A number of start-up enterprises are aiming to disrupt the traditional energy access by offering solar energy services on a pay-as-you-go basis (PAYG). As a result, over half a million households now have access to solar energy home systems, of varying capacity. A recent Bloomberg report suggests that these models could push off-grid solar energy to reach up to 9 million households across Africa by 2020.
Despite the proven benefits and profitability of this model, the scale of these enterprises is constrained by the lack of access to working capital.
With the ambitious goal of reaching 100 million households by 2025, the New Deal on Energy taskforce will build on transformational partnerships to create the right environment for energy in rural areas.
It is in this context that the AfDB's New Deal on Energy for Africa and the Making Finance Work for Africa Partnership hosted a Partner workshop at the AfDB's Abidjan offices. The workshop brought together key stakeholders from the public and private sector, including GSMA, USAID, Ecobank, Microcred, PEG, Lumos Global, and Cellulant.
Participants at the workshop explored developing a PAYG model that will accelerate access to energy and bring off-grid solar equipment to low-income consumers at scale. For these first-time users of solar energy, they will be able to directly access instant micro-loans to pay for energy solutions in an affordable and flexible manner. The model also aims to bring all the major players of the ecosystem, including commercial banks and microfinance institutions, mobile network operators (MNOs), merchants and energy providers into a PAYG platform.
Participants further agreed to pilot the model in the first quarter of 2017 to demonstrate the value of an open ecosystem that has the potential to light-up 15 million farmers who are already registered in a mobile payment platform.
About the New Deal on Energy for Africa
With the aspirational goal of taking advantage of Africa's immense potential to achieve universal access to energy by 2025, the African Development Bank launched the New Deal on Energy for Africa in March 2016.
The New Deal will be implemented through a partnership designed to provide a platform for coordinated action amongst partners (private and public) for innovative financing. The Partnership will unlock Africa's energy potential, and eventually foster a transition to low carbon energy futures. It will help reduce duplication and pool resources to achieve economies of scale in Africa's energy investments.