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Densifying Africa’s Sustainable Energy Entrepreneurs

In 2013, the U.S. government launched Power Africa, an ambitious initiative coordinated by the U.S. Agency for International Development (USAID), aimed at doubling access to electricity in sub-Saharan Africa (SSA) by 2030. Four years on, more than 130 private and public sector partners have since committed more than USD $52 billion, including over USD $40 billion in commitments from private sector partners alone.

The concerted push towards enabling the electrification of the continent is truly impressive and much needed, but what do these developments mean for Africa’s energy startups and innovators?

Many innovators, not enough investors…
Africa has recently seen a steady rise in innovative entrepreneurs pioneering sustainable energy solutions to meet the continent’s demands. Juabar, the Tanzanian outfit operating a network of solar charging kiosks, and M-Kopa Solar, the purveyors of “pay-as-you-go” renewable energy for off-grid households in Kenya, Uganda and Tanzania, are among many ingenious clean energy-related solutions coming out of Africa. Yet despite their potential commercial viability, many of Africa’s small-to-medium energy entrepreneurs remain ‘off-grid’, so to say, due to their inability to access financing.

The African Development Bank’s (AfDB) Sustainable Energy Fund for Africa (SEFA), a USD $95-million multi-donor facility funded by the governments of Denmark, Italy, the United Kingdom and the United States, was set up in 2012 to support SMEs in Renewable Energy (RE) and Energy Efficiency (EE) projects in Africa. Like the AfDB, many global energy sector heavyweights also have initiatives that aim to support startups in the regions they operate in. For example, since 2008, Total Energy Ventures has been identifying opportunities for cooperation with energy startups across the biofuels, oil technologies, energy storage and networks spectrum. The actual impact of these initiatives on catalyzing Africa’s budding energy startups however remains unclear.

Moving from dispersion to density…
Perhaps one of the greatest challenges facing Africa’s energy entrepreneurs and innovators is not so much access to funding, but dispersion. What the SSA region needs is more energy-focused innovation hubs that bring together entrepreneurs and innovators who are focused solely on developing renewable energy, energy efficiency and other disruptive energy products.

Innovation hubs offer the density that is required to catapult startup ecosystems. They enable entrepreneurs to exchange ideas, collaborate on regional initiatives and prevent duplication of ideas. The Silicon Valley model was based on the density approach and now ‘Silicon Savannah’, led by Kenya’s tech revolution, is following suit, attracting big global players such as Google, with ambitious infrastructure projects like the multi-billion dollar Techno City.

But hubs focusing on energy-related innovation have yet to emerge in Africa. Even globally, these types of hubs are only just emerging. In Detroit, a hub called NextEnergy is serving as a living lab for advanced energy and transportation technology development. In Sydney, a startup, co-working and accelerator hub dedicated entirely to the advancement of clean energy, known as EnergyLab, has just recently welcomed its first startups after receiving an AUD $120,000 government grant.

Centralizing Africa’s sustainable energy entrepreneurs will help create more sophisticated ecosystems that adopt innovative business models and provide support networks to transition from start-ups to high-performance, high-growth businesses. These hubs can act as knowledge centers for sector-specific capacity development by housing research centers, and even universities for energy-related studies. One of the key benefits is that it becomes easier to match startups with the right financing tools, mechanisms and initiatives.

African nations truly have the ‘blank-canvas advantage’ – to become the future global epicenter for disruptive innovations in sustainable energy. They must seek to create these ecosystems alongside global energy corporations who are investing in the region. Doing so will facilitate the advancement of renewable energy ventures across the region, and upscale the next generation of African energy entrepreneurs.

By Sangitha Umakanthan, Country Manager, UAE