Business Support/Access to Finance
Companies are struggling to find business partners in the off-grid lighting sector. Entrepreneurs need support to design suitable products and create the right business models in a largely untapped and somewhat unconventional business environment.
A lack of financing options—including limited access to long-term growth capital as well as short term working capital and trade finance—are also significant barriers to market growth.
Providing better access to finance will become a priority as the market for quality lighting products grows, and more companies enter the sector. Financial institutions (FIs) often lack market comprehension and/or are not convinced of the viability of the market. Therefore, they are hesitant to lend to distributors. High interest rates (up to 40 percent in certain countries) negate the fundamental purpose of alternative financing plans, providing little to no incentive for their utilization. Moreover, available financing is often security-based, though most suppliers do not hold collateral. Finally, low-income consumers often do not have the initial investment needed to purchase new lighting products.
Lighting Africa is assisting companies to overcome these barriers by:
