KENYA: $130m securitisation for off

By Jean Marie Takouleu - Published on June 1 2023 / Modified on June 1 2023

Kenya is a testing ground for sustainable securitisation to finance electrification. The first transaction has just been entered into by Chicago-based electricity access provider Sun King and Citi, an international banking group based in New York in the United States of America. Very common in the banking sector, securitisation is a financial technique that transforms illiquid assets, i.e. assets for which there is no real market such as loans, into easily negotiable securities such as bonds.

The operation in Kenya can therefore be described as ‘sustainable’, since it should enable electrification via off-grid solar systems. A low-pollution solution provided by Sun King. According to official figures, three out of ten Kenyans currently live without electricity. Most of these people live in areas not covered by the Kenya Power grid. To remedy this situation, Sun King and other electricity access providers offer a range of solutions, including solar lanterns and solar home systems.

This equipment is available through the pay-as-you-go system, which facilitates access to electricity for the most disadvantaged households. It is because of this positive impact that the Sun King sustainable securitisation deal arranged by Citi has seen the participation of several development finance institutions. These include British International Investment (BII), the Netherlands Development Finance Company (FMO) and the Norwegian Investment Fund for Developing Countries (NORFUND).

The Kenyan subsidiary of the British bank Standard Chartered, the Trade and Development Bank (TDB) and Absa Kenya, the subsidiary of the South African bank Absa, also participated in this transaction denominated in the local currency, the Kenyan shilling. "This securitisation could be key to unlocking the significant capital needed to fund solar energy initiatives on the scale required by the climate crisis. We congratulate Citi for orchestrating this innovative transaction. These innovative financial mechanisms can turn the global challenges of energy access, social development and climate action into compelling investment opportunities," said Anish Thakkar, co-founder of Sun King.

Sun King's securitisation-based electrification financing joins other local currency solar energy financing initiatives in Kenya, including d.light. The San Francisco, USA-based company has partnered with Solar Frontier Capital (SFC), a financing platform and subsidiary of African Frontier Capital (AFC), to launch the Sh6.5 billion (nearly $65 million) Brighter Life Kenya 1 (BLK1) facility to electrify 1.2 million Kenyans via solar home systems.

Jean Marie Takouleu