Absa’s Sh2 billion investment to accelerate switch to solar energy
Absa Bank Kenya has announced a Kes2 billion investment to accelerate the adoption of off-grid solar systems across Kenya. The financing initiative is part of a syndicated finance worth Kes17.9 billion ($130 million), which brings together several commercial banks and other partners to bundle financial innovations that channel funding to environmentally friendly projects.
The lender said the the transaction uses the payment for solar products from current 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 securitised 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.
The listed lender’s Managing Principal for Corporate and Investment Banking James Agin said: “We are making deliberate efforts to entrench and drive sustainable financing for our customers in line with our overall sustainability agenda.”
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An estimated 30 percent of Kenyans live without access to electricity with many off-grid households devoting 5 to 10 percent 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.
“Our proven pay-as-you-go service dismantles the up-front cost barrier that blocks consumers from purchasing solar energy systems. This securitisation is key to unlocking the extensive capital needed to fund solar energy initiatives at the scale the climate crisis requires,” 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.
