Markets & Finance

Solar firm M-Kopa to get Sh7.9 billion IFC loan

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M-KOPA Solar kit and a digital solar-powered TV. PHOTO | SALATON NJAU | NMG

Solar and financial technology firm M-Kopa Holdings Limited has received Sh7.94 billion ($65 million) from the International Finance Corporation to fund its business in Kenya and Uganda.

The financing is part of a five-year facility of Sh21.97 billion arranged by Standard Bank of South Africa to be distributed among its Kenya and Uganda subsidiaries.

The Kenyan subsidiary will receive Sh6.1 billion ($50 million) and Uganda will get Sh1.8 billion ($15 million).

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The company has no plans for new construction or expansion of the premises, according to IFC's disclosures.

“The proposed investment is a senior secured loan of up to Sh6.1 billion ($50 million) to M-Kopa Kenya Limited and senior secured loan of up to Sh1.8 billion ($15 million) to M-Kopa Uganda Limited (the “Project”),” said IFC in the latest disclosures.

“The IFC financing is part of a $180 million sustainability-linked multicurrency receivables financing facility arranged by Standard Bank of South Africa in the form of 5-year local currency loan facilities to be split among the subsidiaries of M-Kopa Holdings Limited in Kenya and Uganda,” the IFC added.

Launched in 2011, M-Kopa’s financing platform enables underbanked customers to access a broad range of products and services without collateral or a guarantor through a flexible payment model.

Its customers have access to smartphones, solar lighting, solar-powered appliances and digital financial services such as cash loans and health insurance.

“The project entails the sale and delivery of smartphones and solar home systems on a credit sale basis primarily, digital financial services in addition to some household appliances (television screens and fridges) to their clients,” IFC said.

The solar company has over one million customers in Kenya, over 250,000 in Uganda and more than 50,000 in Nigeria as it is piloting in Ghana.

The firm aims to reach 20 million customers across Africa by 2026.

87 per cent of Kenyans say M-Kopa’s credit model has improved smartphone affordability.

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By December 2021, the company had unlocked Sh73.2 billion ($600 million) worth of credit for its customers across its African operations.

More off-grid solar power start-ups are trooping to Kenya’s rural areas offering pay-as-you-go kits in a race to claim customers who lack reliable access to electricity.

The firm has also partnered with companies like Safaricom to offer internet-enabled handsets under the ‘lipa mdogo mdogo’ concept and electric mobility companies Roam and Arc Ride offering two- and three-wheeled electric scooters and bikes through flexible financing terms.

M-Kopa’s competitors include PAYGO asset financing companies like Solar Panda, D.Light, Greenlight Planet, Aspira, Bboxx, Azuri, Biolite, Daima Energy, Delta Energy Systems Ltd, Kensen, Mobisol, PowerGen, Solargen, Sunking, Suntech, ZilanSolar, Thrivesolar, Often, Strauss Energy, and ORB Energy.

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