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    Enabling access to finance for locally owned solar companies

     

    September 23, 2022

     

    Charm Impact and Signify Foundation partnered to support a blended finance lending model. This partnership has catalysed the investment in five loans to early-stage, local entrepreneurs in Malawi, Nigeria, and Zimbabwe, providing more than 15,000 people and businesses access to reliable sources of renewable electricity.

     

    Local founders are better positioned to create successful companies. In general, they intuitively understand their home markets better than foreign founders, their cost base tends to be lower than that of international teams and they are more likely to focus on building businesses that generate stable cash flows rather than on hockey stick growth trajectories. These factors often make local companies more suitable for debt investment.

     

    Despite these trends, locally led and owned companies within the energy ecosystem have been financially excluded from accessing international investment capital. In Kenya for instance, only 6% of startups that received more than $1m in 2019 were led by local founders. Latest data from the Global Off Grid Lighting Association (GOGLA) shows that in 2021, 97% of debt invested into the off-grid energy in Africa went to just ten large and majority foreign-owned businesses. Local capital also remains out of their reach due to prohibitively high interest rates, collateral requirements and minimum entry criteria.

     

    Charm Impact has a crucial role to play in supporting early-stage, local actors to nurture their growth in a commercial manner to get them to the stage where they are eligible for the investment mandates of larger investors.

    As a local start up in Malawi, we visited various finance institutions. None of them accepted our business plan because we did not have collateral and the financials alone could not convince them to support our work. Charm Impact's financing support has helped our business to scale up, create more jobs, impact more people with productive use energy technologies and increase in revenues”

     

    Admore Chiumia

    CEO & Founder of Green Impact, a company supported by Charm Impact in Malawi

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    A wide availability of grant capital has enabled companies to test their business models and get first products to market; however, it can also create the promotion of non-sustainable business models that are reliant on grant capital or concessionary finance to succeed.

     

    The partnership between Charm and the Signify Foundation blends philanthropic capital with commercial finance to make meaningful loans for local entrepreneurs. Charm’s internally developed credit, risk and impact assessments are specifically tailored to consider local market conditions. The philanthropic capital from the Foundation acts as a buffer for investors in the event of a default, crowding in private finance that would otherwise not be willing to operate in such a risk tolerant manner.

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    24kW solar minigrid installation by Prado Power, a company supported by Charm Impact in Nigeria
    To date, these companies have received in total more than EUR 435,000 in loans from Charm Impact as working capital. Some have already repaid the first tranche, a great way to demonstrate a credit history and pave the way for accessing further capital. Natfort Energy has repaid their loan in full and is in discussions with Charm for follow on financing.

    I'm grateful for what Natfort has done, especially in the rural areas where there are no lights and complete darkness. Now our grandchildren can read with no problems and visitors can come in and have light. Even the men are happy and have encouraged us as women to buy the lights.”

     

    Mbuya Anna

    A customer of Natfort Energy, a company supported by Charm Impact in Zimbabwe

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    About the author:

    Gavriel Landau

    Gavriel Landau


    CEO, Charm Impact

     

    For further information, please contact:

    Signify Foundation
    Email: signify.foundation@signify.com

    About Signify

     

    Signify (Euronext: LIGHT) is the world leader in lighting for professionals and consumers and lighting for the Internet of Things. Our Philips products, Interact connected lighting systems and data-enabled services, deliver business value and transform life in homes, buildings and public spaces. In 2021, we had sales of EUR 6.9 billion, approximately 37,000 employees and a presence in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We achieved carbon neutrality in 2020, have been in the Dow Jones Sustainability World Index since our IPO for five consecutive years and were named Industry Leader in 2017, 2018 and 2019. News from Signify is located at the Newsroom, Twitter, LinkedIn and Instagram. Information for investors can be found on the Investor Relations page.

    Meydan Bridge

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