Acumen raises $246m to electrify 17 hard-to-reach African nations

Acumen, an impact investment firm, announced during New York Climate Week that it has raised $246m for its ‘Hardest-to-Reach Initiative’.

The fund is designed to finance efforts to expand electricity access in 17 African countries that have some of the world’s lowest levels of electricity access.

Jiwoo Choi, chief of strategic initiatives at Acumen, says the initiative is focused on delivering off-grid solar power as a solution to the electricity gap in these countries. Acumen has been financing off-grid solar since 2007, she tells African Business; with the Hardest-to-Reach Initiative, it is seeking to apply lessons learned in countries like Nigeria and Kenya to countries where the technology remains nascent today.

“The technology is available, it’s affordable,” says Choi. But she says it remains difficult to distribute solar technology in the least developed countries, especially in rural areas. “That’s the challenge that we are trying to solve.”

Some have expressed scepticism that renewables are the solution for electricity access in Africa. US president Donald Trump trolled New York Climate Week by describing green energy as a “scam” in a speech to the United Nations.

His energy secretary, Chris Wright, has also dismissed solar, falsely claiming in a recent social media post that wrapping the Earth in solar panels would only meet 20% of global energy needs. In fact, the US Department of Energy itself points out that: “The amount of sunlight that strikes the earth’s surface in an hour and a half is enough to handle the entire world’s energy consumption for a full year.”

Choi argues that solar is simply the most economic way to provide electricity access.

“The cost effectiveness of solar is actually much better than diesel,” she says, adding that solar kits need to have small batteries to provide some power at night. Other solar applications – such as solar-powered irrigation systems – do not necessarily need battery power, since they operate during daylight hours.

Meanwhile, there is growing evidence that solar is gaining traction across the continent. Africa’s solar panel imports from China have grown by 60% in the past year, according to energy think tank Ember.

Financing challenges

The Hardest-to-Reach Initiative is structured with two separate vehicles. A debt vehicle, which has received $189m in funding pledges, provides loans to help companies scale-up efforts to extend off-grid energy. To complement this, a separate fund that has raised $57m provides a mix of debt, equity and grant funding to help “market-building businesses”.

Investors that have committed to the fund include several development finance institutions, including the Green Climate Fund, British International Investment and the International Finance Corporation. It has already received commitments from commercial sources, including South Korea’s Shinhan Bank.

Yet despite Acumen’s success in attracting funding for the Hardest-to-Reach Initiative, Choi admits to being “nervous” about securing the finance needed to continue efforts to electrify the poorest countries.

“It’s not going to be easy at all. It’s going to be a lot of work.”

Mission 300 marches on

Acumen is one of the partners of the Mission 300 initiative, led by the African Development Bank and World Bank, which aims to bring electricity access to 300 million people in Africa by 2030.

The initiative reached another milestone at New York Climate Week with the unveiling of ‘national energy compacts’ by a cohort of 17 African countries under the Mission 300 initiative. An initial cohort of 12 countries launched their own compacts in January.

The national energy compacts outline specific targets and actions for national governments to strengthen electricity access. The documents are intended to provide confidence to the private sector and development partners, as part of Mission 300’s efforts to mobilise finance.