M-Kopa

East Africa,Africa Infrastructure

M-Kopa, founded in 2012, is a solar energy company. It has pioneered and built one of the world’s most advanced Pay-As-You-Go platforms and expanded the product line from lighting solutions to fridges and mobile phones.

This investment was made when British International Investment was named CDC Group.

Our investment

In 2016, CDC invested $11.6 million of equity in M-KOPA, with a subsequent follow-on round of $7 million in November 2017.

In 2017 CDC also provided $20 million of debt financing (equivalent amounts in Kenyan and Ugandan shillings), as part of a $55 million local currency facility alongside Stanbic, FMO and Norfund. This was a landmark deal in the off-grid energy sector, being the largest commercial local currency debt facility to date for a pay-as-you-go company.

Our investments will allow M-KOPA to install solar home systems in a further one million homes.

Impact
  • Improve livelihoods through access to affordable clean energy (SDG targets 7.1, 7.2).
  • Improve standards of living through improved and more affordable access to mobile internet (SDG target 9C).
How?

M-Kopa provides flexible repayment options via an appropriate financial PAYGo product, which enables access to clean energy and appliances. It also helps establish credit histories which can improve access to finance.
Stakeholder Geography Characteristics
Customers

Kenya and Uganda

Poor, low-income and middle-income (largely rural customers, 80 per cent of current (solar) customers earn below $500 per month).
Customers

Kenya and Uganda

Poor, low-income and middle-income (30 per cent are new smartphone users earning c.$150 per month, corresponding to bottom c. 40 per cent; and 70 per cent are existing smartphone users, earning c. $400 per month).
Scale Depth/Duration
  • Supporting expansion to a target c. 545,000 new customers by 2024.
  • Supporting the sale of 1.5 million phones by 2024 (there may be more than one phone per customer).
  • Income generation of $65 per month where energy supports productive uses (data from 140,000 which represents 5 per cent of current customers). Energy cost savings of $650 per solar system from displacing kerosene. Credit histories established for 450,000 customers in Kenya.
  • Improved access to quality of mobile internet for first-time smartphone users, new phones allow significantly increased access to internet. For existing smartphone users, new phones would allow access to faster mobile connection (4G). Smartphones currently range from c. $80-$600, M-KOPA's are $180-$220. M-KOPA's plan includes second-life refurbishment, which would further reduce prices.
Grid Score Contribution

3.74

To help us direct our investments, we use a tool called the Development Impact Grid. The Grid scores every investment we plan out of a score of four, based on two factors: the difficulty of investing in the country and whether investment in that sector will lead to jobs.
  • Capital not offered on the same terms.
  • CDC supports M-KOPA through value add including: i) governance and core business support, i.e. by establishing a formal credit committee, and support in expanding into other markets; ii) project based support such as market research, development of credit scoring algorithms and significant work around reducing e-waste (i.e. 55,000 solar kits refurbished); and iv) Market shaping through sector-wide engagement with industry association GOGLA, including adoption of customer protection principles.
Risk

Relates to the ability of the to successfully scale beyond Kenya, particularly in Nigeria and Uganda.

Understanding each ‘Impact Dashboard’ (PDF)

Expected impact

Over 600 million people in Africa live without access to reliable and affordable grid-based electricity.

M-KOPA’s pioneering systems use solar energy to power lights, a torch and a radio (which are provided by the company), as well as mobile phone charging.

The system runs through a control box, which contains a mobile data chip, through which customers can buy credit for their power.

Our investment will enable M-KOPA to provide low-cost electricity to low-income customers in Kenya, via daily mobile payment plans on a lease-to-own basis. This allows them to access electricity in their homes, often for the first time, and can contribute to reduced emissions when replacing kerosene lamps.

Environmental and social aspects

M-Kopa has put in place a robust system for managing environmental and social issues. Our current focus is on value add initiatives, including improvements in the management of electronic waste.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.
:
Africa, East Africa
Countries:
Kenya
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.
:
Infrastructure
Website:
http://www.m-kopa.com/
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).
:
Direct Equity, Direct Debt
Start date

For direct investments, this is the date British International Investment committed capital to the business or project.

For funds, this is the date that British International Investment committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e
:
September 2016
Amount

For direct investments, this is the total amount that British International Investment has committed to the business or project (it may be a combination of equity and debt).

For funds, this is the total amount that British International Investment has committed to the fund.
:
$31.5m
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.
:
USA
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