This sector profile focuses on gender-based opportunities and gender-smart investing as an investment strategy for the off-grid solar (OGS) sector. It aims to support investors and fund managers to identify existing and future opportunities, focusing on standalone products, systems and services which supply energy to people living beyond the reach of the grid power supply. See CDC’s full Gender Sector Brief for the evaluation of OGS investments, including screening and due diligence questionnaires, investment cycle guidance, and quick facts.
We know off-grid energy companies that perform well on gender inclusivity return greater profit. We also know that decentralised clean power solutions such as OGS can play a role in addressing women’s limited access to electricity in rural and peri-urban areas and enhance women’s equal access to economic opportunity. This highlights a significant business and impact opportunity.
Adopting gender as an investment strategy can help investors in OGS align their impact with the UN Sustainable Development Goals (SDGs). There is significant potential for investors to shape gender outcomes in line with SDG 5 on gender equality, SDG 7 on ensuring access to affordable, reliable, sustainable and modern energy for all, SDG 11 on sustainable cities and communities, and SDG 13 on climate action.
Guidance on ESG issues and opportunities linked to the OGS sector, including gender-based environmental and social risks, is provided in the CDC ESG Toolkit for Fund Managers.
Why take a gender lens to off-grid solar investments?
- Business case
- Capturing new customer segments: Women tend to have substantial influence over decisions to purchase new lighting devices within the household. Nonetheless, many solar home systems (SHS) companies overlook this influence or assume that men and women access information and make consumer decisions in the same way, designing gender-blind marketing and distribution strategies. Ensuring marketing, distribution, financing and after-sales efforts are adapted to women’s preferences is therefore critical in effectively targeting women as a primary customer segment.
- Driving improved product uptake and enhanced customer satisfaction and loyalty: In addition to exerting significant influence over consumer decisions, women are also the primary users of clean cooking and lighting products, both at the level of the household and as entrepreneurs operating small retail kiosks which benefit from improved lighting for extending working hours and minimising security risks. Integrating a gender lens into research and development can ensure that the needs of female customers are taken into consideration when designing products and services. This can ultimately increase sales, adoption, and customer satisfaction. Also, applying a gender lens to after-sales service helps companies ensure female end-users remain satisfied and loyal customers. Female customer service representatives may be particularly valuable in contexts where traditional gender norms impede interactions between men and women.
- Increasing customer repayment rates: Women’s repayment rates on pay-as-you-go (PAYGo) products is often higher than that of men, meaning that, through targeting a female consumer base, SHS companies can drive increased repayment rates and reduce the administrative costs associated with chasing non-payments.
- Improving sales agent performance and diversifying distribution channels: Engaging female sales and distribution agents can help companies access hard-to-reach households and utilise woman-to-woman marketing techniques. Women may be trusted promoters of products among their peers, and are frequently organised in networks that can diversify distribution channels and access vast new market segments.
- Reducing employee absenteeism, turnover and retraining costs: Beyond engaging women in the salesforce, attracting and retaining women in professional roles allows SHS companies to capitalise on the diversity dividend in their management and employee teams. Gender diversity and inclusion can enable men and women to do their job better, which can in turn translate into a more productive, loyal and satisfied workforce. Creating a supportive environment for female workers can positively impact their attendance and retention, resulting in significant cost savings.
- Impact case
- Increasing access to electricity for all: Globally, 1.4 billion people (one in five) lack access to modern electricity, with 87% of these individuals estimated to live in rural areas, predominantly in sub-Saharan Africa and South Asia. Around 2.7 billion people (40%of the global population) also rely on wood and charcoal as their primary source of energy. In Africa, 600 million people – 70% of the population – live without access to electricity. Many of these people live in rural or peri-urban zones and are unlikely to be connected to grids in the near team. They have no choice but to use kerosene, candles or batteries to meet their energy needs. Even when connected to the grid, many residential, commercial and industrial customers suffer from unreliable supply characterised by daily load shedding. Poor women, particularly rural women, are disproportionately affected by the lack of access to clean, efficient energy solutions. This is because, in most off-grid households across the globe, women are primarily responsible for the collection and use of energy resources. In addition, poor women tend to participate in the informal economic sector, which relies strongly on biomass as its main energy source, which, in turn, does not feature heavily in national energy policies.
- Mitigating time poverty and health impacts due to wood and fuel collection and cooking: Women in off-grid households tend to bear the (substantial) time and labour burden associated with collecting wood. They are also disproportionately affected by health problems associated with toxic smoke arising from inefficient cooking methods and lighting solutions. Indeed, 2 million people – the majority of whom are women and children – die annually because of the burning of biomass indoors. This means that SHS companies are particularly important for women. In addition to improved health outcomes, these companies enable women to reduce or be flexible with the time spent undertaking domestic activities, which can, in turn, be converted into economically or socially empowering activities. Finally, there is also evidence that SHS enable children – in particular, girls – to extend their time spent on education, by being able to study after dark.
- Expanding pathways to women’s economic inclusion: Decentralised clean power solutions can play a key role in addressing gaps in access to electricity for women. SHS using the PAYGo consumer finance model provide an innovative and commercially viable option to deliver modern, clean energy to millions of men and women, while also promoting other key development objectives, such as financial inclusion. Likewise, rooftop or ground-mounted solar solutions are increasingly providing customers with a cost saving solution to expensive and unreliable energy.
-  Asian Development Blog, Why invest in infrastructure and services that work for women (2013)
-  United Nations Development Programme Gender and Energy: Policy Brief (2012)
-  World Bank, Tracking SDG7: The Energy Progress Report Washington DC: World Bank (2018)
-  United Nations Development Programme Gender and Energy: Policy Brief (2012)
-  CDC & ICRW. (2019). “Gender Smart Investing Resource Hub”: https://www.icrw.org/gender-smart-investing-resource-hub/off-grid-energy/. Accessed 11/03/2019.
-  Habtezion, S. (2012). “Gender and Energy: Policy Brief”. New York: UNDP.
-  Ibid.
-  Palmer, C. (2018). “How sustainable energy can further children’s education”. https://www.tes.com/news/how-sustainable-energy-can-further-childrens-education-sponsored. Accessed 11/03/2019.
Gender-smart investment process
- 2X ScreeningThe investor should answer 2X-aligned screening questions before the deal is submitted for approval. The questions below explore gender-based opportunities and focus on the company’s smart inclusion of women across its workforce and supply chain, and its efforts to serve female customers. Screening questions will help determine: (1) If the deal meets thresholds and/or qualifies under the 2X Challenge; (2) if there are potential gender-based opportunities to be explored further in due diligence.
See the Gender 2X Screening Questionnaire for this sector.
- Due diligenceGender due diligence is the process of gathering gender-related data and information from the potential investee company for analysis to determine whether gender gaps present opportunities that may impact performance and affect an investee company’s operations and financials. Deal teams can integrate these questions into existing due diligence workstreams (e.g. E&S, impact, commercial). The investor will collect the due diligence information and proceed to confirm 2X qualification; (2) confirm gender-based opportunities to determine whether to take forward compared to other impact investing themes. Selected sector-specific documents can also be requested to guide due diligence further.
For gender-smart investors, due diligence on gender-based risks and negative impacts is an important aspect of ESG due diligence. Improper screening and poor management of gender-based risks can prevent effective gender-smart investing and have a detrimental impact on a company’s performance in terms of operational costs, reputational damage, stakeholder engagement, employee productivity and loss of confidence.
- Net-zero economy transitionProviding access to clean and reliable energy to off-grid populations represent a large market opportunity within the net-zero economy transition. OGS can provide women, often the primary caregivers, with access to the energy and technologies necessary to undertake domestic work in a clean and safe environment (e.g. access to clean drinking water through solar powered filters, power for cooking, etc.). In addition, OGS can provide women entrepreneurs with the energy they need to strengthen and expand their business models (e.g. opening hours, storage). As the OGS industry expands, women are at risk of not benefiting from accessing the same new employment and supply chain entrepreneurship opportunities, due to lack of targeted upskilling and job placement opportunities that have a gender lens. It is therefore important that investors and investees work together to promote women’s access to science, technology, engineering and mathematics (STEM) education and green skills through technical and vocational education and training (TVET) and other training channels. This can be done by partnering with local and national TVET institutions and universities and encouraging awareness-raising activities for women on careers in the OGS industry.
- Digital IDsOGS products are frequently purchased on credit. Access to credit is more difficult for women in developing countries – Global Findex shows that worldwide, 42% of women are unbanked compared with 35% of men. Digital IDs are an important step towards financial access from formal institutions, providing women with a credit history by ensuring women’s borrowing activities are linked to a digital record.
- UrbanisationOGS technology is a frequently used source of electricity for peri-urban and slum households, providing women with access to labour-saving devices that reduce time burdens associated with domestic responsibilities. As urbanisation continues, an increasing proportion of OGS users are likely to be in cities.
The following resources should help investors and fund managers further develop their gender-smart investing approach in the sector.
- World Bank, Mini-Grids and Gender Equality: Inclusive Design, Better Development Outcomes (2017)
- Lighting Africa, Expanding Women’s Role in Africa’s Modern Off-Grid Lighting Market (2011)
- Energia, Female Microenterprise Creation and Business Models for Private Sector Distribution of Low-Cost Off-Grid LED Lighting
- ICRW, Gender-Smart Investing Resource Hub: Off-Grid Energy
- World Bank, Energy Access and Gender: Getting the Right Balance (2017)