In a strategic move to bolster energy access in one of the world’s most energy-deprived regions, Acumen’s Hardest-to-Reach (H2R) initiative has announced a $2 million investment in Yellow Malawi, a pioneering off-grid solar distribution company. This funding aims to facilitate the procurement of solar home systems, ultimately providing access to reliable energy for approximately 182,000 people, with an estimated 145,000 gaining electricity for the first time.
As the region grapples with significant currency devaluation, many energy access companies have been reluctant to raise debt in local currencies, which can lead to substantial foreign exchange (FX) risks. This challenge is exacerbated by the limited availability of loans in Malawian Kwacha, as few lenders are able to offer favorable terms due to high hedging costs and currency convertibility issues. Acumen’s innovative investment structure seeks to address these obstacles through a blended-currency two-tranche loan.
The first tranche of $1 million will be disbursed in US dollars, with repayments made in Malawian Kwacha, while the second tranche, also valued at $1 million, will be disbursed and repaid in US dollars. This multi-currency approach is designed to mitigate FX exposure, allowing Yellow Malawi to cultivate a sustainable revenue stream while expanding its customer base.
Maya Khonje-Stewart, Co-Founder of Yellow Malawi, expressed enthusiasm about the partnership, stating, “This collaboration with Acumen allows us to reach even more Malawians who deserve access to clean, affordable, and reliable energy. Acumen’s Hardest-to-Reach initiative understands the unique local context and has designed financing that not only meets our needs but also advances our mission to bring energy to those who need it most. The innovative structure addresses critical risks to our business and customers in Malawi, enabling us to deliver reliable and clean energy solutions to more households.”
Sandra Halilovic, Head of Acumen’s H2R development facility, highlighted the alignment of Yellow Malawi’s mission with the objectives of the H2R initiative. “Yellow Malawi’s impact is highly aligned with Hardest-to-Reach’s mission, and this loan will benefit thousands of Malawians over the next few years. H2R is also thrilled to support a company founded by local African entrepreneurs who are at the forefront of driving energy access across the continent. We are pleased to have been awarded a hedging subsidy from TCX’s EUR Market Creation Pricing Facility and are excited to showcase this innovative funding structure.”
Yellow Malawi has established itself as a key player in the solar energy sector, having served over 530,000 customers since its inception. The company has developed a profitable business model through its PAYGo energy provision system, a network of over 1,000 sales agents, and the technology platform Ofeefee. This integrated approach has allowed Yellow Malawi to effectively address the energy needs of off-grid households at scale.
The Acumen Hardest-to-Reach initiative represents a significant commitment to energizing underserved regions across Africa. With a target to activate clean energy markets in 16 of Africa’s most underserved geographies, the $250 million initiative employs various financial instruments to invest in off-grid solar companies dedicated to providing energy access to unelectrified households. Over the next decade, Acumen aims to contribute to universal energy access in sub-Saharan Africa, electrifying 72 million people and avoiding 5 million tons of carbon emissions.
As the partnership between Acumen and Yellow Malawi unfolds, it represents not just a financial transaction, but a shared vision for a more sustainable energy future in Malawi and beyond.