SunCulture has received its first disbursement from a new $11m from SunFunder to help it expand solar irrigation in sub-Saharan Africa.
SunFunder arranged as well as invested in the facility, leading a group of lenders comprising Triodos Investment Management, Nordic Development Fund, AlphaMundi and the AfDB’s FEI OGEF managed by Lion’s Head.
“We are delighted to have led this syndicate of proactive lenders who worked well together for a common goal: to help SunCulture reach many more farmers,” said Jemimah Kwakye-Fosu, Investment Officer, who led the transaction for SunFunder. “It shows how working capital can be combined with end-user financing, which is essential for making productive use technologies affordable.”
SunCulture’s “Pay-As-You-Grow” business model makes solar-powered irrigation affordable for smallholder farmers in sub-Saharan Africa, combining end-user finance, value-added services, modern climate technology, and access to improve productivity. A recent report by Dalberg shows that irrigation systems and solar-powered water pumps can increase farmers’ production between 2 and 4 times, and their income between 2 and 6 times.
“The past year was devastating for the millions of smallholder farmers in Kenya; 87% are in a worse financial position due to the pandemic. 81% of SunCulture farmers, however, were able to increase their revenue from farming in 2020. Solar irrigation helps create food security and sovereignty, and it also helps lift people out of poverty,” said Samir Ibrahim, CEO at SunCulture.
SunFunder tailors the right financing structures to help innovative companies grow and secure additional capital from like-minded investors. New approaches in new sectors like this require proactive partnerships, including with Power Africa on some of the additional transaction costs of pioneering new financing structures.
“This is a pioneering transaction that demonstrates how productive use technologies like solar irrigation can be scaled up. SunFunder arranged this facility with a similar-minded group of lenders to support an innovative product and business model. We look forward to seeing SunCulture grow in Kenya and new markets,” said Surabhi Mathur Visser, Head of Investments at SunFunder.