NewLight Africa Ltd. 2

With a loan of EUR 150,000 Newlight Africa is able to provide 5,000 families in rural Kenya with fuel efficient cookstoves.

  • CountryKenya
  • TypeDirect investment
  • IssuerNewLight Africa
  • Amount€150,000
  • Annual interest7.00%
  • Maturity18 Months
  • CurrencyEUR
  • 5 new jobs
  • 25000 people reached
  • 1600 tons of CO2 reduced
100%
Fully funded in 5 days on 14 March 2018.

Basic info:

Issuer: Newlight Africa Ltd
Currency: EURO
Amount: 150,000, senior debt
Maturity: 18 months, semi-annually and linearly amortizing
Collateral: N.a.
Interest rate: 7% p.a.

Direct loan

This is a direct loan to a company (rather than lending to a financial institution) and therefore it is recommendable that you are careful with the amount you will invest. 

Documentation:

Summary

NewLight Africa – trading in Kenya as Heya! – is a last mile distribution company which sells products to the poorest people, living deep in the rural areas, on a credit basis. Our customers can buy the products which they need by paying in small weekly instalments. We sell solar lanterns, solar home systems, water tanks and clean cooking solutions; with plans for many more products in the future.

While it is increasingly common for African consumers to be able to purchase solar products on a pay-as-you-go basis, we are unusual in that we can sell almost any product this way. The products we sell are all aimed at helping our customers to improve their lives.

We are a UK registered company with our only subsidiary in Kenya. We were founded by Steve Andrews who has previously set up and/or successfully built a number of social enterprises. Steve was born a raised in Zimbabwe and has a passion for bringing clean energy solutions to rural African families.

The project

Cooking is a major challenge if you live off-grid as 80% of African families do. The majority of families have no choice but to use wood or charcoal. These fuels are hugely problematic. They present one of the greatest health and environmental challenges of our time.

Diseases caused by in-door smoke kill more people than HIV, tuberculosis and malaria combined. And 90% of deforestation in Africa is driven by the need for cooking fuel. Heya! is playing a vital part in the solution to overcome this problem.

We are selling two products to help solve this problem: a very fuel efficient charcoal stove – the Envirofit Super Saver - which uses 60% less charcoal (which translates into huge financial savings for our customers). And an LPG package which includes a 6kg gas canister with a burner and frame for holding a pot. These products have been around for a while, of course, but it is Heya!’s ability to reach deep into rural communities and to sell these products on credit (which very poor people need) which is driving huge demand.

By raising €150,000 through Lendahand, Heya! will be able to purchase 5,000 new cook stoves which we will sell on credit to 5,000 families.

We will sell these cook stoves through women’s groups. The groups themselves will provide a guarantee that Heya! will be paid for the stoves, limiting repayment risks for Heya! Itself. (*note that capital is at risk, even with such guarantees)

Impact

As a result of this project, 5,000 families will either save money or enjoy better health. All of us will benefit from the fact that Heya!’s cooking solutions will reduce deforestation. 

It is hard to give an accurate estimate of the environmental impact of these stoves because different families will use different combinations of wood, charcoal and LPG to cook. But we can conservatively estimate that for every stove we sell, between 0.75 and 1.5 tonnes of CO2 will be saved per annum.

Assuming 3 years of use per stove, that means that the 5,000 stoves which this project will fund, will result in CO2 savings of between 11,250 and 22,500 tonnes.

Description of Vision & Mission:

Our purpose is to deliver happiness to rural Africa, one product at a time.

What we do:

  • We serve our customers so they can achieve their own aspirations
  • We sell good products - high quality, affordable, environmentally and socially beneficial
  • We target markets that others have avoided - the base of the pyramid in rural Africa

Why we do it:

  • We are improving people’s lives and the environment
  • We want to solve the world’s toughest problems through business

Management team:

Steve Andrews, CEO

Former Global CEO of SunnyMoney, a non-profit company which he led from sales of 300 to 75,000 lights per month, making SunnyMoney the largest last mile distributor of solar lights on the African continent. Previously the owner-MD of Whitewater, a leading direct marketing agency, serving the non-profit market in the UK. Successfully exited Whitewater in 2007.

Fouad Aoun, COO

Former Consultant at Bain and Company, UAE. MBA Graduate from Harvard University. Fouad first worked at Heya! on a seconded basis from Mercy Corps (an investor) while working as a Senior Adviser on Social Ventures as part of his Harvard University Leadership Fellowship. Joined Heya! as COO/CFO in Apr 2017.

Linda Wamune, Head of Sales

SunnyMoney Kenya. Close colleague of Steve’s for over 6 years. Led SunnyMoney Kenya to become the largest last mile distributor of solar lights in Kenya. Prior to SunnyMoney, learnt about retail through 8 years of working in sales for Davis and Shirtliff, an East African company selling water pumps, solar power and other domestic products.

Candice Pelser, Head of MIS

Candice left corporate IT years ago looking for work with more meaning. She spent a few years in the NGO sector working on energy and climate change policy and practice, till she found her niche in the “best of both” world of social & environmental business. Candice is combining her experience in IT, development and business to strengthen Heya!’s MIS infrastructure.

Max Weiner, Head of Distribution and Procurement

Max graduated from Wesleyan University, USA in May 2017 and left to travel the world, landing at Heya in September of that year. After several months of field work, Max had made such an impact that we gave him leadership of distribution and procurement, where he enjoys the challenge of developing robust systems in an emerging market.  Max is particularly interested in leveraging the strength of local partner organizations to increase efficiency.

Previous realized projects:

https://newlightafrica.com/

 

  • Company nameNewLight Africa Ltd. 2
  • OwnerSteve Andrews
  • Founded2014-01-01
  • LocationKakamega
  • SectorSustainable energy projects
  • Turnover€950,000
  • Employees54

Impact of this project

  • With this investment 5 jobs are created
  • With this investment 25000 people are reached
  • With this investment 1600 tons of CO2 are reduced

About the investment

  • TypeDirect investment
  • IssuerNewLight Africa
  • Funding target€150,000
  • Annual interest7.00%
  • Maturity18 Months
  • Repayment periodSemiannually
  • CurrencyEUR

About the risks

What are the risks of investing money?

Our local partners cover the risk of currency exchange rates and loan defaults. They do this by maintaining financial reserves for this purpose . In addition, there is an option to claim their equity if needed. While these measures are intended to minimize the risk to funders, our local partners face risks of their own that could effect their ability to secure a loan. These include: - bankruptcy - currency exchange rates - fraud - operational risks - political and regulatory changes - natural disasters or epidemics.

If you invest direct in a company, hence not via a local partner, risks of default are not covered. As the risk that comes with direct lendings is generally higher than an investment through a local partner, the interest rate is also higher.

There is also some operational risk at Lendahand. An example might be that Lendahand is unable to find shareholders to finance their activities. In such a case, Lendahand will handle outstanding loans at the best of its ability. At the same time, our ability to legally address non-payment from local partners becomes understandably difficult.

How does Lendahand minimize the risks?

Local partners must adhere to our mission and work with us to provide loans that are affordable. This insures that local entrepreneurs have access to financing that allows them to grow their business. A local partner must also have a track record. In other words, they must have proven themselves as a meso-credit provider for SMEs. This means (for instance) that the partner must have a solid credit portfolio, along with enough buffers and equity to compensate for unexpected downturns. We also check the organizational structure of the partner and how robust their (internal) procedures are. Finally, the loans that a local partner receives via Lendahand must be in proportion to the partner's total balance sheet. A healthy balance between effectuating influence and independence is crucial. If you would like to receive more information on the financial indicators we employ, please contact us via info@lendahand.com.

When currency exchange risks become too high for a local partner, Lendahand will urge the local partner to cover these risks. In some scenario's the local partner is contractually obliged to comply with these demands.

Lendahand will always conduct due diligence when a Company requests for a direct loan. To provide more insights on risks, an independent partie comes in to perform brief analysis on direct loans. The results can be downloaded on the project detail page of the direct loan. However, this analysis serves primarily as a tool for your own opinion and conclusion. Pay attention to the fact this analysis is not an investing advice.

Does Lendahand provide guarantee on the loans?

No. Local partners take care of the repayment, even if (some) entrepreneurs are unable to do so themselves. If the local partner is for some reason unable to repay then there is a chance of partial or full loss of your money. For this reason Lendahand only selects financially solid partners based on strict criteria.

Also, for direct loans no guarantee is provided.

Does Lendahand have a license or exemption?

Yes. The Dutch Authority Financial Markets (AFM) has provided Hands-on B.V. (with trade name 'Lendahand') in September 2016 with an investment firm license in accordance with article 2:96 of the Financial Markets Supervision Act (Wft). Placing orders on Lendahand's website is therefore an AFM regulated activity. Lendahand also meets its minimum capital requirements of EUR 125,000 following its license as required by De Nederlandsche Bank (DNB).

Lendahand uses an exemption from an approved prospectus that is available up to EUR 5 Million per year. 

How safe are my personal details?

We adhere to strict safety requirements with regards to private and payment details. All sensitive data is sent through an encrypted connection (https). Also, data is stored (encrypted) in a secured facility provided by AWS: the world largest hosting service. Customer documents can only be retrieved by a secured connection and multi-factor authentication.

What happens if the local currency devaluates?

Our local partners and Companies bear the exchange rate risks. We settle the loan, redemptions, and interest payments in euro.

Does Lendahand use a third foundation fund?

Lendahand works with Intersolve EGI: a Dutch financial institution that specialises in offering services in the field of payment settlement and electronic money. To be able to offer these financial services Intersolve EGI must comply with the applicable financial legislation. Intersolve EGI is therefore supervised by De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) and is in possession of a license to act as an Electronic Money Institution (and therefore also has a license as a Payment Institution). Your money will be deposited on a protected and secure bank account until the project you have invested in has been fully funded. Intersolve in no way has access to these funds. Once the project is fully funded, the money is transferred to the local partner or company in question.

What happens with my money if Lendahand goes bankrupt?

If Hands-On BV (containing the brand name Lendahand) would go bankrupt trades between Lendahand and payment service provider Intersolve EGI would cease immediately. Intersolve will then transfer the funds in your personal wallet to your bank account (Note: if at this time the project you have invested in has been fully funded and the money has thus been transferred to the local partner, these funds will not be transferred back to your bank account). Intersolve will then in consultation with a trustee handle all repayments between the investors and investees up until the final repayment of the last project has taken place.

Additionally, Lendahand is part of the investor compensation scheme (ICS). This scheme aims to compensate individuals and small businesses who have trusted money and or financial instruments (such as notes or options) to a licensed bank, investment firm or a financial institution in case the financial firm is unable to meet its obligations arising from claims related to the investment service (in other words, if Hands-On BV is not keeping track of the acquired notes by investors in the Wge depot correctly). The ICS guarantees an amount of up to EUR 20,000 per individual. For more information, go to www.toezicht.dnb.nl/en/2/50-202210

Why is my money going via Intersolve EGI?

As part of the AFM license for investment firms it is required that operational activities carried out by Lendahand (maintaining the website, contracting of local partners, legal issues, etc.) are strictly separated from financial transactions (payments made through the website). Intersolve takes care of the payments. This collaboration offers you more security, since your money is placed on a protected bank account immediately after you have made your payment.

What happens when a local partner goes bankrupt?

When a local partner goes bankrupt, there will be a chance that you lose (part of) the amount you lend. Obviously Lendahand will try to recover outstanding payments, but the success rate will be limited in such situations. For the investor there is no possibility to take action against the financial institution. From a legal point of view the local partners are separated, therefore it is recommendable to spread loans across different local partners.

About NewLight Africa

Total assets€1,119,796
Revenue€1,859,040
Leverage ratio-2.50%
Solvability-2.50%
Liquidity85.40%