While other African countries still struggle with figuring out how to light up their rural communities, Tanzania seems to have moved to renewable energy as an alternative means to electrify its nation.
Over the past decade, Tanzania has grappled with a shortage in the supply of electricity and now, the country has resorted to using renewable energy hence, the soaring demand for solar energy. According to Tanzania’s Bureau of Statistics, about 36 percent of Tanzanians have electricity, with only 11 percent of its rural population having access to this utility. Unfortunately, despite this new direction towards renewable energy, most Tanzanians still cannot afford solar power for the homes and businesses.
A Tanzanian company, ARTI Energy, which brought solar lights to Kiromo village in the eastern district of Bagamoyo eight years ago, told Reuters that the people were excited about solar power but could not afford to use it. The company realised that the upfront investment needed to buy modern lighting devices was beyond the means of the average rural Tanzanian and resorted to the use of a traditional credit system, known as “mali kauli.” This system allows customers to purchase products and pay later.
In the same light, other energy firms in the area are finding it difficult to satisfy their customers because of a lack of capital to fund the project and the fact that their target customers are unable to pay for electricity upfront as well.
Recently, it was reported that solar energy firms in Tanzania are getting loans from a solar energy finance business based in Tanzania and the United States known as SunFunder.
SunFunder has brought about an innovative way of providing money to Tanzanian solar energy companies in the form of loans through crowd funding. This is because banks refuse to give out loans to the solar energy company as a result of their little knowledge on the sector. With this mechanism, SunFunder can give loans, tailored to meet the needs of a specific business model, to solar energy companies as well as reduce the risk of a default.
According to Reuters, Africa Business Development Manager for SunFunder, Lais Lona, said investors do not lend to individual businesses but rather put money into solar loan vehicles, each of which lends to a number of companies, spreading the risk.
This development would go a long way to help light up rural Tanzania, which has reveled in darkness for decades. It will also ensure an increase in the quantity of solar energy companies in the area which could also lead to a fall in the price.
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