Can crowdfunding help scale up solar power for Africa’s poor?

Updated 25 April 2017
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Can crowdfunding help scale up solar power for Africa’s poor?

NAIROBI: When Ronald Van Harten arrived in Kenya from the Netherlands in 2015, he was determined to invest in solar-powered equipment for homes across Africa, make a profit and help the rural poor get energy.
But within two years, his company EcoZoom, which sells solar lights, radios, MP3 players and other equipment to some of Kenya’s poorest residents, ran into financial difficulties.
The banks were not willing to lend him the capital he needed to stay afloat and loans available from microfinance institutions were too small.
So, like a number of new technology companies seeking to scale up their programs in Africa, he turned to a crowdfunding company.
“Few banks if any could finance a social investment project dealing with people seen as a high-risk group, and even worse banks are expensive and give conditions that are not easy to meet,” he told the Thomson Reuters Foundation, referring to high interest rates charged by banks.
TRINE, a Swedish company which raised funds for EcoZoom, has a community of about 1,000 young investors in northern Europe willing to each give a minimum of €25 ($27.14) to solar firms which aim to help the world’s poorest.
Using crowdfunding, it has raised more than €750,000 for 10 renewable energy projects since its launch last year, said Matthew McShane, TRINE’s regional manager in East Africa. The firm has invested in countries including Kenya, Zambia, Uganda, Tanzania and Senegal.
In Kenya, EcoZoom received €170,000 in February, while €160,000 went to Azuri East Africa, part of Azuri Technologies. Two solar micro-grids have also received funds.
“The majority of (our) investors can invest in many other ventures in Europe but choose to put their money in social impact projects partly because they want to touch the lives of the poor and partly because returns are slightly higher when compared to ... normal investments,” McShane said.
The returns are about 6 percent, because of the perceived higher risk associated with this market, he said.
Globally, crowdfunding provided $2.1 billion in investment in 2015, and investments in developing countries alone are predicted to exceed $96 billion a year within a decade, according to the World Bank.
It is emerging as an increasingly important means of financing new technology at scale in rural Africa, said Azuri Technologies CEO Simon Bransfield-Garth.
Unlike microfinance institutions where large investors make many small loans to firms, crowdfunding allows many small lenders to provide substantial finance to organizations with the reach and scale to deliver significant impact, he said.
“Crowdfunding is clearly no longer just for startups and has the potential to provide a new class of capital for energy access,” Bransfield-Garth said.
Azuri East Africa turned to crowdfunding when it wanted to raise cash to help its Kenyan partner, Raj Ushanga House, sell solar panels to 1,200 homes, helping 6,000 people access electricity.
Crowdfunding is one of the most progressive and innovative ways of raising money for projects, and relatively unexploited in Africa, said George Wachiuri, a leading Kenyan investment adviser and head of Optiven Ltd., a company based in Nairobi.
Crowdfunding needs to be carried out by specialized firms that are well versed with the concept, he added. “One needs a good understanding of how this type of fundraising works to be able to execute it successfully.”


South Korea downgrades Japan trade status as dispute deepens

Updated 18 September 2019

South Korea downgrades Japan trade status as dispute deepens

  • The change comes a week after South Korea initiated a complaint to the World Trade Organization
  • The new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan

SEOUL, South Korea: South Korea on Wednesday dropped Japan from a list of countries receiving fast-track approvals in trade, a reaction to Tokyo’s decision to downgrade Seoul’s trade status amid a tense diplomatic dispute.
South Korea’ trade ministry said Japan’s removal from a 29-member “white list” of nations enjoying minimum trade restrictions went into effect as Seoul rearranged its export control system covering hundreds of sensitive materials that can be used for both civilian and military purposes.
The change comes a week after South Korea initiated a complaint to the World Trade Organization over a separate Japanese move to tighten export controls on key chemicals South Korean companies use to manufacture semiconductors and displays.
Seoul has accused Tokyo of weaponizing trade to retaliate against South Korean court rulings ordering Japanese companies to offer reparations to South Koreans forced into labor during World War II. Tokyo’s measures struck a nerve in South Korea, where many still resent Japan’s brutal colonial rule from 1910 to 1945.
According to South Korean trade ministry, the new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan, compared to the five days or less it took under a simpler inspection process provided for favored trade partners.
Lee Ho-hyeon, a South Korean trade ministry official, said the change would affect about 100 local firms that export items such as telecommunications security equipment, semiconductor materials and chemical products to Japan. He said Seoul will work to minimize disruption to South Korean companies.
Japan for decades has enjoyed a huge trade surplus with South Korea, an economy that’s much more dependent on exports. Many major manufacturers heavily rely on parts and materials imported from Japan.
But the dispute is taking a toll. Exports to South Korea from Japan fell 9.4% last month, Japan’s Finance Ministry reported Wednesday.
The trade dispute between the neighbors erupted in July, when Japan imposed tighter export controls on three chemicals South Korean companies use to produce semiconductors and displays for smartphones and TVs, major export items for South Korea. It cited unspecified security concerns over Seoul’s export controls.
A few weeks later, Japan dropped South Korea from its own trade “white list,” triggered a full-blown diplomatic dispute that took relations between the US allies to their worst in decades.
The dispute has spilled over to security issues, with Seoul declaring it plans to terminate a bilateral military intelligence-sharing pact with Japan that symbolized the countries’ three-way security cooperation with the United States in the face of North Korea’s nuclear threat and China’s growing influence.
Following an angry reaction from Washington, Seoul later said it could reconsider its decision to end the military agreement, which remains in effect until November, if Japan relists South Korea as a favored trade partner.
Seoul announced its plans to downgrade Tokyo’s trade status in August before holding a 20-day period to gather opinions on the decision, during which the Japanese government voiced opposition to the move it described as “arbitrary and retaliatory,” Lee said.
He said Seoul needs to strengthen controls on shipments to a country that’s “hard to cooperate with” and fails to uphold “basic international principles” while managing export controls on sensitive materials.
South Korea previously divided its trade partners into two groups in managing export controls on sensitive materials. Following Wednesday’s change, South Korea now has an in-between bracket where it placed only Japan, which would mostly receive the same treatment in trade as the non-favored nations in what had been the second group.