Sida invests $50m to increase off grid energy access in Africa

Almost 70% of the population in sub-Saharan Africa lack access to electricity. Following the success of Sweden’s investment in small-scale energy services in Zambia, the concept is now being expanded – to Burkina Faso, Liberia and Mozambique. USD 50 million will give 5 to 15 million people in rural and slum areas access to electricity.

– Electricity is a prerequisite for people to lift themselves out of poverty, says Carin Jämtin, Director General of the Swedish International Development Cooperation Agency (Sida). By leapfrogging the national electricity grid and promoting innovative off-grid solutions, we make it easier to study after dark, charge mobile phones and computers and keep food chilled. Electricity also creates jobs by improving the conditions to run shops and other businesses.

In the rural areas of the targeted countries almost all people lack access to the national electricity grid. The available energy sources are often expensive and harmful to the environment and climate; for example disposable batteries, kerosene and diesel generators. But expanding the national electricity grid is expensive and takes time. Therefore, Sida is focusing on small-scale solutions for energy production. A common solution is solar home systems that are bought on a rent-to-own basis. The customer pays a monthly fee until the system has been paid off. Payments are typically made by mobile money.

– Large parts of Africa skipped landline telephony in favour of cellular networks, says Anders Arvidson, Project Leader at Sida. Now we do the same in the energy sector. Through solar home systems or micro grids for villages, millions of people can get access to electricity that otherwise would have been left unconnected in the foreseeable future.

The Beyond the Grid Fund for Africa (BGFA) is a program that extends over five years, USD 10 million per year, a total of USD 50 million. The concept evolves around procurement. Energy service companies submit tenders presenting their business models, how many people they want to reach and the end price for the consumer. The contracts are awarded to the companies that have the best and most sustainable business models in the long term – when the contribution from Sida has ended. The BGFA contracts covers some of the costs for the implementation of the services, but most of the investments are made by the companies and external investors. The total value of the extended energy access is estimated to USD 200 million, four times more than Sida’s contribution.

– This is what is so important, says Anders Arvidson. If we only funded electricity connections without continued support, it wouldn’t spark long term change. Our goal is to stimulate sustainable business models; companies that will keep growing when the contracts with BGFA expire.

The model for the program is the Beyond the Grid Fund for Zambia (BGFZ) which is now halfway through its five-year project period. The goal of electrifying 1 million people is expected to be exceeded by far. So far, 450,000 people have gained access to electricity, which is twice as many as planned at this point in time. When the project ends in 2021, 1.6 million Zambians are expected to have gained access to affordable and sustainable electricity for the first time.

– BGFZ has really exceeded our expectations. We have proved that small-scale energy solutions can generate large-scale effects. But despite the large numbers, it is meeting with those who have gained access to electricity that is most inspiring. Electricity changes people’s lives in a way that can be difficult for us living in Sweden to understand, says Anders Arvidson.

NEFCO, a financial institution owned jointly by the Nordic countries will implement the program. The agreement will be signed at a ceremony at Sida’s head office on February the 22nd, where Sida’s Director General Carin Jämtin, among others, is present.

 

Source: Sida

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