Financing Fair Energy Transition & Energy Access in Africa

“Only 14% of committed mini-grid funding has actually been disbursed.”

That figure should stop every energy conversation in its tracks.

I have spent years travelling through African communities where solar mini-grids are already doing what national grids have failed to do for decades: delivering reliable power to clinics, markets, workshops, schools, and homes. I have stood next to humming inverters in villages that had known only darkness and diesel. I have watched businesses extend their hours because electricity finally stayed.

Mini-grids work.

And yet, despite near-universal agreement that decentralised energy is essential to Africa’s energy transition, only a fraction of the money promised to mini-grids ever reaches the ground. According to analysis of results-based financing programmes, roughly 14% of committed mini-grid funding has been disbursed.

This isn't a technology problem. It is also not a demand problem or a capacity problem, but rather a delivery failure, and it is entirely man-made.

Why Mini-Grids Keep Proving Themselves

Mini-grids succeed because they are designed for African realities, not idealised models.

They don't wait for perfect transmission networks or assume stable fuel imports. Also, they don't collapse when one line fails. Instead, they deliver electricity close to demand, using solar, batteries, and local distribution systems that can be built in months rather than years.

The World Bank’s Energy Sector Management Assistance Program (ESMAP) has repeatedly shown that mini-grids are often the least-cost electrification option for rural and peri-urban areas far from the grid.

They also deliver reliability. In regions where grid power arrives for a few unpredictable hours a day, mini-grids provide steady electricity that businesses can plan around. This reliability is what turns lighting projects into economic infrastructure.

Energy Transition Africa has also argued that decentralisation isn't a compromise but a design choice for resilience.

So why, if mini-grids work so clearly, is the money still stuck?

The Results-Based Finance Trap

Much of the funding for mini-grids flows through results-based financing (RBF) mechanisms. On paper, RBF makes sense: developers are paid once they deliver verified connections.

In practice, it has become a bottleneck due to slow, fragmented, and costly verification processes. Developers must submit extensive documentation, wait months for inspections, and absorb delays that strain cash flow. For small and mid-sized companies, this can be fatal.

Even when results are verified, disbursements are often delayed by bureaucratic cycles that bear no relationship to operational reality. Solar panels do not wait for donor reporting calendars. Batteries do not pause degradation while paperwork moves.

The result is perverse: developers deliver power, but run out of money before they are paid for it.

Currency Risk: The Silent Killer

Then there is foreign exchange risk, the least discussed but most corrosive barrier.

Most mini-grid revenues are earned in local currency while financing is denominated in dollars or euros. When currencies depreciate as they routinely do, revenues shrink overnight while debt obligations remain fixed.

This mismatch turns otherwise viable projects into financial traps. While large utilities and multinational firms can hedge currency risk, small mini-grid developers cannot. And yet most financing structures assume they will.

As the World Bank has acknowledged in multiple energy finance reviews, currency risk remains one of the biggest deterrents to private investment in decentralised energy. Ignoring FX risk does not make it disappear. It simply pushes it onto the weakest actors in the system.

Why Donors Prefer Announcements to Delivery

Although this is mostly not said publicly, announcements of projects get rewarded, while delivery is complicated.

Commitments make headlines. Disbursements require oversight, risk-sharing, and patience. The political economy of aid often favours the former over the latter.

A $100 million pledge sounds transformative, while $5 million quarterly disbursement sounds small, even if it actually keeps dozens of mini-grids alive.

This bias toward announcements creates a dangerous illusion of progress. On paper, Africa’s mini-grid sector looks well funded, but on the ground, developers scramble to survive. Most times, energy systems don't fail because of a lack of ambition, but for lack of delivery-focused finance. And mini-grids are the clearest example of this gap.

What a Fix Package Would Look Like

The good news is that this problem is solvable if institutions choose to act.

Here is what a realistic fix package could include.

1. Faster, Standardised Verification

Verification should be:

• digital-first, not paper-heavy;
• standardised across programmes;
• time-bound, with automatic disbursement triggers.

If a mobile money company can settle millions of transactions daily, energy donors can verify a solar installation without year-long delays.

2. Currency Risk Absorption

Public and concessional finance should absorb FX risk, not outsource it to developers.

This can be done through:

• local-currency lending windows;
• partial FX guarantees;
• indexed tariffs for mini-grids serving productive users.

Without this, private capital will continue to stay away.

3. Working Capital Facilities

Mini-grid developers do not fail because their assets are weak. They fail because cash flow is misaligned.

Dedicated working-capital facilities tied to verified deployment pipelines would stabilise the sector almost immediately.

4. Treat Mini-Grids as Infrastructure, Not Startups

Mini-grids are infrastructure with 20–25 year lifespans. Financing them like short-term ventures is a category error.

Longer tenors, lower-cost capital, and predictable policy treatment would unlock scale.

Why This Matters Beyond Electricity

Mini-grids are not just about power. They are also about time, dignity, and economic possibility.

Electricity, when it is reliable, quietly reshapes daily life. It determines whether a nurse can trust that a vaccine fridge will hold temperature through the night, it decides whether a midwife delivers a baby under steady light or a flickering torch, and it also shapes whether medicines spoil, equipment fails, or care is delayed until morning.

In workshops and small factories, reliable power changes behaviour just as profoundly. It allows entrepreneurs to invest in better tools, to hire staff with confidence, and to meet deadlines that unreliable grids make impossible. It turns survival businesses into growth businesses and converts energy from a constraint into a multiplier.

In markets, lighting extends hours and safety. Traders earn more. Streets become active rather than abandoned. Informal economies gain structure. These are not abstract development benefits. There are immediate shifts in income, security, and opportunity.

When mini-grid finance stalls, clinics continue to ration care. Businesses postpone investment. Communities remain stuck managing around uncertainty. Time is lost daily, invisibly, and cumulatively.

And time, in development, is never neutral. It compounds either progress or deprivation.

The Real Question

Africa’s mini-grid sector does not need another pilot. It doesn't need another glossy commitment, nor need another climate or energy conference. What it needs is money to move.

If only 14% of committed funding is reaching the ground, then the problem isn't ambition. It is accountability.

Mini-grids are ready. Communities are ready. Developers are ready.

The question is whether the institutions that claim to support Africa’s energy transition are ready to deliver, not just announce.

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“Africa’s mini-grid problem is not technology. It is trust and trust is built through delivery.”