Solar Loans in Kenya

Jenny Jin, KF11

This past weekend I had the opportunity to check out one of KADET’s new loan products: solar loans!

A backstory of how solar is coming on strong in Kenya

Many of KADET’s borrowers live in off-grid rural areas without access to electricity or gas. Charcoal and kerosene are still the most common form of power for average Kenyans to power their homes and businesses. Indeed, a number of KADET borrowers that I’ve met have small businesses of selling charcoal.

In recent years, several solar companies have come to Kenya with interest to partner with MFIs and banks as a form of distributing their products. MFIs are willing partners because they have clients who would like to buy solar products, and because they’re spurred to create new useful loan products to keep pace in a very competitive microcredit market.

KADET’s solar loan product

KADET’s solar product partner is My Sunshine Box. The Sunshine Box is equipped with a solar panel, two light bulbs, and has long cables for cell phones and select other electronics. The battery life should last for 3-5 years.

The Sunshine Box retails at Ksh 23,100 ($288 dollars) as well as an additional KADET interest fee, which is considered on the high end of the solar products on the Kenyan market. If a client is interested in buying a Sunshine Box, he or she will buy the Sunshine Box on credit and pay back KADET over the course of either 6, 9 or 12 months.

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How Do Borrowers Like their Solar Loans?

On Friday, I travelled from Nairobi to Western Kenya, the heartland of Kenya’s agriculture, to meet two KADET borrowers, Susan Odoyo and Angelina Otieno, who recently received Sunshine Boxes.

Angelina has a bag-making business and she bought a Sunshine Box for personal use in her home. The first thing that she said that she enjoyed about her new purchase was the amount of time that she’s saving. Before, she had to walk half an hour each way to a cell phone charging station three times a week.

I asked Angelina whether the loan size was challenging. She told me she would be able to pay off the loan with her purse sales, and she looked forward to the savings that she’d get from the Sunshine Box in future years. It had cost her Ksh 2,340 ($30) annually to charge her cell phone, and Ksh 14,000 ($175) annually to buy charcoal. In a year and a half, she would be able to not only get back the costs of the Sunshine Box, but start to get a positive return. She also plans to charge Ksh 10 for her friends and neighbors to come to her house to charge their cell phones, which will be a small added source of income.

Susan is the chairlady of the Konditi Women’s Group and sells milk in addition to owning a barber shop. She bought a 2-solar panel Sunshine Box with plans to power her shavers. Once she pays off her present loan, she plans to buy another 1-panel Sunshine Box to power the television in her home, which is currently powered by a generator box that she says is very difficult to operate.

Some other interesting feedback from my interview:

- Most of the Konditi group members had heard of other solar products before the Sunshine Box, but they liked that the Sunshine Box was very easy to set up, and had a dedicated sales person (in this case, the CEO) who came and explained the product to them.

- They didn’t have a problem with the $288 pricetag, considering it as an investment for future savings.

- They were immensely happy with KADET for offering the solar loan, which made the process of buying a solar product much easier to them. This made them feel that KADET understood its clients.

- Several of the other group members would also like to take out a solar loan as soon as they repay their current business loans with KADET.

Photos of my visit:

Susan’s beautiful farm, an hour away from the nearest town of Kisumu.

Angelina’s solar panel is placed on her house’s ceiling. It’s very easy to reach and has no current fixtures (you can see a KADET officer’s head in the photo right below). I asked her whether there’s any concerns about theft, but she said that she has little worries from her community.

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Angelina’s now empty kerosene lamp that she no longer uses.

One of Angelina’s Sunshine Box light bulbs hangs on the ceiling of her living room, next to her Obama poster and her daily calendar.

Fun side note: President Obama’s grandmother’s home is very close to where Susan and Angelina lives.

The Sunshine Box is not able to solve all of Angelina’s power needs. She still uses charcoal and firewood for other everyday tasks such as cooking and ironing with her old iron. Could solar stoves and other low-cost solar home products be available soon for Kenya?

The Konditi Women’s Group is one of the most gracious group of hosts that I’ve had the pleasure to meet. You can see the beautiful bags that they make and sell proudly displayed in the photo.

KADET’s Green Loans Coming Soon to Kiva!

Previously KADET’s solar loans were in pilot stage so they were not posted on the Kiva website. Over the coming months, KADET will begin posting solar loans oo Kiva. If you want to support KADET’s green loans, check back on Kiva.org’s Green loan sector category in a few weeks!

Jenny Jin is a current Kiva Fellow at KADET (Kenyan Agency for Development of Enterprise and Technology) and a member of the KADET lending team.