31386 - RA Energy Access Fund

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Summary of Investment Information

Project Number

31386

Company Name

RESPONSABILITY ENERGY ACCESS FUND S.A., SICAV SIF

Date SPI Disclosed

Apr 15, 2014

Country

World Region

Region

Global

Projected Board Date

May 16, 2014

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

May 5, 2024

Department

Regional Industry - MAS Africa

Industry

Financial Markets

Previous Events

Approved : Jun 16, 2014
Signed : Sep 9, 2014
Invested : May 6, 2015

Sector

Commercial Banking - General

Project Description

IFC has been invited to invest in the US$30 million responsAbility Energy Access Fund (the “Fund”). The proposed open-ended debt fund shall provide working capital loans —and in later stages, longer term debt— to manufacturers and distributors of energy access products, such as solar devices and solar home systems. IFC’s expected investment horizon is up to eight years.

responsAbility Investments AG shall manage the Fund and shall be responsible for all daily operations, including sourcing, administering, making investment decisions and monitoring of loans. Shell Foundation will provide a US$2 million First Loss Tranche to cover initial Fund losses.

This Fund is an important step in spurring growth in the energy access product market which is currently constrained by limited access to working capital financing. This market plays an integral role in boosting shared prosperity for the 1.3 billion people around the world that do not have access to electricity and the 3.1 billion people that lack efficient cooking solutions. In the long-term, the Fund may diversify into other development-related sectors in addition to energy.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity	0.0

Development Impact

1. Access to Energy: The Fund should enable the 1.3 billion people that are part of the off-grid / lower income populations to access modern energy products which are cost effective power sources (e.g. for lighting, radio or cell phone charging).

2. Demonstration Impact: This Fund is intended to have a demonstration effect to improve the quality and availability of climate friendly products in a rapidly growing market.

3. Environmental, Health, and Financial Benefits for lower-income users: Solar lanterns as well as other energy efficient products have a demonstrated benefit with respect to using a renewable energy source (solar) to provide environmentally friendly energy solution. Not only is the alternative, incumbent technology expensive and potentially unhealthy, but it could also be dangerous. For example, thousands of (mostly children) users suffer injuries from the use of kerosene lanterns. Moreover, any reduction of the use of kerosene will also result in a reduction of GHG emissions.

4. Job Creation and Productivity: The expansion of the energy access market is expected to create local jobs in the distribution supply chain in various countries in Africa, Asia and across other regions. Further, the use of modern solar lighting is linked to improved access and productivity of small businesses.

1. Catalytic Role: IFC's role as an early investor has been critical for the Fund to attract additional private financing. IFC's knowledge of the sector, partly through the Lighting Africa Program, has given comfort to various investors and helped diversify the investor base.

2. Sector Development / Capital for Growth: IFC will provide necessary financial capital to help spur growth in SME companies that operate in the energy access market in Africa and Asia. Currently, manufacturers and distributors face significant working capital constraints which inhibit additional product sales. The Fund would help reduce these financial constraints, thereby increasing sales volumes significantly.

3. Corporate Governance: The Fund is intended to benefit from IFC's support and active participation on the Fund's advisory committee, which aims to contribute to the governance at the Fund and ultimately, at an investee company level. Co-investors take great comfort in IFC being both a meaningful partner and having representation on the Fund's advisory committee.

E&S Category Rationale / Risks and Mitigation

The proposed project is a facility to provide predominantly working capital to SMEs in the access-to-energy space (and potentially other sectors in the future) primarily in Africa and South Asia. Considering the short-term nature of the financing and the small size of the loans, potential E&S and reputational risks and impacts associated with SMEs designing, manufacturing, distributing, and servicing modern energy products, such as cookstoves and solar lighting products, are expected to be limited.

The Asset Manager has an existing relationship with IFC as an investment manager of a microfinance facility where IFC is an investor, and systematically incorporates E&S issues in the investment decision making.

The project has been classified as FI-2 according to IFC Sustainability Framework. The project will require the Asset Manager to: (i) appoint an E&S Officer for this Fund; (ii) upgrade its existing environmental and social policies, procedure, and guidance to ensure that its lending activities to access-to-energy product manufacturers and distributors are in compliance with the Exclusion List and the applicable national laws and regulations; and (iii) submit an annual report to the IFC. IFC will also review the first three E&S due diligences (checklist) to confirm the capacity of the Asset Manager to implement its upgraded ESMS.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2020.

Investee	Country of Investment	Sector
BBOXX Limited	United Kingdom	Solar – Renewable Energy Generation
d.light	India	Solar – Renewable Energy Generation
Fourth Partner Energy	India	Solar – Renewable Energy Generation
Greenlight Planet	Tanzania	Solar Photovoltaic Equipment
Maaneveeya	India	Other Non-Banking Financial Institution (NBFI)
MFX	United States	Solar – Renewable Energy Generation
MKOPA	Kenya	Solar – Renewable Energy Generation
Mobisol	Tanzania	Electrical Machinery, Equipment and Components (Electric Lighting, Motors, Batteries, Insulated Wires and Cables, Fiber Optic Cable, Carbon and Graphite Products, etc.)
Off Grid Electric Ltd	Seychelles	Solar – Renewable Energy Generation
PEG Africa	Western Africa Region	Solar – Renewable Energy Generation
SolarNow	Uganda	Solar Photovoltaic Equipment

While access-to-energy (e.g., solar LED) products are generally considered environmentally positive, the distributors and manufacturers still need to address workers safety and waste management issues. The sector is still in an early growth stage and standards are being developed. Additionally, the lack of adequate infrastructure in many of these markets presents a challenge in the implementation of practical solutions when it comes to waste management. Given the context these companies operate in and the Asset Manager’s past focus on different types of SME clients, a main challenge is for the Asset Manager to enhance its capacity in identifying and managing E&S issues associated with access-to-energy product manufacturers and distributors.

Contacts

For Inquiries About the Project, Contact

responsAbility Investments AG
Josefstrasse 59
8005 Zurich
Switzerland
Telephone: +41 44 250 99 30
Fax: +41 44 250 99 31

For Inquiries and Comments About IFC, Contact

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IFC Corporate Relations
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Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Description	Anticipated Completion Date
Nominate Officers	June 30, 2014
Formalize Procedures	June 30, 2014
Develop Guidelines	June 30, 2014

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