The World Bank Group’s subsidiary, International Finance Corporation (IFC), has announced a $7 million financing package to help expand the reach of Off-Grid Electric, a solar leasing company that provides domestic solar electric systems to consumers in rural and urban Tanzania. The company, based in the Tanzanian city of Arusha, aims to service 200,000 households in the East African country by the end of 2015.

According to the IFC, the package includes a $4.5 million loan provided through the IFC Cleantech Innovation Facility and an additional $2.5 million loan from Cordiant Capital, a Montreal-based fund manager focused on emerging markets.

“IFC’s backing and expertise will help us bring affordable power to millions of people across Africa. We look forward to continuing this important work with IFC’s support,” said Xavier Helgesen, CEO and one of three co-founders of Off Grid Electric.

Leveraging current technology trends, Off Grid Electric provides pre-paid solar energy via mobile money. The company designs, manufactures, installs and maintains solar home systems that enable the provision of modern electrical services to households that do not have access to regular on-grid electricity.

The service is also affordable as service levels start below the cost of kerosene and grow with household needs with customers paying as little as a day at a time, this makes a huge difference in Tanzania where low-income households collectively spend over $900 million to meet their lighting, cooking and mobile charging needs. These households rely almost absolutely on kerosene to fuel their lamps and back-up generators. It is with this understanding that Off Grid Electric offers a low cost model for households which reduces the upfront cost to customers and minimizes the risks associated with maintenance and repair.

The company has increasingly gained traction in the country, distributing nearly 35,000 solar home systems in the Arusha, Kilimanjaro and Mwanza regions in Tanzania. For an installation fee in the neighborhood of $6 to $10, the company provides customers with a solar home system that includes panels, lithium batteries, lights and a meter. Running the system is relatively easy as customers make payments over mobile platforms and receive their unlock passcode via SMS. Upon successfully unlocking the system, they gain access to the complete power experience provided by the solar systems.

“IFC supports as the innovation of Off Grid Electric, which provides low-cost, clean energy solutions to the millions of people in Africa not connected to the grid,” said Oumar Seydi, IFC Director for Eastern and Southern Africa, adding that the private sector will play a most pivotal role in expanding access to energy as developing countries embrace greener, low-carbon growth paths.

By Emmanuel Iruobe

Elsewhere on Ventures

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