Yellow Malawi, an off-grid solar distribution company in Malawi, has raised $2 million to fund its inventory purchase of solar home systems and enable 182,000 people to receive energy access, 145,000 of whom will likely access energy for the first time.
Yellow Walawi received the funding from Acumen’s Hardest-to-Reach (“H2R”) initiative blended-currency two-tranche loan. The first tranche worth $1 million will be disbursed in US dollars to Yellow Malawi, who will make repayments in Malawian Kwacha while the second tranche will be disbursed and repaid in US dollars. This multi-currency structure will enable Yellow Malawi to grow their customers and revenue in a more sustainable way with lower FX risk exposure.
According to Maya Khonje-Stewart, Yellow Malawi Co-Founder: “This partnership with Acumen allows us to reach even more Malawians who deserve access to clean, affordable, and reliable energy. Acumen’s Hardest-to-Reach initiative understands the unique local context and has designed financing that not only meets our needs but also advances our mission to bring energy to those who need it most. The innovative structure addresses critical risks to our business and customers in Malawi, and will allow us to reach more households with reliable and clean energy solutions.”
Last year, Yellow raised $14 million Series B funding round bringing the total capital raised by Yellow, through a combination of debt and equity to $45 million. Yellow operates in Malawi, Rwanda, Uganda, Zambia, and Madagascar.
“The newly injected capital is being used to leverage more debt finance to reach more customers with financed smartphones and solar systems. While the business will broaden its product offering to include other mobile financial services, growth will be fueled primarily by deepening our expertise in our existing product categories,” said Yellow founder and CEO, Heyink.
Founded in 2018 by Maya Khonje-Stewart and Michael Heyink, to deliver energy financing products to low-income households in Africa on a pay-as-you-go basis, the startup had served over 30,000 homes in Malawi and Uganda with asset-backed electricity, financial services, and connectivity solutions.
Given the significant devaluation of some of the region’s currencies, most energy access companies prefer to raise debt in local currency to match it to the currency of their revenues. However, very few lenders can currently provide loans in Malawian Kwacha to energy access companies due to limited and expensive hedging options and currency convertibility challenges.
Sandra Halilovic, Head of Acumen’s H2R development facility stated: “Yellow Malawi’s impact is highly aligned with Hardest-to-Reach’s mission, and this loan will benefit thousands of Malawians over the next few years. H2R is also thrilled to be supporting a company founded and local by local African entrepreneurs like Maya Khonje-Stewart and Michael Heyink, who are at the forefront of driving energy access across the continent. We’re also pleased to have been awarded a hedging subsidy from TCX’s EUR Market Creation Pricing Facility and are excited to showcase this innovative funding structure.”