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Africa Enterprise Challenge Fund to unlock clean energy markets

The Africa Enterprise Challenge Fund (AECF) has launched a results-based financing programme to unlock new markets for clean energy companies in Kenya and a grant for renewable energy solutions Somaliland and Somalia.

The $4 million REACT Results-Based Financing Programme will support commercially viable companies to establish new markets and accelerate access to clean energy for 87,000 unserved and underserved households in Kenya. Companies will be awarded funding of up to $500,000 at contracting, with a flexible reallocation system to allow companies that exceed their milestone targets to increase their funding cap to US$1 million.

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AECF Chief executive officer Victoria Sabula: “Off-grid energy sector continues to require investment if we are to make notable progress in improving access to affordable and clean energy. We are excited to be launching the REACT RBF programme through which we seek to provide results-based incentives for companies that are increasing access for unserved and underserved communities. Energy access remains critical for a sustainable post-COVID-19 recovery and we see REACT RBF helping companies to withstand the COVID-19 effects, recover, and come out stronger on the other side.”

The REACT RBF programme will be rolled out in Kenya given the country has a relatively advanced clean energy market compared to other Sub Saharan countries. According to a GOGLA country brief, as of June 2019, 4.1 million people in Kenya live with improved energy access and 3.5 million still without power.  

The programme funded by the Swedish International Development Authority (Sida) will provide funding to companies in Kenya incentivising them to reach more energy-poor households and substantially increase their access to clean energy. The RBF projects are expected to be implemented over a 2.5-year period running from July 2021 to December 2023.

Expanding renewable energy and clean energy solutions in Somalia and Somaliland

The AECF has also launched an $8.5 million grant facility to support adoption and diversification of renewable energy solutions in Somalia and Somaliland. This is a component of the REACT Sub Saharan programme, that seeks to reduce poverty through a transformational increase in the use of renewable energy by off-grid households.

“The Somali market presents a unique opportunity for us and other development partners to change the narrative on the reliance of diesel-powered mini-grids as we facilitate a switch to renewable energy sources. To achieve this stimulation of market growth and engagement of the private sector in renewable energy value chains is pivotal,” explained Sabula.

According to the World Bank SDG tracking report, it is estimated that 11 million Somalis lack access to electricity services with only 3% having access to clean cooking. This lack of electricity and the use of poor-quality cooking fuels continues is to hamper development for low-income households of the people of Somalia.

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“For this call, we are looking to work with businesses at different developmental stages particularly those at early stage. In addition to the funding, we will provide technical support, business linkages and investment facilitation,” said Sabula.

The programme targets private sector companies and microfinance institutions that are commercially active. These businesses are expected to be delivering low cost, clean energy products and services that benefit the poor in rural and peri-urban Somalia as well as Internally Displaced Persons, especially women and youth. This programme aims to enable 300,000 people to access clean energy and create jobs for both youth and women.

The deadline for the applications to the REACT SSA Somalia programme is 22 January 2021.

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.