Africa’s Off-Grid Funding Shifts

According to GOGLA, a Netherlands-based off-grid solar industry body, there’s a shift in Africa’s investment.

The continent has been in the spotlight as a land full of opportunities for off-grid solar. But what has been surprising is that West Africa received more than twice the investments of other African countries.

They were able to secure $142 million of investment during 2020 when the COVID-19 pandemic. The investment remained steady despite the challenges.

However, there was still a decrease in acquisitions and investments, partly due to the inability to perform due diligence because of Covid-19’s restrictions.

Investments During COVID-19

The off-grid investments rose slightly from $312 million back in 2019 to $316 million in the year after.

Although investment in the region remained steady, equity investment fell by 46% during 2019, making debt and grant funding rise in proportions.

Apart from that, there wasn’t much diversity from funders. Early-stage companies had to choose from a limited group of funders, making debt funding one of the highest investment concentrations for them.

To stabilize, the public sector offered non-repayable investments for health systems during the pandemic.

Covid-recovery investment may still come, but it might take in the form of debt.

Looking for Diversity

One of the problems before was the lack of diversity from investors and funders. Due to this, they concentrate more on debt funding compared to other types.

But based on the GOGLA’s observations for 2020, there were positive signs that it will become more diversified.

The top 10 deals in the region had accounted for the 68% of the total investment for the year, which had been down to 90% back in 2019.

Beneficiaries increased from 49 in 2019 to 78 by 2020. For the first time, 46 businesses gave their support, which was more than a half increase from 20 businesses only the year before.