This blog was co-authored by Magdalena Banasiak, the Senior Innovation Adviser in DFID’s Research and Evidence Division.

Just a few years ago, if you said that energy inclusion could be solved thanks to small solar home systems with embedded SIM technology, you would have been laughed out of any energy minister’s office. But today, there are more than 650,000 mobile-connected pay-as-you-go (PAYG) solar home systems worldwide. With the momentum behind the UK’s Energy Africa initiative and the Power for All campaign, there is no reason to believe we won’t see the remaining 635 million in Africa without access to electricity, replacing unsafe kerosene lanterns with solar powered home energy solutions, allowing millions of children to safely study and families to light their homes and businesses.

This is in large part, thanks to the UK Department for International Development’s progressive and bold vision that private sector, especially new business models and technology, can make major contributions to the lives of the world’s underserved. DFID provided the first seed grant to Safaricom to pilot M-PESA in 2006 and began funding the GSMA to work with innovative use cases of mobile in energy, water and sanitation in 2013, with Fenix International, Mobisol and Lumos being some of the early investments.

So why is philanthropic capital necessary? Aren’t for profit companies cash-rich enough to take on early stage ideas on their own? Unfortunately not. The needs of the underserved and the bottom of the pyramid are rarely prioritized in investment decisions. Philanthropic capital plays a vital role in taking the initial risk to demonstrate the proof of concept after which they can step back to allow the private sector to crowd-in. DFID invested £4.1 million in 2013 to fund mobile enabled utility innovations through the GSMA, those innovators were able to crowd in a further £40 million and by 2015, the pay-as-you-go energy sector had seen more than £130 million invested.

We are at the threshold of digital transformation driven by innovation. Of the 4.6 billion people who are active mobile subscribers today, some 3.7 billion are located in low and middle-income countries with 557 million in Africa alone. This week, we launch our M4D Utilities Annual report, documenting the rise of mobile technology for energy, water and sanitation. Additionally our Ecosystem Accelerator Innovation Fund launches to support entrepreneurs develop mobile technology solutions for the sharing economy – focusing on small and medium enterprises, which reach the underserved, creating jobs and in particular youth employment.

We’re pleased that the GSMA and DFID have a Strategic Partnership, which was launched earlier this year and will run through to 2020; it will accelerate digital inclusion, close the gender gap in mobile technology, identify digital solutions for those without identification, ensure resilience in times of disaster and most importantly drive innovation especially for the underserved.

Mobile is the single technology cutting across geographies, cultures and incomes levels. Used innovatively and well, it can transform lives.