Debt
The debt facility provides credit at market rates to solar importers and distributors to import and build an inventory as well as allowing them to provide medium-term consumer financing on a Pay-As-You-Go (PAYG) basis. Financing is provided in local currency depending on the needs of the solar companies after detailed review of the companies’ business plan. Individual loan terms (size, tenor, security, etc.) to companies are determined by the Fund Manager during initial screening and diligence.
Results-Based Financing (RBF)
This window provides critical business development support and building the distribution channels at scale. Due to the nascent off-grid solar market in Malawi, solar companies have high operational costs related to building and extending distribution channels, provision of training for agents and technicians, introducing innovative technologies, initial setup, marketing, consumer-awareness etc. The RBF Grant Window offers performance-based subsidies of up to $20 per SHS unit, with 90% disbursed upon verified installation and the remaining 10% retained to ensure after-sales service commitments. These subsidies are channeled through the OGS companies, benefiting end users directly by lowering the predefined sale price of SHS units. Together, the reduction in foreign exchange risk and the end-user subsidy have decreased SHS costs by over 25%, improving affordability and accelerating market adoption. This window does not only help with buying down the opportunity costs of solar companies to expand their business in the market but also allows for start-up companies to enter the market and increase competition. The RBF specifies instalment payments based on the achievement of pre-agreed connection milestones.
Participating OGS companies receive additional financial incentives for working with marginalized groups as well as women entrepreneurs and sales agents. An independent verification agent (IVA) is tasked with ensuring that companies meet their obligations to customers and remain in compliance with Verasol certified product and after-sales service requirements at all times.
Market Catalyst Grant
The Market Catalyst Grant Window focuses on supporting market-based innovative solutions through grants. This window targets projects that demonstrate the potential to scale energy access and create sustainable market dynamics. The grants finances initiatives that address critical barriers to market growth, such as technical assistance, capacity building, and the development of innovative business models. By fostering creativity and innovation, the Market Catalyst Grant Window plays a pivotal role in enhancing the resilience and inclusivity of the off-grid solar market.