Mission 300 is a bold World Bank Group (WBG) and the African Development Bank (AfDB) led initiative to electrify 300 million Africans by 2030. Reaching this goal requires mobilizing an unprecedented amount of low-cost financing to double the current electrification rate through grid improvements and expansion, mini-grids, and off-grid solar home systems. We need focus, partnerships, collaboration, prioritization, and good people who feel a shared sense of urgency.

Progress and Partnerships

Mission 300 has already electrified more than 12 million people. In support of the WBG and AfDB, The Rockefeller Foundation, Sustainable Energy for All (SEforALL), and the Global Energy Alliance for People and Planet (GEAPP), are championing Technical Assistance (TA) to kickstart 15 WBG and AfDB projects across 11 countries, through the Mission 300 TA facility launched earlier this year. The TA facility builds upon the innovative capacities at The Rockefeller Foundation’s public charity, RF Catalytic Capital (RFCC), and GEAPP, which has more than 50% of its current portfolio by value invested in Africa.

Listening and learning at The Global Off-Grid Solar Forum & Expo (GOGSFE)

In October, during the 8^th GOGSFE held by GOGLA in Nairobi, Kenya, the WBG, AfDB, GEAPP, SEforALL and The Rockefeller Foundation hosted robust discussions with industry leaders – including companies, financial institutions, and industry associations – about what Mission 300 needs to succeed. In-depth conversations on TA deployment using different financing models were discussed with more than 60 stakeholders in 5 closed-door sessions.

Here we highlight key insights, broken into four main categories, including public sector reforms, financing tools, technical assistance requirements, and key implementation considerations.

1. Public Sector Reforms:

Only 22 percent of the 600 million people without access to electricity across Africa can afford to pay for electricity at current rates. Lowering electricity costs could have a significant impact on millions of people and communities across the continent. For example, countries that provide VAT exemptions for off-grid products like solar home systems sometimes change their policies regarding exemptions, making it challenging for companies to price products. Here are some of the recommendations for African governments:

a) VAT & Custom Duties Exemptions. Committing to time-bound exemptions that survive changes in government would help companies better predict costs and expand their reach.

b) Program to support local assembly & manufacturing companies. Implement programs to develop companies and systematically phase in incentives (e.g. tax breaks) to unlock a longer-term market while also creating jobs and bringing down costs.

c) Continental Free-Trade. Accelerating the Africa Continental Free-Trade Area would create a 55-country market of 1.3 billion people. It would facilitate local manufacturing of the energy products needed to achieve Mission 300. Concentrated local production could facilitate the lower-cost bulk procurement and regional sales.

d) Fossil Fuel Subsidies – Shifting subsidies from fossil fuels to energy access would have a positive impact on country budgets and economic growth, while reducing emissions.

2. Financing Tools:

Mission 300 aims to deploy over $30 billion in public financing, including funds from the International Development Association (IDA) and African Development Fund (ADF). These tools generally focus on government projects. Recommendations for private sector support include:

a) Scaled, Predictable, and Efficient Results-Based Financing (RBF). RBF programs have helped companies enter and expand to new markets, with 20-30% subsidies driving new sales of off-grid products. Issues such as delays in deployment and payment, inefficiencies in implementation, fragmentation across donors, misalignment in incentives, and lack of continuity have limited RBF impact.  Larger and better coordinated RBF initiatives focused on market expansion and affordability gaps would help achieve Mission 300.

b) Currency Risk Sharing and Mitigation Mechanisms. Unstable global conditions are driving local currency depreciation and worsening currency risk. Revenues are collected in currencies, such as Naira, while borrowings and repayments are in dollars or euros. Companies are absorbing this risk despite not being equipped to do so. While some leaders supported increasing local lending, affordable interest rates and convertibility issues also remain persistent challenges. Discussants praised The World Bank’s support of a fund in Malawi that lends to off-grid solar companies in USD but allows for repayment in local currency.

c) Patient Equity Financing. Many cited the lack of available patient equity as the biggest inhibitor to growth. Companies need equity to raise debt, which is essential to expanding operations. Pay-as-you-go companies in particular need equity to cover inventory and distribution costs upfront, given that they collect revenue over time.

d) Working Capital Financing. Many companies noted the need for working capital financing to cover upfront costs. While RBF programs create strong incentives for companies to expand into new areas, the payments come too late. Working capital financing, even with a quick turnaround and in hard currency, could allow companies to expand.

e) Concessional DFI Capital. Some participants criticized the high cost of financing from development finance institutions (DFIs), with one company noting that it had been offered debt at 23% – a cost that ultimately gets passed on to customers, making electricity less accessible. Some DFIs have become more risk-averse to protect their balance sheets from ongoing macro-economic challenges. We must reinforce the “developmental” mandates of DFIs. Blended finance vehicles such as the Sustainable Energy Fund for Africa (SEFA) show a pathway for DFIs to capitalize private players in the DRE sector.

f) Crowding-In Philanthropic Capital. Many urged philanthropies to strategically use their dollars to de-risk and crowd-in commercial and institutional capital. Investors in Africa’s energy and DRE space – notably DFIs – can play a key role in sensitizing the philanthropic community on the investment opportunities and developing catalytic financing structures to amplify impact of their capital contributions, but philanthropies should not replace DFIs.