It should be a match made in heaven: electrifying Africa, and investor funding. There are few new projects in the world with such a multiplying growth factor, and a lot of funders looking for the Next Big Thing – particularly if said Big Thing has an ESG or ‘impact’ component.
But if there’s one thing I’ve learned over the decades I’ve spent working with lenders, it’s that the promise of returns is meaningless in the face of unmitigable risk. And if there’s one thing no one is labelling Africa, it’s risk-free.
At the moment, the biggest concerns giving investors pause are the uncertainty of the foreign exchange market, the unprecedented volatility of the Naira, and the question of fund repatriation.
And despite the interest in impact investments, many investors consider the opportunities available on the continent to not be deal-ready, with a lack of established track records across the risk-return spectrum. There is also a broader absence of metrics or impact reporting among businesses, causing many to back away for fear of corporate ‘greenwashing’.
“In the moment of crisis, the wise build bridges and foolish build dams.” – Nigerian proverb
The historic business approach to Africa has been to build dams; that is, to avoid the region altogether, or work with purely foreign-run entities with the financing and force to steamroll through the obstacles inherent in an emerging market.
A few years ago, a small team of African and Canadian business experts across a range of disciplines came together and made it our mission to instead build bridges. We have sat with the risks posed by commencing business operations in Africa for a long time – for those in our team born on the continent, they’ve been analysing and getting creative with the many challenges Africa throws up day-to-day for their whole lives.
In that process, we also looked at the opportunities, understanding that risk and opportunity are often intertwined. We then took that first-hand knowledge of Africa – its risks, opportunities and cultural context – and merged it with Canadian business expertise, as well as access to the products and tools offered by the Canadian government to help address and mitigate foreign exchange risks.
This is how we created WATT Renewables: a private, independent Energy-as-a-Service company energizing tomorrow’s leaders, businesses and economies. We deploy clean, reliable, start-to-finish power projects that have real and, importantly, measurable long-term positive impacts. The granular data we collect and report to investors covers a range of ESG metrics, including reduction in diesel consumption, CO2 emissions averted from the atmosphere, increase in direct staffing, and the breakdown in employment of men and women within the organisation.
This is the true meaning of sustainable investing – putting dollars towards projects that look far beyond short-term financial returns. WATT is building not just infrastructure but communities that will stand the test of time. We are also creating a broader environment for investment that is increasingly fertile and decreasingly risk-addled by focusing on long-term improvements to local communities, economies and the environment.
Funding the future
From one site in 2018, we now have over 160 sites, and have designed, built and continue to manage over 10MW of power infrastructure. Some of this growth is thanks to the pandemic, which has fast-tracked demand for our services, demonstrating the vital importance of connectivity and communication. Mobile network operators have never been more under the pump to roll out new technological innovations and to provide affordable, uninterrupted power supply to businesses and consumers.
But this is just the start. With significant increases in crude costs and all fuel supplies, now more than ever businesses and consumers alike are looking to alleviate the pressure on cash flow by moving to more renewable and sustainable solutions. Recent flooding throughout Nigeria, which caused outages to several telecoms services, also reinforced the importance of a reliable, climate-resilient energy supply.
There will no doubt be more crises in the future that prove our business case time and again, and further drive up the value of and demand for renewable energy projects across the continent. But we cannot meet that demand without the right funding – and unfortunately the growth in positive rhetoric, interest and legislative guidance surrounding impact investing is not being sufficiently translated to action.
We’re looking for motivated investors with ESG goals and an interest in accessing sustainable, high-growth markets at the ground level, to help us expand our site coverage and move into new markets, including financial services and corporate and industrial (C&I) operations. The future is waiting. Will you help us fund it?
Get in touch via investorrelations@wattrenewables.com
