The International Finance Corporation (IFC) has committed up to $25 million to Acumen ’s Hardest-to-Reach Fund (H2R), a $200 million initiative aimed at improving energy access in some of Sub-Saharan Africa ’s most underserved regions. This investment will be allocated to the senior tranche of the fund, which is structured into three $60 million equity tranches — senior, mezzanine, and junior — along with a $20 million grant facility. The grant is earmarked for impact-driven interest rate reductions tied to key performance indicators (KPIs), such as the number of first-time electricity users reached.
Acumen ’s Hardest-to-Reach Fund targets off-grid solar companies operating in 16 countries across Sub-Saharan Africa that have the lowest electrification rates and the highest poverty levels. By providing flexible financing, the Fund aims to support the Pay-as-you-Go (PayGo) business model that allows low-income households to purchase solar home systems through incremental payments, making clean energy more affordable and accessible.
The IFC’s $25 million commitment underscores its broader strategy of enabling sustainable development through impact investing in regions with severe infrastructure gaps. By taking a senior position in the Fund’s capital structure, the IFC helps de-risk investments for other stakeholders, thereby attracting further capital to an area where financing is scarce but crucial.
The grant facility, an integral part of the Fund’s structure, incentivizes off-grid solar companies to reduce borrowing costs for end-users by meeting specific KPIs, such as the number of rural and first-time energy users they can serve. This approach ensures that the benefits of the Fund’s investments are felt by those who need them the most, aligning both financial returns and social impact.
Acumen, a nonprofit impact investment fund, has been a pioneer in the off-grid solar sector in Africa. The Hardest-to-Reach initiative is its latest effort to address the chronic under-electrification in Africa, where traditional grid-based solutions are often too expensive or logistically unfeasible. The Fund’s primary focus is on companies offering solar home systems that can provide reliable and clean energy to low-income households and businesses.
One such company, Yellow Malawi, recently received a $2 million investment from Acumen’s H2R initiative. The investment, structured as a two-tranche blended-currency loan, is designed to help Yellow Malawi scale its operations while mitigating foreign exchange risk. The first tranche of $1 million will be disbursed in U.S. dollars, with repayments made in Malawian Kwacha, while the second tranche will be fully U.S. dollar-based. The innovative financing structure allows Yellow Malawi to navigate currency volatility while expanding its reach to an estimated 182,000 people, many of whom will gain access to electricity for the first time.
“Acumen’s support will allow us to deepen our reach in Malawi and help more families gain access to clean, affordable energy,” said Maya Khonje-Stewart, co-founder of Yellow Malawi. “The blended-currency loan is a game-changer for us, reducing our exposure to currency fluctuations while ensuring we can continue to grow sustainably.”
The Hardest-to-Reach Fund: A Blended Approach to Financing
The H2R Fund is a model of blended finance, combining commercial investment with concessional capital and grants to achieve both financial and social returns. The fund’s strategy reflects Acumen’s commitment to activating clean energy markets in the most underserved areas, while simultaneously creating pathways for local businesses to thrive.
“We are proud to partner with IFC on this vital initiative,” said Sandra Halilovic, Head of Acumen’s Hardest-to-Reach development facility. “The Fund is a testament to the potential of impact-driven capital in unlocking opportunities for those living in energy poverty. By focusing on high-impact KPIs such as first-time energy access, we aim to electrify millions of homes while also reducing carbon emissions.”
Acumen has long been a leader in the off-grid solar space, having invested in some of the earliest and most successful PayGo solar companies. The H2R Fund builds on its 20-year history of deploying patient capital to social enterprises, offering a blend of debt, equity, and grant funding to tackle some of the world’s most pressing challenges.
Over the next decade, Acumen aims to leverage the H2R Fund to electrify 72 million people in Sub-Saharan Africa, while avoiding 5 million tons of carbon emissions. The focus on solar energy solutions not only addresses the region’s energy poverty but also contributes to global efforts to mitigate climate change.
As the Fund scales, it will work with both international and local off-grid solar companies, providing them with the necessary financing to expand their customer base and increase the distribution of solar home systems. The PayGo model, which enables customers to pay for their solar systems in small, manageable installments, has proven to be a sustainable solution for both households and companies.
The IFC’s investment in Acumen’s Hardest-to-Reach Fund highlights the critical role that blended finance can play in advancing energy access in Sub-Saharan Africa. By mobilizing a range of capital and using innovative financing structures, the Fund seeks to bridge the gap for millions of Africans living without electricity, while also promoting sustainable business growth and reducing carbon emissions.
As global investors increasingly look to align financial returns with social impact, initiatives like the H2R Fund offer a blueprint for how targeted investments can create lasting change in some of the world’s most challenging markets.