Global impact investor Acumen has secured $246.5m in capital for a major blended finance initiative designed to scale up clean energy solutions in sub-Saharan Africa’s most underserved markets.

The Hardest-to-Reach (H2R) Initiative, launched at COP28, is now backed by a coalition of development banks, private finance, and philanthropic funds, including the Green Climate Fund (GCF), the International Finance Corporation (IFC), British International Investment (BII), and South Korea’s Shinhan Bank.

The goal is to bring electricity to nearly 70 million people across 17 countries, targeting regions where traditional commercial capital has been hesitant to invest due to perceived risk. This includes markets with extremely low electrification rates, such as Malawi (16%) and Burkina Faso (22%).

“At a time when many are pulling back, this coalition is stepping up with capital designed not just to invest, but to solve,” said Jacqueline Novogratz, Acumen’s Founder and CEO.

A two-pronged attack on energy poverty

The H2R initiative uses a dual-vehicle structure to match the right kind of capital with the different needs of energy startups operating in challenging environments.

• H2R Amplify ($189.5m approved): This is a debt vehicle designed for growth-stage companies. It provides impact-linked loans to enterprises with proven models, allowing them to scale operations in higher-risk markets. A key feature is linking repayment terms to the company’s social impact performance. The fund has already achieved a first close of $123m.
• H2R Catalyze ($57m committed): Active since early 2024, this is a more flexible, market-building facility. It deploys a mix of equity, debt, grants, and technical assistance to help early-stage enterprises overcome the initial barriers that purely commercial financing cannot address.

This structure is designed to use catalytic, more risk-tolerant capital to pave the way for more traditional growth funding.

A heavy-hitting coalition

The initiative brings together a diverse group of public and private institutions, signalling a coordinated effort to tackle energy poverty.

Key backers include development finance institutions (DFIs) like the IFC and BII, the UK’s DFI, which noted the partnership reflects a shared commitment to gender equity as a 2X Challenge investment.

“Expanding access to affordable, reliable, and clean energy is essential for unlocking economic opportunity,” said Mohamed Gouled, IFC’s Vice President of Industries. “[H2R] is an innovative financing and reach model that blends public, private, and philanthropic capital to deliver impact where it is needed most.”

The participation of a major commercial bank like Shinhan Bank is also notable. Seung Hyeon Seo, Deputy President, said the blended finance structure “enables us, as a leading Korean bank, to channel capital into the toughest markets.”

Other significant partners include the Soros Economic Development Fund (SEDF), Nordic Development Fund (NDF), and the Global Energy Alliance for People and Planet (GEAPP).

Why it matters: De-risking Africa’s energy frontier

For years, scaling off-grid energy solutions in Africa’s poorest regions has been hampered by two key challenges: high perceived risk and currency volatility. Commercial investors are often wary of the thin margins, logistical hurdles, and unstable foreign exchange (FX) rates in these markets.

Acumen’s blended finance model directly confronts this. The more flexible capital from H2R Catalyze can absorb initial risks and help companies establish a foothold. Once a company proves its model, the larger debt financing from H2R Amplify can help it scale.

This de-risking strategy is crucial for attracting the private capital needed to close Africa’s massive energy gap.

Early bets and the road ahead

The H2R Catalyze fund has already deployed over $10m into seven companies, demonstrating its strategy in action. Noteworthy investments include:

• Yellow Malawi ($2m): A local currency financing deal specifically structured to mitigate FX risk for a pay-as-you-go solar provider.
• RDG Collective ($1.25m): An impact-indexed loan to scale clean lighting in Zambia through a last-mile distribution model.
• KIMS Microfinance ($1m): A Sharia-compliant debt investment to expand energy financing in Somalia, a market almost entirely overlooked by international investors.

With the first close of its Amplify debt fund now complete, Acumen is actively sourcing new investment opportunities to accelerate its mission of moving millions up the energy ladder.