ZAMBIA: EDFI invests $2 million in RDG Collective’s solar home systems
The Electrification Finance Initiative (EDFI ElectriFI) invests in Zambia. This European Union (EU)-funded impact investor is providing $2 million to RDG Collective, a solar home systems provider based in Lusaka, Zambia. The investment aims to boost RDG’s operations as it continues to grow after its launch in 2018.
In rural Zambia, the company run by Rune Gunnar Dige is installing solar home systems for household electrification. To overcome the financial hurdle, the company based its business strategy on the pay-as-you-go model prevalent in the solar home system segment in Africa. EDFI provided the convertible loan (equity) of 2 million dollars to RDG within the framework of its window dedicated to Zambia, a strategy financed by the 11e European Development Fund for Zambia.
Productive use of solar energy
The window is designed specifically for Zambia, in close collaboration with the local authorities and the EU Delegation and the Common Market for Eastern and Southern Africa (COMESA). “Although the company is still at a relatively early stage of development, it has already built a solid business model based solely on local labor and is ready to grow. We are confident that this funding will not only perfectly complement the grant RDG has received from the Beyond the Grid Fund for Africa (BGFA), but will also support the continued expansion of RDG Collective in Zambia,” says Quentin De Hoe, Senior Investment Officer at EDFI Management Company, the manager of EDFI.
With EDFI funding, RDG plans to install 50,000 solar home systems over the next six years, which will avoid 174,000 tonnes of CO2 equivalent emissions over this period, estimates EDFI. Including the OFMFA grant, the solar home systems provider is expected to electrify 250,000 Zambians over the next six years. In addition to electrification, the company will distribute devices for the productive use of solar energy, including water pumps and solar refrigerators.
“These devices will enable thousands of households to generate sustainable incomes, mitigate climate change and improve their livelihoods,” says Rune Gunnar Dige, Managing Director of RDG. It is therefore a high impact investment, given Zambia’s level of electrification. Currently, 2.4 million households still do not have access to electricity, nearly 60% of the population, according to Power Africa.