NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, January 25, 2018

Rural families in Africa who need access to power and investors seeking a decent return on their money are getting together so everyone prospers. The cherry on the cake? It’s good for the environment too.

British investors are funding solar kits for households in East Africa with no access to electricity. As families pay for the kits over two or three years, investors recoup their stake with interest three times that offered by high street banks.

“There are environmental benefits and social benefits so it seemed like a no brainer. It’s also a chance to address inequality between rich and poor countries,” one small-scale investor, James Harman, 24, told the Thomson Reuters Foundation.

Harman has invested 500 pounds ($690) in projects in Uganda and Kenya and could make 5 percent interest annually for two years if repayments on the kits stay up to date.

“You put the money in, accept you might lose some of it and see what happens,” Harman said. Other risks include currency fluctuations, political upheaval or natural disasters.

The investment scheme, Energise Africa, is one example of so-called impact investing, where both financial and social returns – making improvements in people’s lives – are created.

Previously the domain of corporations and the wealthy, impact investing is now available to anyone with small amounts of cash to spare – with investments in community cinemas, affordable housing or low cost gyms – from as little as $70.

Photo courtesy of Business Wire.