Despite promises by Zimbabwean Finance Minister Mthuli Ncube to stabilise the southern African country’s currency, it keeps plunging with the ... Reserve Bank of Zimbabwe (RBZ) auction results showing that the exchange rate stands at Z$732 against the US dollar, up from Z$705 last month.
In September, the company secured $90m in funding from investors including the CDC Group, FMO, and Norfund. The finance is being used to replace unsecured with secured debt, to reduce the interest rate, says Walsh. About $69m of the $90m has been drawn down, and once it is all used, new funds will be needed.
Greenlight will consider raising both debt and equity, says Walsh, who is based in San Francisco. But it’s too early to say how much will be sought.
The company distributes pay-as-you-go (PAYG) solar products under the Sun King brand in Kenya, Tanzania, Uganda and Nigeria. In November 2019, the company partnered with Orange to provide clean energy solution to Orange’s customers.
It’s possible that Greenlight will seek to enter new African countries in the next six to 12 months, depending on the course of the COVID-19 pandemic, says Walsh.
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One side-effect of the COVID-19 pandemic has been to tempt governments to levy higher taxes on solar power, which can make adoption harder, says Walsh. Governments should “see the necessity” of solar products for people who have no other alternative and are generating dangerous kerosene fumes when they cook, he adds.
Walsh sees no immediate prospect of the solar industry ending its reliance on China.
- Any raw material shortage in China can usually be quickly rectified, he says. “Manufacturers in China have the most advanced supply chains and provide the best value for money.”
- Solar equipment manufacturing in Africa is possible in theory, he says, but the rise of automated manufacturing processes means that such a shift would create less jobs now than in the past.
- Nowadays, “manufacturing doesn’t lead economic development” to the extent it used to.
Around 600 million Africans are still without access to any form of energy. Even that figure obscures the number who have extremely limited access. According to research from CGAP and the World Bank in May, rural households in Kenya which had been connected to the grid for two years in 2016 were still using hardly enough power to keep two small light bulbs running through the night.
Walsh says that as a consumer finance business, Greenlight “will need to continuously raise capital.” That makes the business’s expansion path inherently unstable. But Africa’s national utilities are in a position to reduce that instability.
Utilities, the CGAP report argues, are often best placed to make increase access and consumption by making basic electrical appliances affordable.
- They understand the ability of customers to pay, how much energy they consume, and when they consume it.
- This data, CGAP argues, can be used to expand access to credit for customers who have few other financial transactions which can be analysed.
- Utilities could offer customers with good payment records credit to purchase approved appliances, says CGAP says. If they can’t afford to do that, they could still use their data to help third parties offer financing to the same clients.
Africa can’t afford to ignore utility consumer data as a way to scale up solar consumer financing.
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