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FEATURE-Loans for solar systems make power affordable in rural Kenya

by Anthony Langat | @Antonykip | Thomson Reuters Foundation
Tuesday, 15 August 2017 07:00 GMT

Access to credit enables villagers to buy solar equipment in instalments - easier and cheaper than a grid connection

By Anthony Langat

NAIVASHA, Kenya, Aug 15 (Thomson Reuters Foundation) - It is early evening in Ndabibi village in Naivasha, and there are threatening clouds overhead. Kenneth Njoroge quickly parks his motorcyle by the mud structure that serves as his kitchen and rushes into the main house before the rain starts pounding.

Until recently, Njoroge's home northwest of Kenya's capital, Nairobi, was poorly lit at night. Most people in Ndabibi are not connected to mains electricity, and rely on kerosene or small solar lamps to light their homes.

But one month ago, the 55-year-old father of seven decided to stop using kerosene. A loan from a micro-finance institution has made it possible for him to invest in a solar power system for his home.

The credit is part of a scheme being rolled out across the country to provide asset financing for families not connected to the main power grid.

Njoroge's new kit consists of a solar photovoltaic panel, three light bulbs, a battery, a radio, a torch and three charging ports.

The equipment has done more than provide better lighting at home and eliminate his kerosene bills. He no longer has to buy batteries for his radio and torch, nor go to the local shopping centre to charge his phone.

Njoroge is chairman of Mwanzo Mwema, a savings group formed two years ago in Ndabibi which now has 30 members.

Each month, members contribute money which is deposited with Musoni Kenya, a micro-credit firm based on mobile payments. They can then take out loans based on the level of their savings.

After saving for a year, Njoroge started borrowing to buy a motorbike, lease farmland from his neighbours, and buy seed and fertiliser so he could grow more maize and beans to eat and sell.

In June, Leah Mugambi, a Musoni credit officer based in Naivasha, talked to the group about the new solar home systems it is offering in partnership with d.light, an international social enterprise specialising in solar products for off-grid consumers.

"Many people here do not have a connection to the national grid, so when I came to inform them, everyone in the group was interested," Mugambi said.

Njoroge was the first member of Mwanzo Mwema to take out a loan to buy a solar home system.


Getting grid electricity is a long process in most of rural Kenya, involving tedious application forms and high fees.

Njoroge applied for a connection to the national grid two years ago, but has yet to see Kenya Power and Lighting Company employees in his neighbourhood.

"I know that I was (due) to pay around 30,000 shillings (about $290), but they have never come back since I made the application," he said.

By contrast, it took just two weeks from the time he applied to Musoni for the loan until he was able to pick up the solar home system from the organisation's office in Naivasha.

"Connection was easy too because everything was clear. I put the panel on the roof and then hung the lights inside. We used it that same day," he said.

As well as being cheaper than paying monthly bills for grid electricity, Njoroge realised the solar home system would be more affordable than kerosene in the long term.

Even with the 20 percent annual interest rate charged by Musoni for the loan, he finds his repayments affordable.

Njoroge is paying 1,760 Kenyan shillings every month for 12 months, after which he will own the system outright, having paid about two-thirds of what it would have cost to get a grid connection.

"Once I finish paying (off the loan), I will not have any other bills to pay, which is a good thing for me," he said.


The system is designed by d.light so that as each loan instalment is paid, the customer receives an activation code that allows them to use the system for the coming month.

If the customer defaults on a payment, the system deactivates until the money is paid.

Musoni says it has not experienced any defaults since it started to offer asset financing for the solar kits nationwide, but as a last resort the lender could repossess the equipment.

The ability to charge a mobile phone at home is one of the most desirable features of solar home systems, according to Jacob Okoth, d.light's managing director for Africa.

"Most people in the rural areas who do not have a connection to electricity usually have to walk for long distances to have their mobile phones charged - which they pay for," he said.

The price of solar products has dropped in the past few years. According to Jonathan Nyongesa, d.light's director of finance, the government has helped by waiving customs duties on solar batteries and panels.

"This has contributed to making the solar products more affordable and accessible for the consumers. However, the government can do more by further zero-rating all solar products, including accessories like radios, torches and televisions," he said.

Nickson Bukachi of the Energy Regulatory Commission's renewable energy department said increased procurement of solar systems for public facilities such as schools and hospitals was also helping drive the industry.

While the department doesn't keep figures on the number of households using solar power, Bukachi said a study had been commissioned to establish a baseline to measure growth.

Nyongesa of d.light said progress in end-use efficiency, supply and storage performance had seen the cost of providing off-grid electricity with solar photovoltaic cells and battery storage fall by 40 percent in 18 months for household systems.

Appliances like LED lighting, televisions, fans and radios became 40 percent more efficient over the same period, further lowering costs, he added, predicting an additional price drop of 60 to 70 percent in the next few years.

"We think in the next five years, it is going to not only be possible to bring highly affordable solar products to the market at scale, but also make it possible for households using solar to have similar experiences to those who have a grid connection," he said.

($1 = 103.6500 Kenyan shillings)

(Reporting by Anthony Langat; editing by James Baer and Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women's rights, trafficking and property rights. Visit http://news.trust.org/climate)

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