Madagascar energy firm secures AfDB grant

From the newsletter

AXIAN Energy, a Madagascar-based energy company, has received a $5.6 million grant from the African Development Bank. This new funding builds on the company's previous success in raising $114 million in debt financing in two rounds over the last two years — mainly from private equity investors like the Emerging Africa Infrastructure Fund.

• AXIAN operates in 7 African countries through its subsidiaries, NEA, Welight, CGHV, JOVENA, EYDON, and MOCO. It has a renewable energy portfolio of 186 MW in operation and a pipeline of 800 MW and plans to reach 1,000 MW by 2030.

• The renewables investment climate in Africa is heating up, even despite funding cuts from the US. Countries are racing to achieve universal electrification and are changing policies to facilitate this goal.

More details

• The grant was obtained from the Sustainable Energy Fund for Africa (SEFA), which is administered by the African Development Bank Group. It will target a pipeline of projects in Côte d'Ivoire, Mauritius, Mozambique, Madagascar, Sierra Leone, and Zambia. This grant is part of the broader Mission 300 initiative, which aims to provide electricity access to 300 million people across Africa by 2030.

• Benjamin Memmi, CEO of AXIAN Energy, emphasised the significance of the grant, stating: "This type of backing is essential: it allows us not only to accelerate the pace of deployment, but also to scale up our impact."

• The AfDB has recently increased its financing in African renewables. The bank provided over $700 million in funding for renewables in the last two months. Mauritania was the largest single beneficiary in April, receiving $289 million. This month, it has granted $30 million for Togo's 62 MW Sokodé solar plant.

• Despite many efforts to support the energy sector, it is still dominated by foreign multinationals who have significant financial backing to undertake mega-projects. Most African companies are focused on less capital-intensive sectors like commercial and industrial projects, mini-grids, and solar home systems. However, even most of these enjoy foreign boardroom backing that has steered funding raises.

• Africa's energy market growth and potential are proving attractive to foreign investments, to the point of being supported in local currency funding. Solar home systems company Sunking this week just raised a Naira-denominated loan equivalent to $80 million. 

• Beyond debt, venture capital and grant funding are also actively supporting the sector. For instance, Nigerian energy startup Arnergy recently closed an $18 million Series B funding round with investments from multiple sources, including British International Investment (BII) and Norfund. Malawi also received a $350 million grant from the World Bank to support its hydropower project.

• Energy companies that operate in the African energy sector have reported profitability. Scatec generated $96 million in revenue in the first quarter of 2025 financial results. South African solar energy company Wetility completed early repayment of its venture loan from the MultiChoice Innovation Fund (MIF).

Our take

• The grant will allow AXIAN Energy to reduce the overall capital expenditure required for a project. This translates to a lower cost of energy for consumers, enabling the company to compete with established players.

• Despite being small, the grant acts as a signal of confidence from the AfDB. This can potentially attract additional private sector investment, including debt and equity.

• Renewable energy projects, especially large-scale ones, involve significant upfront costs. Most of these costs are in the project preparation phase, so grants should be provided for such activities. This helps to de-risk investments, attracting more commercial lenders and investors.