MALAWI – SunFunder, a fund manager focused on solar energy in sub-Saharan Africa, is providing a US$4 million loan to Yellow, the Lilongwe-based start-up distributes solar home systems that improve access to electricity in rural Malawi and expand its operations.
The start-up founded by Mike Heyink distributes solar home systems that provide rural households with access to electricity in this East African country.
Given the low standard of living in the countryside, the company allows pay-per-use of its solar home systems via the mobile payment solutions available in Malawi.
“When we first met founder Mike Heyink and his team a few years ago, they were a start-up with barely 100 customers. We’ve followed their progress from a start-up studying lessons learned to a growing company that is setting best practices for the industry,” explains SunFunder.
Like many businesses distributing solar home systems in off-grid areas, Yellow offers their customers credit by selling their products on a pay-as-you-go (PAYGO) basis. Despite being a relative newcomer, the company has instilled a highly impressive credit operation, through automation and training.
“Yellow has quickly established itself as a leading off-grid solar operator,” said Collins Kuindwa, Investment Officer at SunFunder.
“We are particularly pleased to be starting this new partnership having stayed in contact since their early days – supporting new players, as a trusted advisor and partner rather than just financier, is built into SunFunder’s own journey helping to establish the off-grid solar sector.”
To date, the start-up has already distributed 110,000 solar kits that provide access to electricity to 400,000 people through its 66 employees. Yellow is playing an important role in Malawi, where the rural electricity access rate is only 5% according to Power Africa, one of the lowest rates on the African continent.
The company has also deployed 721 sales agents in three African countries. In 2020, the start-up raised US$3.3 million from Platform Investment Partners (PIP) and Ruby Rock Investment. The goal is to provide solar home systems to 100,000 rural households in Uganda and Malawi.
Early this year, SunFunder completed the financial mobilisation for its Solar Energy Transformation (SET) fund worth US$70 million.
The multi-investor fund closed thanks to an investment by Oesterreichische Entwicklungsbank AG (OeEB).
The SET Fund was launched by SunFunder with the aim of accelerating the electrification process in Africa and this financing mechanism has attracted many other investors like Swedfund which injected US$12 million in September 2020.
The fund has also received investment from American Development Finance Corporation (DFC), Calvert Impact Capital, Ceniarth, the IKEA Bank of America Foundation, Mercy Investment Services, Schmidt Family Foundation, as well as several individual investors through the Toniic Impact network.
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