SIMA launches energy access fund to support off-grid solar energy companies

0

Social investment managers and advisers (SIMA) launched the Energy Access Relief Fund (EARF) with an initial close of $ 68 million and a close target of around $ 84 million by year end.

The fund aims to support off-grid solar companies and protect access to energy for more than 20 million people in sub-Saharan Africa and Asia. Through this fund, SIMA will provide relief loans to institutions facing liquidity constraints due to COVID-19-related disruptions.

SIMA said energy access companies face the threat of diminished commercial viability even after 19 months since the onset of Covid-19. Lockdowns due to COVID-19 and the resulting economic hardship have affected the consumer base of these businesses. Additionally, supply chain disruptions and rising raw material prices make sourcing solar components difficult for businesses.

The fund is expected to provide subordinated capital with a subsidized interest rate of up to 5% for an average tenure and no guarantees to around 100 energy access companies that had a viable business model before Covid- 19. In addition, support could reach a total of 110 to 120 companies by the first quarter of 2022, with a closing target of $ 84 million.

Arivazhagan GD, Vice President of SIMA, said: “According to our estimate, around 77% of small and medium enterprises that come to EARF are facing a liquidity crisis, and with limited access to capital, these companies are struggling to finance local jobs and operating expenses for the continuity of their activities.

Investors like CDC, FMO, DFC, Green Climate Fund, Acumen, Shell Foundation, The Rockefeller Foundation, IKEA Foundation, United States Agency International Deployment, UK Aid, International finance corporation, world Bank, and SIDA has mobilized its resources to close the fund.

The Energy Access Assistance Fund will provide subordinated capital with a subsidized interest rate of up to 5%, an average tenure (up to 3.5 years) and no guarantees to about 90 to 100 energy access companies that had a viable business model before COVID-19 emerged.

According to SIMA, it has been providing relief loans since January 2021 through the ‘Prime the Pump’ platform, covering nine relief loans in seven countries before the fund closes.

Last month, the Development Bank of Southern Africa launched a tender to support solar and wind power generation projects under the Integrated Generation Investment Program (EGIP). The selection will be made by call for tenders.


Share.

Leave A Reply