Markets & Finance

Clean energy firm releases Sh1.75bn for small ventures

solar

Apart from solar projects, AECF supports seed production and irrigation. Photo/FILE

Small green energy ventures in Kenya will benefit from a Sh1.75 billion funding by private sector financier Africa Enterprise Challenge Fund (AECF) that has just announced its third phase of interest-free loans and grants.

The fund is targeting 25 small- and medium-size enterprises (SMEs) with between Sh21.9 million and Sh131.5 million ($1.5 million).

The fund, under the Renewable Energy and Adaptation to Climate Technologies (React, Round 3) programme, will be managed by consultancy KPMG and is open to firms from all five East African Community countries for the next two months.

“The money will be disbursed on a competition model, where we will pick the best business ideas from the online applications. It will be offered in form of grants or interest free loans, with a contract period of six years,” AECF director Hugh Scott said in Nairobi on Tuesday.

Apart from green energy projects such as solar and biogas production, other areas targeted for funding in arid and semi-arid areas by Nairobi-based AECF include production of drought resistant seeds, early weather warning systems, small-scale irrigation system, the livestock sector and weather insurance.

The UK’s Department for International Development (DfID) and the Swedish International Development Agency are funding the programme.

Mr Scott said beneficiaries are required to match the cash they get from AECF.

“This will help us to mitigate risk and weed out applicants who are not serious. We shall however take into account investment already made into the businesses by the applicants,” he added.

In the first two funding rounds in 2012 and 2013, AECF says it disbursed Sh2.2 billion ($25 million) in grants and non-interest loans to 32 companies in the region.

Previous beneficiaries include solar project M-Kopa that got Sh87.5 million ($1 million) in loan and grant and solar lamp supplier Ecosmart (Sh32 million).

READ: Cheaper solar solutions attracting more Kenyans

Cummins Cogeneration Kenya, a Baringo-based small-scale biomass power generation company that is expected to produce 11.5 megawatts of electricity also got a $1 million (Sh87 million) injection in equal loan and grant disbursements.

AECF is financing 191 projects in 23 African countries to the tune of $137 million (Sh12bn), since 2008. Similar funding programmes in Kenya include Acumen Fund and the Climate Innovation Centre (CIC).