Absa Bank Kenya has announced a KSh2 billion investment to increase off-grid solar energy adoption across Kenya.
This is part of a syndicated finance facility worth KSh17.9 billion ($130 million), which brings together several commercial banks and other partners to bundle financial innovations that route funding to environmentally friendly projects.
The transaction utilizes payments for solar products from present and future customers of Sun King, the world’s largest off-grid solar energy company, to raise funds for future growth and expansion. As part of the agreement, customers’ future payments for solar equipment purchased on credit will be securitized and funded by investors.
As one of the investors, Absa Bank Kenya will provide funding to a Special Purpose Vehicle (Sunking Financing Ltd) to acquire the eligible receivables from Sun King Kenya. The facility will help Kenyan households and companies to shift to clean, reliable, and environmentally friendly energy.
Approximately 30% of Kenyans live without access to electricity with many off-grid households devoting 5 to 10% of their income to polluting fuels and technologies for light and power. Solar energy offers clean and reliable energy as well as long-term cost savings for homes and businesses, but the upfront equipment cost blocks many Kenyan consumers from transitioning to solar energy.
Speaking about the deal, Absa Bank Kenya’s Managing Principal for Corporate and Investment Banking James Agin said: “As an organization, we are making deliberate efforts to entrench and drive sustainable financing for our customers in line with our overall sustainability agenda. We are thus pleased to collaborate in this arrangement which comes with a significant positive impact through the provision of clean energy to households. Our close and ongoing collaboration with leading financial institutions has helped ensure the smooth execution of the transaction.”
“Our proven pay-as-you-go service dismantles the up-front cost barrier that blocks consumers from purchasing solar energy systems. This securitization is key to unlocking the extensive capital needed to fund solar energy initiatives at the scale the climate crisis requires. We thank Absa Bank Kenya Plc for their support and trust. These trailblazing financial mechanisms can convert the global challenges of energy access, social development and climate action into compelling investment opportunities,” said Anish Thakkar, Sun King’s Co-Founder.
Sun King designs, distributes, installs and finances solar energy solutions for African and Asian households and businesses who cannot access, rely on or afford traditional electric grid connections. Sun King customers can purchase products using the company’s technology-enabled, pay-as-you-go “Easy Buy” financing service, which breaks payments down into regular, affordable instalments. These payments can be made via mobile money or cash for as little as $0.15 a day.