How to change lives AND make money: bringing solar bonds to Africa

Dutch investment firm Oikocredit International are working with London-based solar power start-up BBOXX to turn solar power into an asset class and bring energy to parts of rural Africa.

BBOXX, founded by three Imperial College engineering graduates – Christopher Baker-Brian, Mansoor Hamayun, Laurent Van Houcke – is a start up who have brought electricity to 120,000 people across Africa via its cut-price solar power kits. These are perfect for those in rural Africa not connected to on-grid power, and can light several lightbulbs and small appliances such as a television, fan and mobile phone charger, making a huge difference to quality of life.

By 2014, the company was turning over £2 million a year and had grown by 300 percent, and have now launched their latest initiative: they are hoping to replicate the US model of securitizing residential solar installations, in partnership with Oikocredit. Their aim is to “offer an on-grid experience in an off-grid world”, selling solar electricity systems on a monthly payment plan to the mass market, and issuing and selling the notes to Oikocredit. The value of the notes is based on future receivables on the customers’ contracts.

BBOXX founders Mansoor Hamayun, Christopher Baker-Brian and Laurent Van Houcke
BBOXX founders Mansoor Hamayun, Christopher Baker-Brian and Laurent Van Houcke

The solar bond market has already taken off in the US and has attracted more than $60 million in investment; given the potential in such a project, Oikocredit and BBOXX are confident that, together, they can transform Africa’s off-grid sector through a similar solar bond in Africa. The potential for the solar market’s growth in Africa is huge – the International Energy Agency estimates that more than 1.2 billion people worldwide live without access to grid-connected energy, a large proportion of that within rural Africa. Investors like the idea too – at the end of 2015, BBOXX raised $15 million for funding its African solar venture.

David ten Kroode, renewable energy manager at Oikocredit, explained: “We are proud to be part of this innovative way of financing where we lend money on the basis of future receivables from solar home system contracts. By demonstrating how this can work, we are paving the way for other lenders to scale up the much needed investments in this early-stage growth sector.”

The solar sector has traditionally found it difficult to attract investment, perceived as a risky business model given the relatively new technology and clients with little or no credit history. However, having successfully sold over 41,000 products since launching in 2010 and on track to supply 20 million people with clean electricity by 2020, if any company can make it work – BBOXX can.

Miranda Wadham on 12/01/2016
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