Wednesday 4th May 2022 – There are clearly multiple hurdles at play when considering how best to solve the major global problem of energy poverty. This includes means of sustainably financing efforts to reach SDG7 – clean energy for all.
At Bboxx, we are proud to be on-the-ground delivering the clean energy transition in Africa, positively impacting the lives of over 2 million people through providing access to clean, affordable and reliable energy. This includes our recent launch of Flexx by Bboxx, a new brand offering entry-level clean energy products to millions of people at the bottom of the energy pyramid that we have not reached previously.
However, the scale of the funding issue is vast – 759 million people live without access to energy, of which 570 million are in Africa today – and tackling energy poverty is ultimately highly capital intensive, requiring huge investment to solve a sizeable problem.
Sustainably financing the industry
While there is a huge opportunity to positively transform the lives of these massively underserved communities, a lot more can be done when it comes to finding better ways of sustainably financing the industry.
This includes the urgent need for increased innovation in the financial solutions made available. Traditional funding models have so far not been fit for purpose here, with financial institutions preferring to invest in safer more traditional ventures or charging incredibly high interest rates coupled with long-lead times for unlocking access to capital.
Bridging the gap of working capital is one of the biggest financing issues we face as an industry, and the nature of the traditional funding routes is incompatible with our aim to pass on as little costs as possible to our consumers, championing affordable energy kits without compromising on quality and reliability. Affordability is key to payment reliability and being able to scale.
The message is being heard however and thanks to facilities offered by investment houses specialising in impact, like responsAbility, who recently provided us with an $8 million loan, we are able to continue to scale our operations sustainably. Indeed, we can immediately put this funding to work, to ensure both supply chain efficiencies and the best possible outcomes for our end-users through lower product prices.
This transaction marks an innovative first for Bboxx in the industry as we were able to benefit from responsAbility’s nuanced understanding of the credit risk environment in the clean energy sector, an understanding which needs to be better understood by traditional lenders. The flexibility of the facility means that it can grow at the same pace as Bboxx and demonstrates the investment house’s high degree of confidence in our business model’s scalability.
An important step in the right direction
While this is a sign of progress, we are calling for more innovative facilities to be introduced that can help accelerate our collective journey towards achieving the UN’s SDGs.
The possibilities are endless, but a greater effort needs to be made to ensure there are better financial terms for businesses facilitating a just transition and generating significant impact across the world. This includes the provision of grants, government funding and vital subsidies, as well as the avoidance of heavy and expensive debt financing which not only considerably stifles progress but creates an unattractive environment to really resolving the issues. It’s time to walk the talk..
Bboxx’s endeavours are rooted in our firm belief that technology is the key to unlocking sustainable and inclusive development, fostering financial inclusion and economic opportunities to positively transform lives in the most remote and least connected communities. Identifying and introducing more sustainable financing options is paramount to the success of our mission, creating a virtuous cycle that ultimately benefits our customers and has the power to transform lives.
Anthony Osijo, Group CFO and Head of Relationships at Bboxx