CDC-backed Energy Access Relief Fund reaches first close

A first-of-its-kind relief fund has been launched with a first close of $68 million and a target of over $80 million to protect energy access for at least 20 million people in sub-Saharan Africa and Asia.

The Energy Access Relief Fund (EARF) is the culmination of a partnership convened by Acumen, including CDC Group, U.S. International Development Finance Corporation (DFC), FMO, Green Climate Fund (GCF), Shell Foundation, IKEA Foundation, The Rockefeller Foundation, World Bank, International Finance Corporation (IFC), Swedish International Development Cooperation Agency (SIDA), Swiss Agency for Development and Cooperation (SDC), the UK Foreign, Commonwealth and Development Office (FCDO), USAID, and Power Africa.

The EARF, managed by Social Investment Managers and Advisors (SIMA), will provide relief capital in the form of short-term loans to an estimated 90 energy access companies in sub-Saharan Africa and Asia still struggling with disruptions wrought by Covid-19.

“Access to clean, reliable, and affordable energy is essential in lifting communities out of poverty. We could see that the pandemic was adversely impacting those who were most vulnerable, and that we needed to take action. We couldn’t do it alone – it would take all of us,” said Jacqueline Novogratz, Acumen’s founder and CEO. “The launch of the EARF illustrates the power of partnership and moral imagination in a time of crisis.”

Broken supply chains, increased costs of solar components, and continued Covid lockdowns have crippled the energy access industry, which provides renewable energy solutions such as solar lanterns, household solar, mini-grids, and modern energy cooking equipment to customers in low-income and last-mile communities.

“Together, CDC, DFC, and FMO are mobilising our capital to ensure the survival of small and medium social enterprises extending energy access to the 800 million people living without power. The EARF’s flexible and innovative financial structure blends different types of capital to offer low-interest loans and liquidity while the health and economic consequences of the pandemic continue,” said Geoff Manley, head of the energy access and efficiency team at CDC Group.

SIMA’s analysis of energy access companies eligible for relief funding across 50 countries shows that 77% of potential borrowers require emergency financial assistance to stay afloat. Without it, many companies may be forced to take drastic measures such as pausing operations, laying off staff, or permanently closing their doors, which would disrupt energy access for customers at a particularly difficult time.

“We have innovated to create a robust underwriting approach that allows us to rapidly provide relief loans to companies that most need our support during the crisis. We have also implemented into our investment approach a comprehensive ESG process, including developing a gender action plan and supporting the companies to deal with Covid-19 challenges,” said Asad Mahmood, the CEO of SIMA, the EARF fund manager.

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