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

Updated 25 April 2017

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.”


$8bn blow to Erdogan as investors flee Turkey

Updated 49 min 50 sec ago

$8bn blow to Erdogan as investors flee Turkey

  • Overseas holdings in Istanbul stock exchange are at lowest in 16 years

ANKARA: Foreign capital is flooding out of Turkey in a massive vote of no confidence in President Recep Tayyip Erdogan’s economic competence.
Overseas investors have withdrawn nearly $8 billion from Turkish stocks since January, according to Central Bank statistics, reducing foreign investment in the Istanbul stock exchange from $32.3 billion to $24.4 billion.
As recently as 2013, the figure was $82 billion, and foreign investors now own less than 50 percent of stocks for the first time in 16 years.
“Foreign investment has left Turkey for several reasons, both internal and external,” Win Thin, global head of currency strategy at Brown Brothers Harriman, told Arab News.
“Externally, investors fled riskier assets like emerging markets during the height of the coronavirus pandemic. Some of those flows are returning, but investors are being much more discerning and Turkey does not seem so attractive.”
In terms of internal factors, Thin said that Turkish policymakers had made it hard for foreign investors to transact in Turkey. “This includes real money clients, not just speculative.
“By implementing ad hoc measures to try and limit speculative activity, Turkey has made it hard for real money as well. Besides these problems, Turkey’s fundamentals remain poor compared to much of the emerging markets.”
Erdogan allies claim international players are manipulating the Istanbul stock exchange through automated trading, and have demanded action to make it difficult for them to trade in Turkish assets.
Goldman Sachs, JPMorgan, Merrill Lynch, Barclays and Credit Suisse were banned this month from short-selling stocks for up to three months, and this year local lenders were briefly banned by the banking regulator from trading in Turkish lira with Citigroup, BNP Paribas and UBS
JPMorgan was investigated by Turkish authorities last year after the bank published a report that advised its clients to short sell the Turkish lira.
MSCI, the provider of research-based indexes and analytics, warned last month that it may relegate Turkey from emerging market status to frontier-market status because of bans on short selling and stock lending.
With the market becoming less transparent, overseas fund managers, especially with short-term portfolios, are unenthusiastic about the Turkish market and are becoming more concerned about any forthcoming introduction of other liquidity restrictions.
The exodus of foreign capital is likely to undermine Turkey’s drive for economic growth, especially during the coronavirus pandemic when employment and investment levels have gone down, with the Turkish lira facing serious volatility.