Access to electricity is still a major challenge in Africa. It’s 2022, and 600 million people in Africa still don’t access to electricity. About 50% of them live in the Democratic Republic of the Congo (DRC), Ethiopia, Nigeria, Tanzania, and Uganda. To ensure that universal access to affordable electricity is achieved by 2030, connections to over 70 million people will need to be added per year! This would essentially mean tripling the current rate of connections, according to the IEA’s latest Africa Energy Outlook report.
In a bid to boost initiative to increase energy access, the International Development Finance Corporation (DFC) announced a participation of up to $40 million in the Energy Entrepreneurs Growth Fund (EEGF), in a mix of junior and senior notes. The Energy Entrepreneurs Growth Fund offers financing and assistance to companies that increase access to energy in sub-Saharan Africa. EEGF offers catalytic financing and technical assistance to early and growth-stage companies that increase access to clean, safe, dependable, and affordable energy for off-grid households and businesses in Sub-Saharan Africa.
The EEGF was created in 2019 by UK charity Shell Foundation (co-funded with UK aid from the UK government) and FMO, the Dutch Entrepreneurial Development Bank. The use of blended finance allows EEGF to unlock additional capital and further its positive impact in improving access to energy and advancing women’s economic empowerment. In January of this year, FinDev Canada announced its commitment to EEGF. DFC’s announcement complements last month’s commitment by the Nordic Development Fund and brings commitments to EEGF to $106 million.
In addition to mezzanine capital, the fund provides equity and debt instruments to achieve tailored solutions that meet the changing needs of growing energy companies. With a fund life of 12 years, EEGF provides a longer investment holding and support period, recognizing the inherent need for such businesses in emerging economies to unlock value creation to their stakeholders.
“DFC’s investment in EEGF will support businesses that provide energy access to those who currently lacked basic services across Sub-Saharan Africa. By providing additional capital for this transformational work, EEGF will help communities in the region and spur economic growth and development,” said Scott Nathan, Chief Executive Officer at DFC.
“Collaboration between international growth capital providers is key to scaling clean energy businesses and to reaching underserved customers,” said Jonathan Berman, CEO of Shell Foundation. “Shell Foundation seeks to de-risk innovative, impactful ideas so others can invest. This deal further demonstrates that we and our colleagues can widen pools of investment opportunities for commercially-minded investors, and positively impact the lives of millions of people. We are delighted to have worked with our partners at DFC to bring this deal to fruition.”
EEGF is managed by Triple Jump, an Amsterdam-based leading impact-focused investment manager, with Persistent, a Nairobi-based venture builder focused on innovative climate businesses in Africa with extensive expertise in the off-grid energy sector, acting as investment advisor to the fund. The fund focuses on access to energy in the broad sense, including rent-to-own and energy-as-a-service operators. It also supports enablers in the sector, such as software providers, retailers and other distribution businesses.
EEGF’s primary objective is to increase the access to energy for off-grid households and businesses. This includes not just the number of people with such access, but also the depth of access that is provided. Further targets include emissions reductions, gender equity targets, job creation, and additional investment catalyzed. EEGF has an associated Technical Assistance facility and, in addition, Triple Jump and Persistent provide hands-on ‘engine room support’ to the management teams of portfolio companies. The fund supports their responsible growth and enhances the impact of their operations, as well as catalyzing cooperation and innovation in the sector more broadly.
Steven Evers, CEO of Triple Jump, said: “Recent market shocks such as COVID-19 and the increases in food and energy prices are hitting the world’s poorest the hardest. Providing access to clean, renewable and reliable energy is one change we can make to improve lives. EEGF has already invested in seven businesses, using bespoke capital solutions to meet these enterprises’ specific needs. The fund ultimately aims to reach in excess of 5 million beneficiaries, including over 240 female-led businesses, and avoiding 4.5 million tons of greenhouse gas emissions.”