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Apr 08, 2020

Spurring rural economies through renewable energy sources

When Anthony Mayodi cofounded Rafode as a microfinance institution in 2007, the main focus was in supporting SMEs access affordable loans.

He would have considered it a figment of one’s imagination had anyone told him at the time that the non deposit microfinance organization would venture into the sale of renewable energy products.

“When we were working in the rural areas giving people small loans, we realized there was a need for rural people to be connected to main grid electricity but they didn’t have the finances so we looked at the options that would enable them access electricity and renewable energy was the cheapest method,” Anthony Mayodi, currently the Managing Director, told us when our team visited him at Rafode Headquarters in Mountain View, Kisumu.

One key lesson they picked while working with rural communities was that most households faced lots of struggles using paraffin and wood for lighting and cooking. There are also attendant effects on the environ- ment such as air pollution caused by burning of paraffin and wood.

Wood cutting is also a major cause of land degradation. The need for funding and a partner to help build their capacity in renewable energy led Rafode to join KCIC in 2017.

They were then assigned a mentor who reviewed and refined their business processes to ensure they were aligned to the relevant provisions of law. Staff and senior management went through capacity building on various aspects of business operations relevant to their sector. With the anticipated expansion, Rafode was also supported to refine their business plan so that they could expand profitably.

The company also benefited from funding advanced to them in the form of KCIC Early Stage Financing Mechanism (ESFM). The enterprise currently supplies rural communities and slum dwellers across nine counties in Western, Nyanza and North Rift regions with renewable energy products such as solar lanterns, solar panels and clean cook stoves for use at home.

The lighting equipment contribute to the expansion of small businesses in market centers in the villages because traders are able to extend business hours late into the night.

Parents who use the solar lanterns also report improved academic performance among their children resulting from a conve- nient source of lighting. Cases of rampant respiratory infections associated with dirty forms of energy have also reduced. The energy efficient cookstoves are smoke free and consume little fuel.

Rafode’s products are popular with those at the lower end of the economy because payments are made in small installments. Even with stiff competition from pay as you go vendors of similar products,Rafode’s market niche remains intact because they don’t resort to drastic measures such as cutting off access in cases of default.

Instead, the company negotiates with customers on flexible payment terms as per the customer’s circumstance.

By Vincent Ogaya,

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