Power Africa Supports Tanzania-based Solar Company to Fuel Livelihoods of Rural Farmers and Fishers
By Karen Blyton, Power Africa Off-grid Project
From late June to mid-October, rainfall is rare in Tanzania and the country is sheathed in sunlight, making it the most pleasant time of year for some. However, for farmers like Steps Musika, this five-month-long dry season creates uncertainty that their crops will survive and that they will be able to provide for their families.
“Shortage of water has been a problem to me, and it has always made me unhappy as my harvests were always below expectations,” says Musika.
In order to have a reliable source of income, he needed a way to regularly water his crops during the dry season.
Musika’s story is not unique. Farming contributes to 80 percent of Tanzania’s employment, yet accessing electrical irrigation equipment can be challenging for many farmers. Out of a population of 57.3 million, over a quarter of Tanzanians live below the poverty line and less than 17 percent of the country’s rural population have access to electricity. Simusolar, a company providing financed clean energy solutions for agribusinesses, is trying to change that. The company was founded in 2014 by two U.S. citizens.
“We started with the vision of using solar renewably powered tools to transform the rural economy and rural quality of life,” says Michael Kuntz, Co-CEO and Co-Founder of Simusolar. “And finance was a key part of that.”
Farmers discovered they could afford a solar-powered water pump using Simusolar’s pay-as-you-go (PAYGO) financing program, which allows customers to use their mobile phones to make incremental payments on their equipment instead of buying it outright. Because PAYGO has made this equipment more accessible, it has changed how farmers approach farming. Over 70 percent of solar water pump sales in sub-Saharan Africa have been made using PAYGO financing and for 63 percent of those customers, it was their first time buying a product on credit.
“Since I started using this solar pump I’m now confident as my harvest is always stable and brings profit beyond expectations,” says Musika.
Based in Tanzania, with recent expansion into Uganda, Simusolar offers solar-powered equipment such as water pumps that farmers can activate remotely and fishing lights designed for night fishers. These two innovative product lines are crucial to supporting Tanzania’s and Uganda’s rural economies.
According to Simusolar, the company’s water pumps enable farmers to boost profits by increasing their yields. Farmers can water their crops more reliably — even in the dry season — and can monitor the water pumps for issues even when they are away from their farms. Simusolar’s fishing lights help fishers increase their incomes by using solar power rather than kerosene and allowing them to fish even in inclement weather, which would not be possible with fuel-powered lights.
In addition to financing, the company goes beyond traditional retailers, offering expert advice to help customers understand what product will work best for their needs, even conducting measurements on-site at customers’ farms.
Simusolar was one of the first solar companies to center its business model on productive use of electricity. As the off-grid energy industry continues to evolve, companies require up-to-date information on how the market will be impacted by new laws and regulations, and where opportunities exist to access public and private financing for continued growth.
Power Africa is supporting Simusolar in these areas to help the company continue to grow and positively impact lives.
“We are proud to help Simusolar become one of the leading productive use of electricity companies in Tanzania and Uganda,” says Lais Lona, the Tanzania Lead Advisor for the Power Africa Off-grid Project. “Powering farm equipment through the grid may not be possible or practical for many farmers. Supporting companies like Simusolar is vital to boosting rural economies and improving the quality of life across sub-Saharan Africa.”
One of the key ways in which Power Africa has helped Simusolar is by enabling the company to gain access to financial resources.
It has assisted the company in developing and refining its investor-facing materials, such as its pitch deck, and honing its equity story. Because of this support, Simusolar has been able to focus its efforts on investors that align with the company’s mission.
“We’ve received good insights and information on the funding environment,” says Kuntz on Power Africa. “Understanding the context around different funding programs, where they are coming from, what they really want to see done, and what their real timelines are is immensely valuable to us.”
In April 2020, Simusolar secured a total of $2 million in investments from the Acumen Pioneer Fund, Chroma Impact Investments, and Impact Capital in convertible notes. This capital will allow the company to maintain its inventory to keep up with high customer demand — solar water pumping sales increased by 76 percent in East Africa and by 70 percent across sub-Saharan Africa between July and December 2019 alone.
“We’ve raised debt, working capital, convertible notes, and all along the way, the conversations we’ve had with the team at Power Africa and their responsiveness and their connectedness have really allowed us to be efficient in that,” says Kuntz. “They definitely contributed to the funds we’ve raised today.”
Kuntz says Power Africa has helped Simusolar make important connections with peers, funders, and organizations that are doing relevant research and policy development.
“Those kinds of introductions and facilitations are critical,” says Kuntz. “Power Africa gives us visibility in the broader ecosystem and allow us to then link up with organizations that can be good partners.”
The company’s commitment to gender diversity is evident by the fact that 50 percent of its leadership team is made up of women, including Kuntz’s counterpart, Simusolar Co-CEO Marianne Walpert.
“If you want to be a business that is really innovative, which we have to be because we are a pioneer in this space, you need a really cooperative environment and a diverse staff, especially a gender diverse staff,” says Kuntz.
Power Africa has provided the company with support to develop a gender strategy and showcase its commitment to equity to gender lens investors.
While Simusolar is currently focusing on Tanzania and Uganda, it will look to Power Africa for advice and support when it expands to other countries.
“Being able to have a friend and peer that is connected and keeps us connected is a great value,” says Kuntz. “Everyone that I’ve worked with has been so professional — Power Africa is doing something very right in terms of the quality of people and that has really stood out for me.”