SunFunder, a fund manager and intermediary for solar energy investments in sub-Saharan Africa, has made the first disbursement from a new US$11mn syndicated debt facility to SunCulture, a solar irrigation company based in Nairobi, to expand its operations in sub-Saharan Africa
SunFunder arranged as well as invested in the facility, leading a group of lenders comprising Triodos Investment Management, Nordic Development Fund, AlphaMundi and the AfDB’s FEI OGEF managed by Lion’s Head.
The funds will enable SunCulture to scale up renewable energy installations at smallholder farms and households that will mitigate over 20,000t of CO2 annually as farmers replace diesel pumps with solar ones, while facilitating income growth and job opportunities in rural communities.
“We are delighted to have led this syndicate of proactive lenders who worked well together for a common goal: to help SunCulture reach many more farmers,” said Jemimah Kwakye-Fosu, investment officer at SunFunder. “It shows how working capital can be combined with end user financing, which is essential for making productive use technologies affordable.”
SunCulture has pioneered a ‘Pay-As-You-Grow’ business model to make solar-powered irrigation affordable for smallholder farmers in sub-Saharan Africa, combining end-user finance, value-added services, modern climate technology, and access to improve productivity. A recent report by Dalberg shows that irrigation systems and solar-powered water pumps can increase farmers’ production between two and four times, and their income between two and six times.
“The past year was devastating for the millions of smallholder farmers in Kenya; 87% are in a worse financial position due to the pandemic. 81% of SunCulture farmers, however, were able to increase their revenue from farming in 2020. Solar irrigation helps create food security and sovereignty, and it also helps lift people out of poverty,” said Samir Ibrahim, CEO at SunCulture.