FinDev Canada and its 2X Canada facility announced today a participation of up to US$ 13 million in Energy Entrepreneurs Growth Fund (EEGF). The Energy Entrepreneurs Growth Fund offers catalytic financing and technical assistance to early and growth-stage companies that increase access to clean, safe, dependable, and affordable energy for off-grid households and businesses in Sub-Saharan Africa. The EEGF was created in 2019 by Shell Foundation, co-funded with UK aid from the UK government, and FMO, the Dutch Entrepreneurial Development Bank. The use of blended finance will allow EEGF to unlock additional capital, a greater challenge during the COVID-19 crisis, and further its positive impact in improving access to energy and advancing women’s economic empowerment.
This is the first transaction that FinDev Canada makes under the recently launched 2X Canada: Inclusive Economic Recovery, a facility implemented by FinDev Canada and funded by Global Affairs Canada. At least half of the energy companies to benefit from EEGF financing will meet the 2X Challenge criteria. Through its investments, the Fund will address the particular energy needs of African women consumers and women business owners. The Fund also commits to promoting inclusive practices within its portfolio companies, thus contributing to positive impact on women’s economic empowerment in the region.
The lack of access to energy is a critical barrier to development. FinDev Canada is committed to investing in the access to energy ecosystem as a way to contribute to Sustainable Development Goal 7 to ensure access to affordable, reliable, sustainable and modern energy for all. Today, about 600 million people in Sub-Saharan Africa lack access to electricity, which corresponds to three-quarters of the global without access to energy. Despite progress made over the last decades in reducing the number of people without access to electricity, the COVID-19 pandemic has reversed the trend, pushing many countries away from the goal of achieving universal access by 2030.
“The pandemic has slowed down electrification in Africa, which was already behind before the health crisis”, said Paulo Martelli, Vice President and Chief Investment Officer of FinDev Canada. “By increasing EEGF’s capacity to invest in this sector, FinDev Canada and its 2X Canada facility indirectly support energy companies committed to expanding access to clean and reliable energy for African households and businesses, leading to inclusive and sustainable growth and the improvement of millions of lives.”
“A just and inclusive energy transition, one that alleviates energy poverty and mitigates climate change, requires understanding the financing needs of entrepreneurs who we are depending on to deliver the world’s energy access goals,” says Gareth Zahir-Bill, Shell Foundation Operations Director. “FinDev Canada’s investment into the fund will help it expand its provision of flexible financing solutions for entrepreneurs, accelerating access to clean and reliable energy for millions of lives in Africa.”
“Investment Manager Triple Jump and Advisor Persistent are thrilled to welcome FinDev as a new fund partner, given our alignment not only on climate friendly energy access, BoP client support in LDCs in Africa, but also on gender equality and women economic empowerment” says Jan-Henrik Kuhlmann, Head of Sustainable Energy at Triple Jump. “FinDev’s investment paired with targeted Technical Assistance support, will help address the unique needs of women as customers, entrepreneurs and employees in the access to energy sector.”
By providing flexible and patient financing solutions – catalytic debt, mezzanine debt, equity and technical assistance – tailored to the needs of energy entrepreneurs, EEGF enables entrepreneurs to scale and eventually become more attractive to established debt and equity markets. EEGF recently completed three investments in innovative access to energy enterprises: Baobab+ Côte d’Ivoire, which supports underserved households and microentrepreneurs in gaining energy autonomy and digital access in Sub-Saharan Africa, Yellow, a leading Solar Home Systems pay-as-you-go (PAYGo) company serving off-grid households and microentrepreneurs in Malawi and Uganda, and Redavia, which provides solar units to commercial and industrial businesses in Eastern and West Africa, so they can in turn contribute to local economic development while reducing greenhouse gas emissions.
Women’s economic empowerment
Lack of access to energy in developing countries disproportionately affects women, particularly those with low incomes, as they manage households or small businesses. At least half of the companies that EEGF will invest in will meet the 2X Challenge criteria, intentionally addressing the energy needs of African women consumers and entrepreneurs and promoting inclusive practices within energy companies. These commitments qualify the investment for the 2X Challenge.
With its investments in companies offering renewable energy solutions to meet the electricity needs of households and businesses, EEGF contributes to addressing the climate challenge by helping to replace fossil fuel-based energy sources such as diesel or kerosene.
Further to the positive economic impact that access to electricity drives, EEGF estimates that the companies they will invest in could create 1,500 jobs in the access to energy value chain in Sub-Saharan Africa. In turn, this is expected to spur local economic activity and generate additional income for end-use clients.
Development Finance Institutions and COVID-19
FinDev Canada has a mandate to support companies that have a presence in the areas most affected by the COVID-19 pandemic. Investments will help guarantee that developing markets continue to have liquidity, providing important support for the recovery of the economic and social consequences of this crisis.
About FinDev Canada
The Development Finance Institute Canada (DFIC) Inc., operating under the FinDev Canada brand, is a Canadian institution dedicated to providing financial services to the private sector in developing countries with the aim of combating poverty through economic growth by focusing on three main topics: economic development through job creation, women’s economic empowerment, and climate change mitigation. The Development Finance Institute Canada Inc. is a wholly owned subsidiary of Export Development Canada (EDC).
About 2X Canada: Inclusive Economic Recovery
2X Canada is a CAD 75.9 million blended finance facility implemented by FinDev Canada and funded by the Government of Canada. through Global Affairs Canada. It aims to enhance the resilience and socioeconomic well-being of low-income, underserved and marginalized populations, particularly women and girls, in the Caribbean and Sub-Saharan Africa. The Facility adopts a whole of Canada approach to help address COVID-19 economic recovery in ODA-eligible countries., to support investments that drive positive impact on women’s economic empowerment in Latin America and the Caribbean and Sub-Saharan Africa.
About the 2X Challenge
The 2X Challenge was founded by the Development Finance Institutions (DFIs) from the G7 as a call to action to shift more capital towards investments that empower women in developing countries to access entrepreneurship and leadership opportunities, quality jobs, and products and services that enhance their economic participation. More information about the 2X Challenge can be found here: https://www.2xchallenge.org.
What’s the criteria for qualifying for a 2X investment?
- Whether a business is majority owned by women or founded by a woman
- The share of women in senior management or on the board
- The share of women in the workforce
- Whether a product or service specifically or disproportionately benefits women
- If a certain percent of loan proceeds in a deal through financial intermediaries supports women.
About Global Affairs Canada
Global Affairs Canada is a federal department of the Government of Canada that works to define, shape and advance Canada’s interests and values in a complex global environment. The department manages diplomatic relations, promote international trade and provide consular support. It leads international development, humanitarian, and peace and security assistance efforts. It also contributes to national security and the development of international law.
About Energy Entrepreneurs Growth Fund (EEGF)
Managed by Triple Jump and advised by Persistent, EEGF is designed to provide patient, flexible capital combined with technical assistance that is currently lacking in the Decentralized renewable energy (DRE) ecosystem. By offering tailored solutions it is able to meet the changing needs of growing DRE companies working to achieve Sustainable Development Goal 7 (“Ensuring access to affordable, reliable, sustainable, and modern energy for all”) by 2030.