Norfund has closed an investment agreement with the mini-grid company We Light. The aim is to build mini-grids in hundreds of villages in Madagascar, and thereby improve the rural populations access to cheaper and more reliable electricity - at work and at home. We Light will also explore opportunities elsewhere in Africa.
Madagascar is one of the poorest countries in the world. With a population of 25 million people, about 80% live below the poverty line (less than US$1.9/day) and 77% lack access to electricity.
In 2015, the Malagasy government published a new policy that targeted 70% grid electrification by 2035. However, recognizing that large parts of the country may remain beyond the reach of the national grid, the government of Madagascar is embracing the potential offered by off-grid technologies.
Providing access to renewable energy to hundreds of un-electrified villages
In November 2019, Norfund closed an investment agreement with We Light, a company that provides access to renewable energy to un-electrified villages in Sub-Saharan Africa. The aim is to build mini-grids in hundreds of villages in Madagascar, and thereby improve the rural population's access to cheaper and more reliable electricity - at work and at home.
To date approximately 500 000 households have solar home systems in Madagascar. We Light’s hybrid plants, with solar, battery and diesel generators are very flexible and scalable. They can optimize electricity generation as best suited to the load pattern of the customers, and thereby be a reliable and cost-effective source of electricity for the village.
For the rural population, this means amongst others that kerosene lamps can be replaced with safe lamps with improved light. Mobile phones and computers can be charged whenever needed, and the public information will become easily available through internet, TV and radio.
The mini-grid will also improve the electricity services for productive use, like that of a conventional national grid. Examples are use of electrically powered machines, tools and appliances, irrigation pumps and cold storage. This will enable more businesses to grow, and thereby create more jobs and more local tax income.
Other uses may be public lightning, electricity to health centers, schools and public administration buildings.
Experienced partners with local knowledge
We Light is a company founded by Sagemcom and Axian Group with plans to build mini-grids in several countries in Africa. Sagemcom is a French broadband, telecom and energy company with presence across the African continent. Axian is a Malagasy conglomerate active in the energy, telecom, finance and real estate sector and long-term partner of Sagemcom.
Together, these partners have the resources, technology and network it takes to execute this business plan. Sagemcom has delivered mini-grids as a contractor in many African countries, and Axian has a strong presence in Madagascar. It is an opportunity for Norfund to enter the business at an early stage and help shape the direction of the business plan.
Norfund will have a seat on the board. Norfund will contribute with risk capital, helping to mobilize additional equity and debt in the business from private companies.