Although small-scale solar providers focused on the rural off-grid market have been the darlings of the development world, they generate just enough electricity to power more than a few basic appliances such as light bulbs, fans, and televisions. These improvements are undoubtedly an important improvement, but the vision for energy access should embrace a more comprehensive and robust potential. Improvements in quality of life and productivity should be the centerpiece of the agenda for powering Africa. A sustainable vision is required to identify feasible, durable solutions. Unless government and industry stakeholders invest in larger renewable systems, we will continue to champion an unsustainable model of sustainable development.

While African governments have increasingly framed renewable energy as the linchpin of their climate change and development strategies, solar energy still remains largely dependent on public sector capital from sources like the World Bank and the African Development Bank. At present, Africa lacks sufficient investment to fund enough energy projects to achieve universal energy access by 2030. In 2015, the African Progress Panel found that current energy-sector investments in Africa are about US$8 billion a year—less than one-sixth of the US$55 billion per year required to meet electrification targets. And even those funds won’t meet the renewable energy sector’s financing needs.

According to a recent Power for All report, only 11 percent of World Bank energy access funding and 1 percent of African Development Bank funding went to decentralized renewables between 2011 and 2014. With climate mitigation funding in flux due to the U.S. withdrawal from the Paris Agreement, Africa’s solar industry must rapidly develop more capital-efficient ways to reach consumers outside of the grant-based or subsidized rural electrification model or risk future impediments to growth.

Solar companies providing subsistence-level energy to consumers with poor economic prospects have provided an important basis for the industry’s development. Investors betting on the off-grid rural market are right about the transformative impacts of models like M-KOPA, which enables customers to repay the cost of a $200 entry-level solar system over time. These systems provide the means for children to read at night, and they improve household health by reducing reliance on dirty fuels like kerosene. However, if these investors hope to generate long-term growth and improve economic livelihoods, solar systems must be able to generate enough output to power products like refrigeration, which improve food security, or irrigation and agricultural machinery, which enable productivity in the increasingly promising smallholder-led agricultural industry in sub-Saharan Africa.

Likewise, water heating is a staple and important aspect of daily urban living. Enhanced access to electricity shouldn’t just be a stop-gap solution: it should provide a means of reducing poverty and create better conditions for healthier, more financially stable lives in the long-term. As governments and development partners work to catalyze Africa’s green revolution, energy generation must play an essential part of the story. In Kenya, for example, energy accounts for nearly 15 percent of agricultural input costs. Harnessing enough energy to enable customers to expand their discretionary income is a critical path to improving the customer experience while also helping the energy industry’s profit margins—everybody wins. Electrification efforts that focus solely on basic solutions will not uplift the continent as a whole.

For renewable energy to create scaled impact, greater focus is needed on urban and peri-urban locales, which are often neglected in the race to power Africa. The sheer number of customers in urban areas means that efforts to improve electrification among all residents will reduce marketing and distribution costs. Although the electricity deficit is most stark in rural villages, the continent’s most developed cities from Nairobi to Johannesburg also confront irregular power, which, given the rapid urbanization trends in Africa, will become an ever-greater problem as more slums spring up on the urban periphery.

According to the Honourable Akinwumi Ambode, Governor of Lagos State, nearly 86 people enter Lagos every minute of the day—a rate 10 times that of New York. As new settlements crop up, the grid has yet to keep pace with the scale of development. Because the cost of solar power has gone down by 80 percent since 2010, renewable energy solutions have become an increasingly appealing option to expand access to energy in urban environments, the primary drivers for Africa’s economic growth. In these environments, community-level mini-grids and individual solar home systems are models that can deliver higher returns for customers and solar providers alike. Expansion of solar provision in urban areas can subsidize the costs of expansion of solar power in rural communities, and translate into a more commercially sustainable approach to achieve universal and, equally as important, reliable electricity access for more Africans.

As hubs of innovation, urban areas also offer more opportunities to experiment with various types of solar solutions on a large scale. It is hard to imagine testing a scalable power system in a small village—distribution and maintenance would be expensive due to infrastructural and access issues, and piloting a scalable system in a population-limited area is difficult.

Urban settings are ideal testing grounds because research shows that innovation in urban areas grows at the same rate as populations because it increases more opportunities for personal interaction and leads to exposure to new ideas. Directing more investment towards urban energy solutions can improve local resilience by helping balance the over-stretched power grids found in most African countries, and facilitating nationwide energy efficiency.

Expanding electrification in rural Africa is an important step towards building an inclusive future, but the solar industry’s preoccupation with last-mile off-grid solutions will not deliver transformative growth for the continent. Empowering entrepreneurs at a scale that enables them to grow their businesses and generate more economic employment will require firms and investors alike to balance urban with rural concerns, and immediate energy access with a longer-term, sustainable vision.

By Ademola Adesina is the Founder and CEO of Rensource, a West Africa-focused distributed energy services company.

To help close the gap, new sources of capital, especially private, need to be tapped. One key to investing at scale for impact is to attract deeper pockets of private capital by leveraging limited public funding through blended finance. Capital alone, however, is not the only challenge to be tackled.

Professional intermediation and capacity to do so is a considerable bottleneck. This ranges from identifying or even developing investable opportunities, designing investment vehicles, raising capital or matching investors with investments, and managing these impact assets with developmental goals and returns at heart–throughout all stages of an investment cycle, starting from sourcing.

Funds and fund managers who live and breathe impact investing have been proliferating more recently. Yet, the professionals and assets under management lag far behind the numbers needed to address any significant part of the multiple trillion-dollar gap. Fund managers who are new to this space find it hard to gain credibility and traction, cover any pilot testing and ramp up periods, and source capital, for instance.

Creating the universe of future leading fund managers and investment vehicles to achieve the SDGs is as key as capital to be invested. Impact investing veterans, such as Innpact, thus work on a range of solutions to help build professionalism–capacities, competence, expertise–and ecosystems for impact investing.

One initiative is the Climate Finance Accelerator announced in June 2017 by the Government of Luxembourg and developed together with eight private actors–including Innpact, the Luxembourg Microfinance and Development Fund and leading accounting, legal and tax firms. The accelerator will address three main issues for start-up fund managers in climate finance and will be a central point of support and access for them by providing:

• early stage loans for operating capital
• bespoke mentorship in neuralgic areas such as fundraising, climate finance expertise or impact methods
• a ready-to-use toolbox for fund set-up and management, e.g. financial model, policies and procedures, impact monitoring and reporting tools
• training in core areas.

In another initiative, Innpact pursues the development of a turn-key platform for impact investing. This white-label platform will address the constraints of many, especially innovative, smaller funds. By engaging an impact fund manager and drawing on impact finance services, such as developing fund policies, systems and reporting tools, the initiators will be able to strengthen their fund management expertise while focusing on the delivery of investment advisory services.

At Innpact (www.innpact.com) we specialise in services fostering sustainable impact finance initiatives. To this we dedicate our advice and expertise in design, set up and management for impact investing, drawing on our team and an established network of partners and advisors in Africa and around the developing world.

Meet Innpact at the 2nd Africa Impact Investing Leaders Forum 2017 in London, United Kingdom.

By Innpact

According to a case study on alternative sanitation for water security done by Tomorrow Matters Now, 19.5% of South Africans are still without an improved sanitation service and 4.9% of South Africans have no access to sanitation.

For 60% of water management systems, water demand is overtaken by supply, while 98% of our available water resources are already being used. At the same time, South Africa’s water and sanitation infrastructure is crumbling because of a chronic lack of investment.

Local municipalities are faced with these challenges and its effects on a daily basis.

Some of these include the age old problems of institutional or financial shortcomings and capacity constraints, a delay in sanitation services linked to a delay in housing, and the continued maintenance and improvement of basic sanitation.

Waste management has also become an increasing problem with water treatment plants having released raw sewage into rivers in the past due to poor management and maintenance backlogs.

The case study found the need for alternative means of sanitation.

Providing universal access to conventional waterborne sanitation is one of government’s biggest challenges, and the critical aspects of hygiene and dignity, as well as a healthy and resilient environment need to be addressed.

The study said that ‘flushing’ cannot be the solution as we cannot continue to use clean, portable water to flush waste. “We need game-changing new technologies which require little or no water,” the findings suggested.

Technology

The study suggested that alternative means of sanitation require low-water and no-water systems, low-energy wastewater treatment, sustainable operations and maintenance, and be an adaptable, integrated system that can ‘click into place’.

The Arumloo micro-flush toilet was cited as an example as it only uses 1 litre of water.

Biokube, a Danish company, was said to be a reputable in building decentralised waste-water treatment plants which have been implemented in more than 43 countries. Its “strength lies in scalability from household level, to resorts, to small cities,” the report said.

Partnerships

The development of a viable partnership model involving the combined efforts of governments, communities, citizens, civil society and the private sector is critical for success, the study added.

It also noted the following factors as crucial for success:

• Community involvement/mobilisation
• Stakeholder feedback loop: representation of the community’s needs, and education around/exposure to project developments
• Citizens themselves as early adopters
• Move forward together on an equalised journey towards improved sanitation

Johannesburg eliminating backlogs

In response to ageing water systems in South Africa, the City of Johannesburg has commenced with an Infrastructure Renewal Plan costing R1 billion a year to increase the renewal rate from 1% to 3.5% to eliminate backlogs.

Similar plans are in place for water-and sewer infrastructure throughout the country.

Industry experts have asked whether it will be possible to maintain demanding and costly water technologies, as perhaps alternative sanitation systems could provide an answer to these issues, offering low-water flush solutions or alternative sanitation technologies that use no water at all.

There are a wide range of improved technologies available in the industry that provide safe, hygienic, and sustainable sanitation at various costs and levels of complexity, the report pointed out.

It concluded by saying that these types of alternative sanitation technologies promote water security through the recovery of potential resources, unlock business potential for entrepreneurs and create incentives for future job creation.

By Riante Naidoo