Off-grid solar companies in Zambia and Malawi received $3.25 M from Acumen Fund
Acumen’s Hardest-to-Reach (“H2R”) initiative has approved a US $3.25 million debt investment for off-grid solar companies Yellow Malawi and Zambia’s RDG Collective.
Whereas Zambia’s RDG makes it easier for people to acquire vital renewable energy goods and services that unlock potential and change lives all across Africa, Yellow Malawi is a solar home system and mobile phone distributor that offers energy access to off-grid and rural homeowners in Malawi.
The two businesses have now obtained funding from Acumen Hardest-to-Reach, a US$250 million initiative aimed at igniting clean energy markets in 16 underserved geographies of Africa ($2 million for Yellow and US $1.25 million for RDG). H2R makes investments in off-grid solar companies that aim to give electricity access to households without electricity through a range of financial instruments.
With its investment in Yellow, it will be able to provide 182,000 people with access to energy and finance the company’s inventory purchase of solar home systems. Yellow Malawi will receive the first tranche of US $1 million in US dollars and be required to repay the funds in Malawian Kwacha. In order to lower hedging costs and increase the loan’s appeal to Acumen and Yellow Malawi, the TCX EU Market Creation Facility has granted the latter a subsidy.
The second tranche, totaling one million US dollars, will be paid out and reimbursed in US dollars. Yellow Malawi will be able to grow their clientele and income more sustainably and with less exposure to foreign exchange risk thanks to this multi-currency structure.
“This partnership with Acumen allows us to reach even more Malawians who deserve access to clean, affordable, and reliable energy. Acumen’s Hardest-to-Reach initiative understands the unique local context and has designed financing that not only meets our needs but also advances our mission to bring energy to those who need it most. The innovative structure addresses critical risks to our business and customers in Malawi, and will allow us to reach more households with reliable and clean energy solutions,” said Maya Khonje-Stewart, Yellow Malawi co-founder.
The head of Acumen’s H2R development facility, Sandra Halilovic, stated that thousands of Malawians would profit from the loan over the next few years and that Yellow Malawi’s impact was highly aligned with Hardest-to-Reach’s mission.
RDG’s inventory purchase of solar home systems will be funded by the US$1.25 million in RDG Collective, allowing 66,000 people to have access to energy and reducing CO2 emissions by at least 7,000 tCO2eq. Additionally, the investment will make it possible to buy solar generators, providing 180 small businesses with a dependable and environmentally friendly source of energy.
The investment was set up as an Impact Indexed Loan, whereby interest rates decrease upon the achievement of specific impact benchmarks, and through an on-lending arrangement made possible by a collaboration with BioLite, a manufacturer of RDG products.
“We are proud to partner with Acumen for the first time as part of their innovative Hardest-to-Reach initiative. This investment will enable RDG to accelerate the distribution of thousands of solar home systems through our countrywide network, a significant milestone toward achieving universal energy access in Zambia,” Rune Gunnar Dige, CEO and founder of RDG Collective, said.
RDG Collective was a perfect fit for the Hardest-to-Reach project, according to Halilovic, because of the company’s growth potential and commitment to offering premium solar solutions.
“We are also thrilled to be partnering with BioLite through this innovative on-lending structure. This investment is a testament to our commitment to sustainable energy solutions that empower and bring dignity to low-income communities and demonstrates the potential that innovative impact-linked finance instruments, such as impact-indexed loans, hold for climate solutions like decentralised renewables,” Halilovic said.
