Earlier this month, USAID and the Swedish International Development Cooperation Agency (Sida) announced an $8 million loan guarantee to promote renewable energy in Zambia. As part of their commitment to Power Africa, Zambia-based Madison Financial Services will support agribusinesses' investment in renewable energy technology to increase capacity and improve output.

The 50% loan guarantee -- via USAID’s Development Credit Authority -- includes contributions of 25% from USAID and 25% from Sida. Through this financing, farmers in Zambia will be better-positioned to invest in renewable energy technology, such as biodigesters that can produce enough energy to run a milk chiller, or solar-powered micro-irrigation kits that can increase harvest seasons from one a year to potentially three, while also increasing yield.

One of the greatest hurdles to providing reliable electricity access in Africa is the availability of financing, specifically debt. USAID’s Development Credit Authority provides security for lenders, and helps business owners and farmers invest in renewable energy solutions -- even those who are far from the national grid.

“Unfortunately the majority of people in Africa will not be reached by national electricity grids any time soon. It’s becoming increasingly clear that off-grid energy solutions, such as solar and biogas units, will play a major role in the future energy mix of Africa, providing people outside major cities with access to basic energy services and opportunities to build and grow businesses” said Henrik Cederin, ambassador of Sweden to Zambia.

Off-grid and small-scale energy solutions are making a huge difference for rural residents across sub-Saharan Africa. Power Africa helps to catalyze the market for such solutions through tools like USAID’s Development Credit Authority, and the strength of relationships with partners like Sweden.

This commitment is just part of the ongoing efforts between Sweden and the United States to deepen collaboration with key partners and develop a multi-donor MOU on energy cooperation activities.

Sweden’s engagement and financial guarantees, along with those from the United States, will help to unlock additional private sector investment that is so critical for transforming the energy sector in Africa.