•Bboxx Kenya will use the funds to support the financing of affordable solar home systems in the country.
•80 per cent of the targeted group is based in rural areas.
SBM Bank has extended a $15 million (Sh1.6 billion) loan to Bboxx Kenya for the the financing of affordable solar home systems in the country.
The project is expected to benefit more than 470,000 households .
GuarantCo, part of the Private Infrastructure Development Group (PIDG) has supported the transaction with $11.25million (Sh1.2 billion) partial guarantee (75 per cent) against the loan facility.
Bboxx Kenya will purchase new inventory over the next two years, including 89,600 solar home systems and essential appliances such as fridges and phones.
These are expected to serve the targeted households, 80 per cent of whom are based in rural areas , with the majority currently using torches and non-traditional fuel as their main source of lighting.
“SBM Bank is elated to spur the growth of the energy sector in Kenya through partnerships with like-minded entities such as Bboxx and GuarantCo,” SBM Bank Kenya’s Deputy Chief Executive Officer Jotham Mutoka said.
He said through the transaction, school children would be able to access electricity at home, as opposed to the past where they struggled with traditional modes of lighting, common in poor households.
Mutoka said the bank is keen towards achieving the Sustainable Development Goals of the UN on access to clean energy.
“We continue to work with our customers in key sectors of the economy like energy, manufacturing, agribusiness to offer unique and tailor-made solutions that meet their needs whether they are SMEs or large corporates,” he said.
The bank has committed to offer sustainable financing, especially in the renewable energy space to its clients.
Kenya’s electrification rate is estimated at around 70 per cent though there is some disparity between urban (90%) and rural areas (60%).
The Kenya National Electrification Strategy, developed in 2018, demonstrates the government’s commitment to scaling up off-grid electrification with ambitions to establish two million new connections by 2022, notably through solar home systems and mini-grids.
GuarantCo chief operating officer Emily Bushby said: “We are proud to support the Kenyan government in its ambition to grow its off-grid capabilities and improve affordable, clean energy access to local people while involving the private sector and provide local currency infrastructure project financing which is at the core of GuarantCo’s business.”
This is GuarantCo’s sixth deal and first off-grid solar project in Kenya.
Historically investments on the African continent in the off-grid Solar Home Systems sector have been made in hard currency, which can expose companies to significant exchange risks.
Through mobilising a local bank, the guarantee will match the currency of funding needs with operations and collections and so contribute to the overall sustainability of the business.
This is expected to have wider market benefits through demonstrating a model for domestic banks and increasing their appetite to lend to the sector.
Mansoor Hamayun, CEO Bboxx, said: “This transaction is the largest single loan raised by Bboxx Kenya, it will enable us to unlock potential and transform even more lives for the better through energy access in Kenya.”