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PAYG Is Not A Profitable Business, Especially For African Solar Startups

By  |  April 7, 2021

Sub-Saharan Africa is the abode of three-quarters of the total 800 million people that are still in the dark worldwide.

The count of electrically disconnected people in Africa (as a whole continent) has been on a steady decrease since 2013, thanks to off-grid/renewable energy strides made in places like Rwanda, Kenya, Senegal and Ghana.

The COVID-19 pandemic—as of 2020—brought about an acceleration in the number of solar panels installed and off-grid energy projects unveiled. To an extent, the global health crisis turbocharged Africa's solar boom.

As a result, Africa-focused pay-as-you-go (PAYG) solar firms basked in downpour of investors' million-dollar interests.

The funding rounds for these companies last year became more frequent and came in larger sums. South Africa's Yellow bagged USD 3.3 Mn in Series A, Kenya's SunCulture landed USD 14 Mn in a similar round, and Energy+ raised USD 1 Mn—despite being from a country as undermined as Mali.

In 2021, though, African PAYG solar is unusually quiet. That could be because the sector itself in such a continent has some inherent challenges.

Dr. Harald Schützeichel, who runs Sendea—a business incubator for solar companies in Africa—reveals that PAYG solar startups in the continent may turn out as unprofitable as they are elsewhere, as there's more than what meets the eye.

In an exclusive interview with WeeTracker, Schützeichel, who is also the founder and president of GOGLA (Global Off-Grid Lighting Association) expresses concerns regarding the current lopsided state of the industry.

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