Knowledge Hub

An abundance of natural resources and a rapidly growing consumer market well positions sub-Saharan Africa’s prospects of becoming a prominent manufacturing destination, and a key player in global supply chains.

This recent report from PREO,‘Made in Africa: Impact of local manufacturing on profits, people and products. Insights from the off-grid energy sector in sub-Saharan Africa’,analyses the opportunity to capture the local ‘share of value’ while accelerating energy access in the off-grid sector. The report states that ‘local manufacturing and assembly can increase profitability by 10% to 40% by avoiding import duties, retaining supplier margins and reducing shipping costs’.

As the energy access and off-grid sector faces rapid growth, incentives and enabling policies around domestic manufacturing can increase local activity leading to further expansion. Over the course of two years, the PREO programme ran a Value Addition and Employment Creation (VA&EC) challenge that set out to support five companies in assessing the viability of import substitutions. The challenge enabled the five sub–Saharan African companies to explore upstream segments of the off-grid energy value chain in their respective sectors, including local research and development (R&D), testing, manufacturing and assembly of products.

The learnings from the VA&EC challenge demonstrate what benefits can be realised from increasing local manufacturing capacity and the added value across the upstream value chain and increase in job creation to improve livelihoods. A key finding that came out of the challenge is that products manufactured and assembled locally in Africa can be of higher quality than imported products, resulting in rejection rates falling by up to 70%. This report features in-depth case studies on each of the five companies detailing their findings.

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The productive use of renewable energy (PURE) market opportunity in rural sub-Saharan Africa is estimated to be worth $864 billion up to 2030. The PREO Impact Report 2022/23 explores the latest impact insights from the PREO programme, demonstrating the socio-economic benefits of investing in revenue and income-generating products and services in Africa.

Enterprises funded through PREO are demonstrating an undeniable business case for investment in PURE infrastructure to enable business and industry to thrive across sub-Saharan Africa.

The report brings together programme level highlights on the breadth of PREO’s impact across companies, regions and sectors, and dives in to detailed examples from a range of PREO-supported enterprises.

Read the report to find out more about 14 PURE enterprises funded through PREO, spanning a range of different agriculture value chain and e-mobility initiatives. Each demonstrates the impact of PREO support on business model viability, knowledge building, and attracting scale-up capital, as well as the wider impact of this work on end users, communities, and local economies – supporting higher incomes, job creation, climate resilience and reduced reliance on fossil fuels through harnessing clean energy.

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Responses to the recent PREO open call for Africa-focused projects can offer some encouraging insights into productive use of renewable energy (PURE) sector in sub-Saharan Africa.

With a total of USD 3 million available in this round of grant funding, PREO invited applications for business models demonstrating the viability of PURE solutions, across sectors including agro-processing, cooling, solar irrigation, e-waste recycling, textile production, e-mobility, education, healthcare, ICT, and street lighting.

The level of response to the open call was staggering – with 241 applications submitted meeting the call’s core criteria, seeking a combined USD 50.08 million in catalytic grants, and offering USD 47.21 million in co-financing. The call was oversubscribed by 17 times, underlining the substantial demand for funding to support and scale innovative business models that have the potential to drive demand for renewable-based energy solutions.

Applications were received from across 29 countries – with Kenya, Nigeria, Uganda, and Ethiopia constituting the highest number of submissions. See Figure 1 for a breakdown of applications submitted per country.

Kenya and Nigeria had the highest number of applications and were notable for the substantial number of PURE enterprises that were established post-2020. This is an encouraging trend that signals a strong and growing demand in these regions, with the PURE sector attracting new entrepreneurship opportunities, investments, business models and innovative solutions.

Another promising trend across all regions was the predominance of enterprises owned mostly by local entrepreneurs, with 79% of all applicants falling into this category. Zimbabwe (100%) and Nigeria (97%) stood out in this criteria, demonstrating the opportunities for homegrown entrepreneurship in these countries.

Furthermore, most applicants (91%) were for-profit entities, signaling an increasing private sector-led participation among enterprises driving innovation and growth by leveraging clean energy.

Agro-processing and cooling emerged as the sectors most represented, followed by irrigation, electric mobility, recycling, education, healthcare and ICT. See Figure 2 for a breakdown of applications submitted per country (label the graph below Fig 2). This highlights the vast potential for clean energy applications to drive economic growth and climate resilience, particularly within agricultural and food systems.

The response to this open call paints a picture of a dynamic and evolving clean energy landscape across sub-Saharan Africa. With innovative solutions emerging across a broad range of sectors, it is clear there is significant potential for investment in this region to support commercialisation of renewable energy enterprises, which in turn can create local ownership and employment opportunities, support sustainable development and bolster climate resilience.