SunFunder a US financial organization now with offices in Tanzania tries to fill that gap by providing small loans to the Renewable Energy companies in Tanzania.
Banks are often unwilling to lend money to them without knowing how the sector works, said Lais Lona, Africa business development manager for Sunfunder; a solar energy finance business based in Tanzania and the United State.
It aims to bridge the gap between investors and business specialising in off-grid solar energy by providing loans.
"If it wasn't for SunFunder, we'd still be ordering stock in small volumes and paying a premium for transport and customs clearance,"said Dennis Tessier, programme director for ARTI Energy, which secured a SunFunder loan."It has enabled us to move larger volumes, and pass on the savings to our customers,"he said.
SunFunder has created a mechanism through which investors in solar energy can make loans to solar companies, benefiting from SunFunder's specialised knowledge of the indusrty, Lona said.
"We vet individual solar businesses closely, and also develop understanding of the broader business context," he said.
SunFunder loans are tailored to meet the needs of a specific business model and to minimise the risk of default.
Investors do not lend to individual businesses but rather put money into solar loans vehicle, each of which lends to a number of companies, spreading the risk, Lona said.
SunFunder, which won the 2016 Ashden Award for Innovative Finance last month, has so far dished out around 70 loans worth $8.6m to more than 20 solar companies in ten countries, Lona said.
The loans can be from around $50,000 or more each. companies normally starts with a small loan for a few months to ship one consignment of products, and then build up to larger, longer-term loans as successful repayments are made.
"We pride ourselves on being able to move quickly with our customers, and being open and flexible in designing a financing solution that meets their needs," Lona said.
More than 300,000 household have been reached with solar technology financed through SunFunder, the company says.
Those households now have clean source of power to make everyday activities easier, saving on the cost of kerosene for lighting and fees for charging phones.
Eliminating the use of kerosene reduces the risk of fires and health damage from indoor pollution.
In addition, SunFunder's financial backing reduces carbon dioxide emissions by around 50,000 tonnes per year,the company says.
Source: The Guardian
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