Malawian, Zambian Off-Grid Solar Companies Bank $3.25m from Acumen Fund
Off-grid solar companies Yellow Malawi and Zambia’s RDG Collective have secured a combined US$3.25 million in debt investment from Acumen’s Hardest-to-Reach (“H2R”) initiative.
Yellow Malawi is a solar home system and mobile phone distributor that provides energy access to off-grid and rural customers in Malawi, while Zambia’s RDG facilitates access to essential renewable energy products and services that unlock potential and transform lives across Africa.
The two companies have now secured funding – US$2 million for Yellow and US$1.25 million for RDG – from Acumen Hardest-to-Reach, a US$250 million initiative designed to activate clean energy markets in 16 of Africa’s underserved geographies. Using a variety of financial instruments, H2R invests in off-grid solar companies working to provide energy access for unelectrified households.
Its investment in Yellow will fund the company’s inventory purchase of solar home systems and enable 182,000 people to receive energy access. The first tranche worth US$1 million will be disbursed in US dollars to Yellow Malawi, which will make repayments in Malawian Kwacha. Acumen has been awarded a subsidy from the TCX EU Market Creation Facility to reduce hedging costs and make the loan more attractive for both Yellow Malawi and Acumen.
The second tranche in the amount of US$1 million will be disbursed and repaid in US dollars. This multi-currency structure will enable Yellow Malawi to grow their customers and revenue in a more sustainable way with lower FX risk exposure.
“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.
Sandra Halilovic, head of Acumen’s H2R development facility, said Yellow Malawi’s impact was highly aligned with Hardest-to-Reach’s mission, and that the loan would benefit thousands of Malawians over the next few years.
Meanwhile, the US$1.25 million in RDG Collective will fund RDG’s inventory purchase of solar home systems, enabling 66,000 people to receive energy access and mitigating at least 7,000 tCO2eq. The investment will also enable the purchase of solar generators, which will offer a resilient and clean source of energy to 180 small businesses.
The investment was structured as an Impact Indexed Loan, where the interest rate reduces as certain impact milestones are reached, and through an on-lending structure via a partnership with BioLite, which is one of RDG’s product manufacturers.
“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.
Halilovic said RDG Collective’s dedication to providing high-quality solar solutions and its potential for growth made them an ideal partner for the Hardest-to-Reach initiative.
“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.
Source: Disrupt Africa
