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Solar energy is Madagascar’s key to boosting electricity in rural areas

By David Whitehouse
Posted on Friday, 21 August 2020 10:59

baobab alley in Madagascar
The most famous baobab alley in Madagascar Photo/Ondrej Zaruba (CTK via AP Images)

Groupe Filatex is in talks with Bboxx on a partnership to extend the clean-energy platform’s services to Madagascar, Filatex chief operating Officer George Condé tells The Africa Report.

The discussions, which are at an early stage, are to analyse whether Bboxx’s business model can be adapted to generate solar power for rural Madagascar, says Condé. Filatex is a Malagasy family-owned real-estate company which has expanded into solar and claims 1 million solar customers in the country.

Bboxx operates in countries including Democratic Republic of Congo, Rwanda and Kenya. Its model of using solar-powered systems as a starting point for delivery of further services such as television content has attracted partners such as France’s CANAL+ and private-equity investors such as the African Infrastructure Investment Managers (AIIM). Last week AIIM, which has a stake of about 30%, told The Africa Report that it will invest more money into Bboxx to finance growth.

READ MORE AIIM bets on solar power growth with further investment in Bboxx

Madagascar offers the prospect of rapid growth in electricity consumption, as about 85% of the population has no access to electricity. The country has no national grid, yet it enjoys about 2,800 hours of sunshine per year. That means solar mini-grids may be a viable way forward. “When you go outside the cities, there is nothing,” explains Condé. “Mini-grids area an answer, and so are retail solutions such as Bboxx.”

  • Condé notes that many of the countries where Bboxx operates have higher per-head incomes than Madagascar. Bboxx will need to “find a way to adapt its business and revenue model” to enter the country, he says. “It’s about finding a solution that works for Madagascar.”

Solar expansion

Filatex secured equipment from its solar supply chains before COVID-19, thus avoiding disruptions, Condé says.

But the pandemic has exposed a reliance on Chinese supply chains in solar power, he adds. He hopes that the implementation of the Africa Continental Free Trade Agreement will help to reduce this dependence. “If you can rely on local manufacturing, it’s always better.”

READ MORE African grid operators that don’t open up to solar risk being left behind

The company’s own expansion plans have been disrupted but not derailed by COVID-19. Filatex said in December 2019 that it was seeking $150mn of finance to enter Ghana, Guinea and Côte d’Ivoire in 2020.

  • The Côte d’Ivoire project is the most advanced, adds Condé. Financing has been secured with term sheets received from banks, he says. Travel restrictions are now the only constraint on beginning operations in Côte d’Ivoire.
  • Entry to Ghana has been delayed as onsite technical studies have not been possible. These feasibility studies need to be concluded before finance can be obtained. Plans to enter Guinea are likewise on hold, he says.
  • The company is expanding in solar power in Madagascar and by 2022 aims to install 170MW of new solar capacity.
  • It is planning about 25MW of mini off-grid solar plants and plans to use the roofs of its warehouses in Antananarivo to generate 10MW of solar power.
  • Filatex has also diversified its risks by making an investment in a hydro-power project in Albania, Condé concludes. The funds will help lift the capacity of the project from 8.3MW to 14.6MW in 2021.

Bottom line

A partnership with Bboxx could be a breakthrough in providing electricity in rural Madagascar.

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