- Date written
- January, 2022
- Contact for guarantco
- Marjolein van Kampen
- Communications Director
- +44 (0)738 8857097
- Contact for PIDG
- Cecille Sorhus
- Head of Communications
- +44 (0)7917 302724
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, a next generation utility company, 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. 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.
Emily Bushby, COO/CFO of GuarantCo, said:
“We are delighted to partner with Bboxx and SBM Bank to make this solar home systems transaction happen to the benefit of people in Kenya. This is our sixth deal and first off-grid solar project in Kenya. 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.”
Mansoor Hamayun, CEO of Bboxx, said:
“We are very pleased to partner with GuarantCo and SBM Bank to accelerate access to clean, reliable, and affordable energy to hundreds of thousands of Kenyans. This fund marks a big milestone in our industry’s history. This transaction shows what is possible to achieve when forging partnerships between different stakeholders to mobilise private capital to the energy sector. 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. It is a positive step in the right direction in securing more funds to help tackle the global energy access gap and make progress towards meeting UN Sustainable Development Goal 7 – energy for all.”
Jeff Vanden Berghe, MD of Bboxx Kenya, said:
“Over the past 12 months we have been working closely with GuarantCo and SBM to bring this partnership to fruition. This marks Bboxx Kenya’s first local currency transaction, which allows us to bring more renewable, low-cost and safe energy to an extra 470,000 Kenyans. The partnership will also help us expand our services to more remote regions of the country, working with the Government of Kenya, through its KOSAP program, to bring power to underserved communities.”
Jotham Mutoka, Deputy Chief Executive Officer of SBM Bank Kenya, said:
“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. Through this transaction, I envision school children being able to access electricity at home to complete their schoolwork when in the past they were in darkness, this will uplift the social-economic status of the entire home leading to a smarter tomorrow.”