Situation

The solar-home-systems industry has grown incredibly quickly in its first five years, though businesses and investors estimate demand at tens of millions of systems across Africa. Yet fewer than 1 million units were sold in 2015. Given that solar home systems businesses offer direct credit to consumers, one of their primary challenges is lack of asset-backed financing.

DFID engaged Open Capital to prepare a feasibility study for a new DFID debt fund to promote growth in the African solar home systems industry through off-balance sheet receivables financing.


Our Approach

  1. Conducted interviews across Sub-Saharan Africa with dozens of solar businesses, investors, development partners and banks
  2. Carried out market assessment for solar home systems in Sub-Saharan Africa based on our interviews, industry expertise, and market research
  3. Advised on strategic options for fund including size, target geographies, loan currencies, market focus and product focus
  4. Created financial projections to quantify business demand, investor returns and off-grid impact
  5. Designed fund operations including size and terms of investments, pipeline options, due diligence process, as well as fund management and TA opportunities

Outcome

Our feasibility study provided an in-depth analysis of the solar home systems industry and the market opportunity, as well as a thorough assessment of varying data and credit standards used by different businesses.

Based on our study, we expect the fund to catalyze growth in the industry and facilitate access to future commercial capital by developing common reporting standards and benchmarks.