One of the big issues around climate change, particularly in Africa, is adaptation. Specifically, how are African countries going to adapt to the changing climate, and how will these adaptation projects get funded?

Despite being responsible for only around 3 per cent of global carbon dioxide emissions, experts say that Africa will be the region hardest hit by climate change. The past two years has seen the Nile hit its highest levels in 50 years while the 2020 floods affected more than one million people across East Africa. The worst locust outbreak in 25 years, caused by unusual weather conditions, left about one million people food insecure in the Horn of Africa. Meanwhile drought and desertification are rampant: Ethiopia is battling its most devastating drought in almost fifty years, while in Somalia, some 40 per cent of the population are at risk of starvation, as a result of crop failure and livestock deaths due to a lack of rainfall.

Adaptation – reducing countries’ and communities’ vulnerability to climate change by increasing their ability to absorb impacts and remain resilient to a changing climate – is a key pillar of the Paris Agreement.  

One challenge for  adaptation projects in Africa is finance. This is not just about access to finance, but about unlocking and redirecting existing finance so investors feel more confident about putting their money into adaptation projects. One company aiming to bridge this gap is Energise Africa.

Set up in 2016 as a partnership between Ethex and Lendahand, Energise Africa is an impact-focused crowd financing platform that enables individuals to invest from as little as £50 into innovative clean energy projects in sub–Saharan Africa. These projects can then raise working capital finance from the “crowd” of investors using the platform.

“Energise Africa’s initial aim was to bridge the seventh Sustainable Development Goal on affordable and clean energy (UN SDG7) financing gap,” says the company’s Head of Marketing and Communications, Rachel Mountain. Energise Africa does this by providing capital to sustainable businesses that provide pay-as-you-go solar solutions to homes and businesses in rural parts of Africa where there is no access to the grid.

Energise Africa – which won a Global Climate Action award in 2021 – “has attracted more 4,000 individual investors, raised more than £31 million, and made more than £14 million in repayments to investors. It has funded more than 7,000 small and micro-sized enterprises, is mitigating over 180,000 tonnes of CO2 a year and enabled over 850,000 people across 15 countries to access affordable solar energy,” Mountain says.

An estimated 40 per cent of Small and medium-sized enterprises (SMEs) in emerging markets cannot access finance through traditional financial institutions, so the alternative finance available through initiatives such as Energise Africa is vital in supporting their companies to grow and innovate.

The company focuses on renewable energy as it is “probably the most developed from an investment perspective and is one of the areas that has the greatest potential to shift the needle with regard to impacting UN SDGs such as education, health and wellbeing, financial inclusion and economic development,” Mountain says.

Energise chooses clean energy projects in Africa, which are then listed on its website. Investors’ money enables the companies to buy equipment, hire staff and install the solar projects. Companies that raise finance on the platform provide their home solar systems to customers via monthly financing plans. This gives low-income households immediate access to energy but ensures they know how much it will cost until the system has been paid off (which usually happens between 6-24 months). Once it is paid off, the household will own the system outright, meaning their electricity is effectively free. Money that would have been spent on electricity can then be spent on other things such as food and healthcare, increasing resilience.

It also means that these households are no longer so exposed to fluctuations in fuel prices or changes to government fuel subsidies (common in many Sub-Saharan African countries, with disproportionally negative impacts on low-income households).

Energise Africa has since expanded from domestic to commercial solar (for clinics, schools, hospitals and businesses). “We’ve also lent to agricultural companies promoting more climate-smart practices and we’re actively in discussions with clean cooking, e-mobility and recycling companies in sub-Saharan Africa and Southeast Asia,” Mountain says.

And with more and more investors looking for sustainable projects, the transparency of a platform such as Energise Africa, is very appealing, says Mountain. “Because you can see where your money is going you don’t have to worry about greenwashing as you’ve got complete transparency as to what your investment is funding and the types of communities you’re helping.”