- GuarantCo, part of the Private Infrastructure Development Group (PIDG), and SBM Bank Kenya, a local commercial bank, provided a KES 1.6 billion (c. USD 15 million) financing solution to Bboxx Kenya.
- The funding will allow Bboxx to invest in affordable solar home systems for 470,000 Kenyans.
- GuarantCo supported the transaction with a KES 1.2 billion (USD 11.25 million) partial credit guarantee of 75 percent against the loan facility.
Historically investments on the African continent in the off-grid SHS 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 increase their appetite to lend to the sector.
The funds will be used by Bboxx Kenya to 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 470,000 people, 80 percent of whom are based in rural areas and the majority of whom currently use torches and non-traditional fuel, such as wood and kerosene, as their main source of lighting.
Kenya’s electrification rate is estimated at around 70 percent though there is some disparity between urban (90 percent) and rural areas (60 percent). The Kenya National Electrification Strategy, developed in 2018, demonstrates the Government of Kenya’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.
The transaction will contribute to United Nation’s Sustainable Development Goals: Affordable and Clean Energy (SDG 7) and Climate Mitigation (SDG 13) through increasing access to affordable and reliable energy.
At present, Bboxx Kenya employees 350 workers, 40 percent of which are women, and the company intends to maintain this proportion of female employment as the workforce as it grows.
The transaction will enable the creation of a further hundred new long-term jobs with efforts to provide opportunities for women in the process.
Author: Bryan Groenendaal