AREED II Philosophy
AREED model provides early-stage and later-stage financing to rural clean energy enterprises identified and supported through the AREED II programme in Ghana, Mali, Senegal, Tanzania and Zambia.
Investments are placed in higher risk enterprises that cannot be funded through conventional sources. Financing is provided jointly with local and micro-finance institution in AREED countries.
The willingness to take more risk than conventional sources, combined with the provision of enterprise development services and technical advice are the main concessional aspects of AREED financing.
Wherever possible, investments are structured for AREED to exit the equity investment, including options to allow the future sale of the equity shareholding to the founders or other interested parties.
Debt investments are structured with reasonable terms and conditions. Terms and conditions include the interest rate, currency of repayment, length of loan, grace period and security. The interest rate is determined based on a number of factors, including: the current market rates available for small and medium rural energy enterprises in each country; the underlying “risk” of the enterprise investment and the cash flow of the enterprise (what can it afford).
The strength of AREED is rooted on AREED country partners, local non-governmental organisations (NGO’s) for local delivery of capacity building and enterprise development services. These partners can be found at the Partners section.