Energise Africa, a leading impact investing platform has today launched a first-time investor guarantee pilot that will cover the first £100 of any investment to support new customers taking their first steps into impact investing on the platform.
Supported by the Department for International Development (DFID), the scheme is a first in the crowdfunded impact investment space – one of the highest risk, but most meaningful areas of sustainable investment.
Founded in 2017, Energise Africa enables ordinary people to invest in bonds issued by pioneering solar companies in developing African nations, ultimately providing life changing pay-as-you-go solar home systems to low income families while paying average returns of 6 per cent per year to investors.
Under the scheme, all new Energise Africa customers will be offered a guarantee on some of what they invest in their first bond issue, up to £100. This means that if an issuing company defaults on its bond, then the guarantee facility will repay the investor the first £100 of their capital.
These funds will be held in something called a Special Purpose Vehicle, whose sole purpose is to provide the guarantee and to hold funds to cover the guarantee should they be called upon.
Commenting on the scheme, Lisa Ashford, managing director of Energise Africa comments: “Recent events including the climate change protests by schoolchildren and in London, as well as interventions by leading fund managers and the Bank of England highlight the growing need to act now on climate change.
“We believe that ethical investing is about changing the status quo and ensuring that finance flows to those organisations who are actively looking to protect people and the planet. This pilot is an example of creating accessible products with low minimum thresholds where people can connect with their money to see the direct impact, whilst also generating fair financial returns.
“We firmly believe that this guarantee mechanism will act as a catalyst to encourage more people to put their money into ethical investments and that, over time, these investors will develop the confidence to go on to reinvest once they have gained more familiarity with the platform, investees and the tangible impact that their money can create.”
Lighting up Africa
Alongside DFID, the scheme is supported by UK aid, Virgin Unite, Good Energies Foundation and the Partnering for Green Growth (P4G).
They join a community of more than 1,800 investors and partners who have raised more than £8.25 million for projects are across 10 countries including Kenya, Rwanda, DRC and Tanzania.
Energise Africa has successfully closed nearly over 65 different project raises with investors enabling more than 330,000 people to access affordable clean energy, mitigating more than 73,000 tonnes of CO2 entering the atmosphere each year and has successfully repaid more than £2 million back to investors.
All funding from UK retail investors is matched by DFID, which then helps innovative UK businesses provide off-grid solar panels to families and SMEs across sub-Saharan Africa.
The two European social and environmental impact investing platforms behind the Energise Africa, Ethex and Lendahand, have long histories in the impact investing field and together have raised more than £110 million from an ever-growing base of more than 20,000 investors.
Harriett Baldwin, minister of state for Africa says: “Solar power has the potential to transform the lives of millions of people who are still living off the grid. Energise Africa gives the British public the opportunity to invest ethically and help people across Africa to access clean, sustainable energy.
“UK Aid’s support to Energise Africa is making technology and finance available to help provide power for people across the continent, tackle climate change and deliver the United Nations’ Sustainable Development Goals.”
Encouraging ethical beginners
Coinciding with today’s launch, Azuri Technologies, a leading UK-based pay-as-you-go solar company, has launched a campaign on the Energise Africa platform to bring clean power to a further 10,000 people in Kenya who have no access to mains electricity and rely on harmful fossil fuels.
During the pilot, investors can deposit a minimum of £50 in one project and can choose the location and term of their investment, typically over two to three years.
Simon Bransfield-Garth, CEO of Azuri says: “Currently 600 million people in Sub-Saharan Africa lack access to electricity, which limits their life chances and income opportunities. This innovative financing is helping Azuri to bring affordable, clean energy and potential economic opportunity to tens of thousands of families.”
In a recent survey, Ethex found that six in 10 people are interested in ethical financial services, yet just 17 per cent of those surveyed hold any such investments. Ethex believes that by reducing the risk for these customers, it can reduce the psychological barriers to investing and help build customer confidence in an activity that they may be new to.
All Energise Africa investments are eligible to be held within the Innovative Finance ISA (IFISA), free of charge. To learn more about how the IFISA works, see our handy, comprehensive guide.
Risk warning: Investing in Energise Africa projects via energiseafrica.com sites involves risk, including the loss of all of your invested capital, the inability to sell assets quickly or without substantial loss in value, and should only be done as part of a diversified portfolio. The UK Financial Conduct Authority recommends investors place no more than 10 per cent of their investible wealth in high risk investments.