On Thursday, July 16, USAID Power Africa staff, Government of Malawi (GoM) officials, and private sector representatives gathered to celebrate the Malawian and international companies that qualified for a total of $2 million in results-based grant financing through “USAID’s Solar Home System Kick-Starter Program for Malawi.” USAID selected SolarWorks!, Vitalite, Yellow Solar and Zuwa Energy from a group of twenty applicants. The awardees will leverage the results-based grant financing, commercial loans and market-based approaches to deliver basic electricity access to more than 100,000 households across Malawi before 2023.

Speaking on behalf of the Malawian government, Chimwemwe Banda, the Chief Director in the Ministry of Natural Resources, Energy and Mining, said “Electricity is power. I have travelled to rural areas in Malawi and when electricity is connected to such areas, you start to see small towns booming. Development revolves around electricity.”

USAID Mission Director, Littleton Tazewell (left); Chief Director, Ministry of Natural Resources, Energy and Mining, Chimwemwe Gloria Banda (middle) and USAID Malawi Director, Sustainable Economic Growth Office, Cullen Hughes (right)

Photo: USAID/SAEP

Electricity access in Malawi is extremely low. The current electrification rate is at 11 percent, with only a four (4) percent access rate in rural areas. Off-grid electricity access is a key focus of the Government of Malawi’s new National Energy Policy for 2018. One of the most flexible, easy-to-deploy off-grid electrification solutions is Solar Home Systems (SHS). Basic SHS provide households with sufficient electricity for lighting, mobile charging and radio use. However, the Malawian SHS market is a nascent one, with small to medium-sized SHS companies and only a few operators having national distribution.

The SHS Kick-Starter Program is designed to expand energy access and grow the private sector in Malawi by providing SHS companies with streamlined access to a wide array of support, including operational support, working capital, and results-based financing. USAID, in support of  Power Africa, has committed USD $2 million in grant funding. A wide range of partners are supporting the Kick-Starter, including the Government of Malawi, local private-sector financiers (FDH Bank, Kuwa Capital, National Bank of Malawi and Standard Bank), international private-sector financiers (Lion’s Head Global Partners and SunFunder) and awareness-raising institutions (SolarAid).

Based on experience from similar countries and supported by business plans of Kick-Starter applicants, USAID expects the program to deliver 100,000 to 150,000 connections over the next three years, as well as $15 to $22.5 million in private investment into the SHS sector. There are also significant synergies with the upcoming World Bank ACCESS program’s support of the off-grid sector, with the Kick-Starter catalyzing the SHS market and the World Bank ACCESS program bringing in further support to sustain growth in SHS connections.

The request for applications was launched in January 2019. In total, twenty SHS companies submitted applications to the grant and working capital finance components of the program by March 2019. After a technical and financial evaluation that assessed companies’ business plans, product quality, after-sales service and financial sustainability, USAID was able to select the grant recipients. In parallel, working capital financiers independently evaluated individual companies to receive working capital loan facilities. 

Technician installs solar panel on client's roof.

Photo: USAID/SAEP

The grants will be disbursed between July 2019 and March 2021 and are linked to SHS sales achieved by the companies in order to support the provision of affordable electricity sources for off-grid communities, while the working capital facilities are structured to be repaid based on individual companies’ cash flows.

The event formally launched and showcased the SHS Kick-Starter Program for Malawi. It also served as a platform to officially announce Kick-starter Awardees who will be receiving results-based grant funding of $2 million as well as working capital facilities delivered by the local and international private-sector. Perhaps most importantly, the launch event also presented an opportunity to celebrate the achievements of the private-sector in growing the SHS sector in Malawi over the last few months.