Convergence has awarded a proof-of-concept grant to Prado Power Limited. In partnership with Farm Warehouse, Prado Power will develop a blended financing solution to enable access to clean energy and agricultural productive use equipment (PUE) for rural off-grid communities in Sub-Saharan Africa, starting in Nigeria. The grant aims to support the design and launch of the Gender-Based Smallholder Economic Liberation Project, a USD175 million blended fund that invests in mini-grid developers and agricultural technology companies, with a particular focus on benefiting smallholder farmers and women.
Agriculture serves as the primary employment source in Nigeria, engaging over 70% of the population in smallholder farming. Unfortunately, a significant proportion of these smallholders face enduring poverty due to the utilization of poor-quality inputs, resulting in low crop yields. This challenge is exacerbated by inadequate storage facilities and electricity, further reducing the already limited availability of marketable produce. Compounding these issues, farmers contend with fixed prices for the remaining sellable products, as they struggle to access standard markets and must rely on available selling offers.
Among smallholder farmers in Nigeria, women make up to 80% of the entire workforce and face pronounced financial instability. Cultural and patrilineal norms hinder their ownership and access to valuable assets, such as land or collateral and limit their ability to leverage business opportunities in agriculture. Consequently, women involved in agriculture in Nigeria often find themselves primarily engaged in labor-intensive manual work, resulting in low economic returns. Furthermore, a significant portion of women in rural Sub-Saharan Africa encounter barriers to equal access to education, training, extension activities, and information which further widens the gender gap in the country.
In addressing these challenges, the Gender-Based Smallholder Economic Liberation Project will provide financing for mini-grid developers and agricultural productive use equipment companies operating in Nigeria. The project aims to impact up to 1.2 million smallholders by elevating their annual earnings from USD 250 to over USD 6,000 and providing up to 600,000 new electricity connections. The project encompasses all aspects of the agricultural chain for smallholders, including addressing the challenges of market access, processing limitations, and product losses due to inadequate storage. Through the vehicle, Prado aims to stimulate high commercial and productive activities in rural Nigerian communities, ultimately boosting earnings for users. A specific emphasis is placed on empowering women and creating opportunities for them within the communities where the mini-grids will be developed.
Convergence’s grant will support Prado Power in selecting a fund manager for the vehicle, finalizing the capital structure, refining the gender strategy and approach, and developing a robust project pipeline.
Design Question and learning potential for the market: How can a blended finance vehicle be structured to provide rural communities improved access to clean energy while also supporting women’s economic empowerment?
The vehicle will deploy up to USD 175 million to develop mini-grids, agricultural hubs and productive use appliances for rural off-grid and underserved communities in Nigeria. Capital will be raised at both the fund and project levels. Grants and concessional debt will be raised and held at the fund level and managed by an independent fund manager. It will channel grants into a technical assistance facility, which will be used to support capacity-building and project preparation activities to support new projects. Meanwhile, concessional debt will be channeled into local project SPVs, which will be blended with local currency debt from commercial banks and equity from investors at market rates. The concessional debt, combined with technical assistance, will de-risk new projects so that they become attractive to commercial investors such as local banks to finance.
Further, the vehicle’s investment strategy ensures that productive-use appliances are provided to rural processors, small and medium enterprises, and smallholder farmers, with equal representation across gender lines. The strategy is designed to provide universal access to clean distributed renewable energy for all members of the communities and create new leadership opportunities for women, such as leading local agriculture and energy committees at the community levels.
