Tapping Africaby Baset Asaba on Apr 3, 2016
Along with a lack of robust business models that can guarantee returns, high capital and maintenance costs have often been fronted as the key barriers to the proliferation of solar, much needed to hasten Sub-Saharan Africa’s access to power.
It is a concern that American-Senegalese singer, Akon, has taken upon himself to remedy by employing a self-sustaining model that can at the same time attract local and international investments.
“The region is rapidly opening up, we are beginning to see change,” says Akon, real name, Aliaume Damala Badara.
“We are now showing the whole world that Africa does not necessarily need charity for basic power requirements and that communities can actually sustain their own power generation.”
Through his Lighting Africa project, Akon, together with partners Samba Bathily and Thione Niange are seeking to provide a concrete response at grass roots level to Africa’s energy crisis and lay the foundations for future development.
Over 100,000 street-lamps, 1,000 solar micro-generators and 200,000 household electric systems have been proposed and installed in targeted localities, creating direct and indirect jobs mainly for local youth.
“Until now, we have used $240mn out of the $1bn that we have at our disposal. We are present in 14 countries and want to expand into an additional 30 countries very soon,” says Bathily.
Recently, the trio was in the Middle East to woo regional investors and build concrete partnerships that will translate into increased investments from the Middle East into Sub-Saharan Africa.
“We are in the process of developing a major project to deploy microgrids throughout the member countries of the Economic Community of West African States (ECOWAS), in partnership with its centre for Renewable Energy and Energy Efficiency (ECREEE),” says Akon, who took part in the World Future Energy Summit 2006 in Abu Dhabi
“The objective is to have 15,000 microgrids, which corresponds to 10% of the localities targeted by the ECREEE microgrid plan.”
Akon says that to achieve this, they require technical partners to help manufacture microgrids at the lowest cost possible. They also require financial partners to help de-risk the project. “The more financial partners we can bring, the bigger the financing and the lower the risk for those investing in the project. We are currently in discussions with major donors and financial institutions from whom we expect commitment,” says Akon.
“As a hub for pioneering sustainable energy thought leadership, innovation and investment, fresh ideas and approaches emerging from the Middle East could certainly help in solving Africa’s energy crisis,” adds Akon.
He says that although technology and know-how needed to power Africa already exists, there is need for greater technical innovation and more creative financial models.
“We believe that these resources are in the Middle East and that the positive growth in relationships between the Middle East and Africa will only create more business opportunities.”
However, despite existing business opportunities, the gap between lofty ambition and the challenge of getting things done on a continent often hampered by conflicts among multiple government agencies has always scared way potential foreign investments.
Due to this and a myriad of other challenges, it would take more action than mere convincing to attract foreign players. This is exactly what Akon and his partners are setting out to do.
Through Solektra international, a business to government (B2G) vehicle created by the Akon Lighting Africa partners, the company is providing a wide range of solar equipment including microgrids, solar street lights, solar water pumps and solar systems for homes, public areas and building in rural areas through government programs and public tenders.
“The business model that we have set up with governments is based on prefinancing. We start from a simple observation that African states cannot always finance a $100mn project in one go,” says Thione Niang.
“We divide this into four equal instalments of $25mn which most governments can easily include into their annual budgets.”
“As a result we would like to adopt a similar approach for the big micro-grid project that we are currently developing for the ECOWAS region.”
The success of the B2G model has enabled Solektra International to win contracts in several countries and to take part in several tenders.
“The B2G model has projected us as trustworthy partners for governments because it meets their needs, and this puts us in a perfect position to attract new partners given our level of exposure that makes us a gateway to Africa for solar suppliers,” adds Niang.
The company will launch its business to consumer (B2C) model once it starts operating the new microgrid project. Solar kiosks will be built on top of microgrids and will serve as a one stop shop to manage payments for the energy services accessed as well as maintenance.
The Kiosks will also provide additional services to communities such as ICT and refrigeration.
“What we aim at is to provide these rural communities with an easy way to pre-pay for energy access through a pre-paid card system, which is gaining popularity across Africa,” says Akon.
Explaining the nature of service deployment, Akon says that before launching a project, the company runs a pilot phase where facilities are presented and deployed in the areas allocated by the local authorities, mostly without access to electricity. The cost of this pilot phase is directly covered by Solektra International.
The pilot phase is followed by a larger scale deployment, as part of an official tender process to guarantee transparency.
“At this stage we work with other financial partners. Today we have secured financing from suppliers, export agencies, international and local banks,” says Akon.
Presently SUMEC is the major contributor on the supplier side, while Ecobank is the company’s main banking partner.
Solektra International positions its self as a social enterprise that seeks to have a positive impact on populations, in order to drive growth across the different regions.
The company employs local people to install and maintain the equipment, as part of its commitment to give back to African communities.
The lack of enough skills to maintain the installed facilities and the need for improved quality of services inspired the cofounders of Solektra International to set up the Solektra Solar Academy, which is the first training institute in Africa fully dedicated to solar technologies.
The academy was inaugurated in December and it is expected to offer training and certifications to a minimum of 200 young Africans every year that are categorises as skilled workers or installers, technicians and engineers looking to specialise in solar technologies.
During the first year, the academy should train future trainers who will then be in a position to recruit and train locals in the various countries of operations.
According to the World Bank, 24% of the population in sub-Saharan Africa has access to electricity. It points out the fact that a lack of electricity keeps businesses from growing, clinics from storing medicine and people from getting around safely in their communities.
Power Africa, a $7 billion project coordinated by the United States Agency for International Development that is one of President Obama’s signature policies for Africa, is supposed to help change all that, with a goal of doubling electricity access in sub-Saharan Africa over the next five years.
President Obama launched Power Africa in 2013-a partnership to help double access to electricity in sub-Saharan Africa, working with African governments, the private sector, and bilateral and multilateral development partners.
Since its launch in 2013, Power Africa has helped projects expected to generate over 4,300 MW of new, cleaner electricity reach financial close and is actively supporting an additional 25,000 MW of projects. Over three-quarters of these projects involve clean, renewable technology.
The Power Africa Tracking Tool (PATT) that allows for easy, real-time tracking of transactions across the continent was launched during the powering Africa summit in Washington DC held in January.
The tool helps to provide previously unavailable data that will increase transparency and drive the competitiveness of African markets.