Mobisol and responsAbility have signed an off-balance sheet debt deal to provide financing for the electrification of more than 15,000 households and small businesses in Tanzania. According to Mobisol, the deal is one of the largest ever seen in the off-grid solar sector.
The amount to be provided by the energy funds managed by responsAbility has not been revealed, however Mobisol stated that it is in the ‘eight-digit U.S. dollar’ range. The mechanics of the deal will involve local special purpose vehicles, which ring fence specific Mobisol customers exclusively for the responsAbility funds. The structure has been named MOOVE (Mobisol Off-grid financing vehicle).
“Mobisol is proud to have partnered with responsAbility in order to devise a groundbreaking new financing structure for debt financing,” said Mobisol CFO Hartmut Schuening. “We believe the mechanics will make a significant contribution to the growth of the PAYG sector as a whole.”
Mobisol was also keen to point out that, as an off-balance sheet deal, the financing deal avoids several complexities, and that the model is ‘infinitely scalable’, and could be easily replicated to reduce transaction costs within Tanzania and elsewhere.
“Through its PAYG business model, Mobisol provides underserved Tanzanian households and businesses with affordable and reliable off-grid electricity supply – an important prerequisite for economic growth and development in the country,” says Stefan Issler, Head of Energy Debt Financing at responsAbility investments. “we are pleased to able to provide easy-to-access financing for the further development of this business.”
According to a Mobisol press release, the financing mechanism has already attracted interest from other lenders, and has the potential to greatly ease access to debt capital. The company says that the MOOVE model could help to develop a new asset class in the PAYG sector, attracting large commercial and institutional investors who have been waiting for a simple and secure investment vehicle.
Off-grid, pay as you go business models have become a vital tool for electrification across much of the African continent, where access to finance remains a major block in the way of further solar development.