GreenMax Capital Group and CLASP Launch Green4Access First Loss Facility to Drive Uptake of Renewable Energy Solutions in East and West Africa
October 19, 2022 — Today, at the Off-grid Solar Forum in Kigali, Rwanda, GreenMax Capital and CLASP announced the Green4Access Financing Facility (G4A) launch. G4A’s initial pilot phase will catalyse project and consumer financing for local renewable energy companies in Uganda and Nigeria, expanding next year to include Kenya, Tanzania, Malawi and up to 10 additional countries across Sub-Saharan Africa. The increased financing triggered by G4A’s risk mitigation instruments will enable low-income households to invest in solar home systems and appliances, deliver mini-grid installations and improve service delivery at community health facilities. G4A is supported by the IKEA Foundation.
Local lending for renewable energy in East and West Africa is not scaling at the speed required. According to World Bank projections, sub-Saharan countries will account for 85% of the world’s unelectrified population by 2030. Off-grid, distributed renewable energy supply coupled with solar appliances and equipment will put the region on a low-carbon pathway to electrification. Yet, there is a considerable gap between the funding available to energy access companies and what they require to provide more communities with energy services.
G4A is establishing a blended finance platform for first-loss facilities to support off-balance sheet energy access lending in East and West Africa. G4A is offering first-loss products and technical assistance that will help local lenders perceive off-grid consumer lending as sufficiently de-risked while also aiming to allow the fund’s investors to achieve modest returns that make the products sustainable.
GreenMax will manage G4A’s first loss guarantee facility and work with African banks during the pilot phase to reduce risk by covering up to 100% of losses if an individual customer defaults on their loan, up to a cap of 20% of the bank’s total energy access loan portfolio. G4A aims to unlock a further USD 25 million in consumer lending from banks in Uganda, Kenya, Nigeria, Tanzania and Malawi to scale solar-powered appliances and healthcare equipment in its pilot phase.
GreenMax Founding Principal, Clifford J. Aron believes that “G4A’s goal is to transform the energy access finance ecosystem by demonstrating to local lenders how the off-grid energy space can be a significant element of their mainstream consumer lending business. Local lenders provide a critical source of much-needed local currency finance. Their direct lending to consumers will dramatically reduce the pressure on energy access companies to finance their customers themselves- allowing smaller, locally owned energy access companies to flourish.”
About the IKEA Foundation
The IKEA Foundation is funded by INGKA Foundation, owner of the Ingka Group of companies. The IKEA Foundation is independent from the retail business, with a sole focus on creating brighter lives on a liveable planet through philanthropy and grantmaking. Learn more at www.ikeafoundation.org.
CLASP serves at the epicenter of collaborative, ambitious efforts to mitigate climate change and expand access to clean energy through appliance energy performance and quality.
About GreenMax Capital Group
GreenMax is a specialized fund management and advisory firm focused exclusively on the clean energy space in emerging markets.