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Energizing the Covid-19 Recovery Effort in Africa and Asia

Clare Boland Ross — Former Managing Director, Power & Climate, The Rockefeller Foundation
Perspective
Published DateSeptember 01, 2021
Read Time 5 Minutes

The Covid-19 Energy Access Relief Fund (EARF) is an alliance of 16 governments, foundations, and investors, providing emergency capital to off-grid energy providers in sub-Saharan Africa and Asia in order to bring reliable, sustainably powered electricity to more than 20 million people.

In the last decade, the world made encouraging progress towards ensuring universal access to energy. The number of people without electricity fell from 1.2 billion globally in 2010 to around 800 million by 2018; off-grid renewable energy solutions have been instrumental in this achievement. Indeed, energy access firms have made remarkable progress in connecting some of the hardest to reach people on the planet to off-grid, low-carbon energy, especially in sub-Saharan Africa and South Asia.

However, the Covid-19 pandemic has caused major disruptions to the sector, widening the energy access gap and jeopardizing a decade of progress. In 2020 alone, more than 100 million additional people have seen their electricity access severed because they could not pay their bills during the pandemic. The most vulnerable populations have been disproportionately affected.

Access to clean, reliable, and affordable electricity, which thanks to breakthroughs in renewable energy technologies can also be provided by off-grid service providers quickly and cost-effectively, is vital in helping communities recover from the economic devastation of the Covid-19 pandemic and to ensuring a future of more sustainable and equitable economic growth and opportunity. The EARF recognizes this and is set up to make a difference in 20 million lives across sub-Saharan Africa and Asia.

With $68 million in available capital (and a target of over $80 million), the fund will provide emergency financing in the form of short-term, subordinated loans to companies suffering Covid-related disruptions.

Liquidity issues in the sector – worsened by the coronavirus crisis – are pushing energy access firms to their limits, risking job layoffs and service cuts to stay afloat.  A combination of widespread fiscal issues and sweeping ‘stay at home’ orders across the world have left small and medium social enterprises that make up much of the off-grid sector face challenges related to reduced sales and collections, disrupted supply chains, limited cash reserves, and tightening funding resources. Initial industry surveys revealed that 85 percent of off-grid energy companies were facing imminent shutdowns.

During these challenges times, the EARF aims to support the clean, off-grid power sector, promoting lives and livelihoods for employees and consumers alike. The EARF is funded by a diverse group of partners convened by Acumen, including Green Climate Fund (GCF), CDC Group, US International Development Finance Corporation (DFC), FMO, SIDA, Shell Foundation, IKEA Foundation, and The Rockefeller Foundation. The EARF, which will be managed by Social Investment Managers and Advisors (SIMA), will safeguard gains made in the off-grid energy sector from Covid-related economic shocks. The fund has been designed to provide up to four-year tenure, subordinated, unsecured, low-cost, subsidized loans to viable companies that are facing liquidity challenges due to Covid-19. The loans will support companies ranging from those providing mini-grid powered electricity, to stand-alone solar home systems and companies providing homes with access to clean cooking technology.

The EARF is a critical tool that will help communities rebuild more sustainably. It will ensure that social enterprises can continue to provide clean energy solutions and advance climate mitigation and resilience across sub-Saharan Africa and Asia. The fund will focus on the smaller to mid-sized energy access companies that are addressing the needs of the most vulnerable consumers and expects to make about 90-100 loans.

Investment in the EARF is an important part of The Rockefeller Foundation’s commitment to aiding communities around the world that have been affected by the pandemic through our Power and Climate Initiative. In June, the Foundation announced a partnership with IKEA Foundation to set up a $1 billion global platform to fight climate change and energy poverty. The growing, global coalition of public and private partners will work to avert 1 billion tons of greenhouse gas emissions and improve 1 billion lives by catalyzing an equitable and green Covid-19 recovery and building a climate-smart energy system of the future.

For more information on accessing EARF support, please visit: SIMA funds website.

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