The Path Forward

Key messages from the report

As outlined in Chapter 2 to Chapter 5,the OGS sector has faced a challenging period in recent years but has remained resilient. As outlined in Chapter 6, OGS is a critical enabler of electrification and livelihoods. As described in Chapter 7 and Chapter 8, additional funding and a greater focus on innovation to unlock some of the potential game changers are critical to improving the commercial viability of the OGS sector and delivering first-time access at scale.

Governments need to set ambitious OGS access targets backed up by clear, well-funded implementation plans. In mature markets like Kenya, Uganda, and Rwanda, governments should focus on scaling up first-time access using RBF and end-user subsidies, while using guarantees and credit lines to address equity and debt financing constraints. Tax exemptions remain critical to lowering the cost of OGS products, while meaningful enforcement of quality standards is needed to protect consumers. In nascent markets, many of which are fragile, upfront grants and technical assistance can complement RBF, end-user subsidies, and credit lines, enabling smaller companies to grow. Multi-country financing facilities can enable smaller countries to benefit from standardization, automation, and economies of scale in fund management, and help to attract larger companies into smaller markets. Finally, in conflict-affected and humanitarian settings, there is no one-size-fits-all approach, but finding the right implementing partners—such as local OGS companies, microfinance institutions, or development agencies—is key, as are mechanisms to bring down upfront costs and risks for implementing partners.

As public funding from governments enables companies to scale up through delivering first-time access, investors need to co-invest, providing equity and debt to catalyze sector growth. In mature markets, equity financing, patient capital, and local currency financing are needed to scale. For nascent and fragile, conflict-affected, and vulnerable (FCV) markets, smaller-ticket financing is needed to support smaller OGS companies. In all markets, collaboration with development partners is needed to develop blended financing solutions that deploy guarantees, grants and technical assistance—as well as aggregation—to reduce costs and risks for both investors and investees, and that support companies at all stages of growth.

Development partners also need to scale up their support to the OGS sector, funding technology and business model R&D, as well as the development of innovative public and private financing mechanisms. Once technologies, business models, and financing mechanisms are proven, development partners should work closely with governments to integrate them into large-scale programs through technical assistance and capacity building. In more mature markets, development partners should focus on innovative ways to deliver first-time access while also ensuring the commercial viability of companies—for example, through linking RBF or end-user subsidies not only to sales but to service over time, and monitoring repayment rates, or through exploring business models beyond PAYG. For nascent markets, donor interventions should include technical assistance, upfront grants, and financial support mechanisms that enable companies to enter new markets and scale operations. Expanding impact-linked financing models, such as Acumen’s Hardest-to-Reach fund, can help incentivize companies to target underserved populations. In conflict-affected and humanitarian settings, development partners— like governments—must fund innovation to identify technologies, business models, financing mechanisms, and partnerships able to deliver access in those settings.

The private sector must use public funding and private investment to improve profitability, while continuing to scale up. In mature OGS markets, OGS companies must prioritize profitability and growth through robust credit management, minimizing bad debt, and keeping operational costs low. Companies should focus on upselling to customers with established credit histories and tapping into new segments that can afford more profitable products, while participating in public funding schemes that deliver first-time access. They should collaborate with investors to develop innovative financing mechanisms, such as local currency financing and off- balance-sheet solutions, to maintain liquidity and growth. The private sector can also play a pivotal role in scaling up productive use of energy (PUE) solutions and OGS for social infrastructure by developing business models for these market segments. In nascent markets, OGS companies should focus on leveraging public funding mechanisms, including RBFs, credit lines, and upfront grants, to provide first-time access to underserved communities while exploring opportunities to serve higher-income households with high-margin products. In conflict-affected and humanitarian settings, the private sector must adapt its business models to the context, often working closely with international organizations or local NGOs already operating on the ground, to facilitate distribution and after-sale services.

In conclusion, the need to accelerate electricity access through OGS has never been more urgent. Over the last decade, the OGS sector has demonstrated its ability to deliver high-quality, affordable products and services at scale through lean, resilient, and proven business models. While significant public and private investment is needed to meet the sector’s development goals, the path forward is clearer than ever. With just five years to 2030, the sector is at a critical juncture. The time is right for companies, investors, governments, and development partners to unite in a new effort to ensure that OGS fulfills its potential—enabling the achievement of SDG 7, while having a transformative impact on households, businesses, farmers, and social infrastructure.