African startups: striving for a world with cleaner energy

African countries are some of the world’s top places to apply technologies related to renewable energy. Hence, the December 2015 announcement that WeChat would invest about $3.4 million USD in African startups didn’t come as a surprise. Here are a few examples of some of the initiatives that may hold the key to the future of clean energy:

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Image courtesy of Gerry Machen at Flickr.com

Smart Solar Kiosk

Based in Rwanda, this team claims to have developed a mobile solar Kiosk, aimed at charging small electronic devices, product sales and Wi-Fi internet access for on-the-move customers.

Henri Nyakarundi leads the project, which has implemented 20 kiosks in Rwanda thanks to a partnership with Airtel Rwanda. You can watch a video demo of these kiosks at their official website, http://www.a-r-e-d.com/

ColdHubs

This Nigerian startup thought of a solution to store and preserve vegetables and fresh fruit: modular, solar-powered walk-in cold rooms that are installed in farms and markets that are close to retailers and farmers. The temperature in said rooms (5°C) prolongs the freshness of vegetables and fruits up to 21 days instead of 2 days with no refrigeration. Their business model includes a pay-as-you-store option that allows farmers to pay a flat fee every day for each crate that they store.
You can read more at http://www.coldhubs.com/

Strauss Energy

With the promise of providing disruptive energy solutions, this company’s goal is to diminish the energy deficiency in the African continent. Led by Tony Nyagah, they introduced a new technology to the Kenyan market: solar cells on roof tiles, which are capable of powering a house while saving roofing costs at the same time.  

They plan to feed the excess power from commercial or residential units into the country’s  grid in order to provide home owners with additional income. A return on investment is estimated to be reached in 18 to 24 months.
Their website: http://straussenergy.com/

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Image courtesy of Sterling College at Flickr.com

GreenChar

GreenChar produces and distributes charcoal briquettes out of agricultural waste. GreenChar’s briquettes are cheaper, produce little smoke, provide higher amounts of energy and last longer than conventional burning materials. They are sold to households in rural settlements that spend an average of $1.50 every day and experience health problems from polluted air caused by cooking with firewood and charcoal.  They also mitigate deforestation and help reduce CO2 emissions.
Read more at http://www.greenchar.co.ke/

Biogen Kenya

They are committed to produce environment-friendly, renewable fuel. This bio-diesel is derived from excess vegetable oils. The company is located in Nairobi and it follows a complete production cycle to process waste vegetable oil and turn it into fuel. They list six key points within their strategy: ease of use; power, performance and economy; emissions and greenhouse gas reduction; energy balance and security; toxicity, biodegradability, safety and recycling; and economic development.
Read more at http://www.biogenkenya.co.ke

PayGo Energy

Their pay-as-you-go model aims to provide users in rural areas with affordable, clean gas. Through micro-payments, potential customers can avoid cost barriers and have access to a reliable supply of gas for cooking purposes. Their slogan: “modern energy for all”.  Their website is http://paygoenergy.org/

Nadji.Bi

Nadji.Bi develops, manufactures and commercializes solar products through a distribution network in Sub-Saharan Africa. They can be found in Burkina Faso, Cameroon and Senegal. Among the products they offer are solutions for off-grid systems, solar streetlights, solar modules and solar inverters; all with the ideal of lowering costs and keeping their products affordable.
Read more at http://www.nadjibi.com

Juabar

All the way from rural Tanzania comes Juabar, a solar-powered charging kiosk that uses a 50W solar system. It is capable of charging between 10 or 20 phones simultaneously, as well as other electronic devices. Their mission is to create opportunities for small businesses in Tanzania while meeting the connectivity and energy needs of the community. Each kiosk works as a retail and charging platform.

According to their website, their longest running kiosks have been in operation for more than an entire year and their operators charge about 20 phones every day.
You can read more at http://juabar.com/

Skynotch Energy Africa

Founded in 2012, this company promotes access to renewable energy and focuses mainly on distribution of solar lanterns, energy generation and real-world application of solar energy. They develop projects involving initiatives such as solar and hydro farms and promote water pumping and purification through solar powered appliances. In alliance with development agencies, civil society organisations, academic and microfinance institutions, they provide energy solutions to meet the needs of their target audiences and potential customers. By doing so, they add value and enable social and economic development. In 2013 they joined forces with the World Bank to become one of Kenya’s innovators in renewable energy, to provide access to clean energy solutions to the off-grid community in said African country.
Read more at http://www.skynotchenergy.com/

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5 Major Obstacles Faced by African Entrepreneurs

Africa is poised to become one of the world’s leading centers of entrepreneurship, with exciting companies emerging in a number of different cities. The continent has a highly skilled and increasingly connected and globalized workforce with game-changing ideas, and more venture capitalists are starting to take notice of the region’s growth and provide support for innovators. Moreover, governments have increasingly taken notice of startups as their potential for fueling economic growth becomes more readily apparent. Despite the bright future ahead for many African entrepreneurs, a number of hurdles still exist for people interested in pursuing and developing a novel idea. However, these hurdles are not insurmountable.

1. The fledgling nature of the venture capitalist community.

Image courtesy UK DFID on Flickr
Image courtesy UK DFID on Flickr

In many ways, venture capital is still inaccessible throughout much of Africa. While many accelerators and incubators have sprung up around the continent, access to venture capital remains rather limited, especially when compared to other parts of the world. As a result, many entrepreneurs have turned to traditional bank loans to finance their companies. Unfortunately, these individuals may end up with loans whose terms are not optimized for startups. Banks typically view startups as a high-risk investment and may demand very high interest rates or simply deny loans altogether.

The success of some African entrepreneurs has attracted more venture capitalists to the continent, but startups need to know how to appeal to these investors. Most venture capitalists expect to see a solid business plan and numbers that demonstrate the likelihood of the startup’s success. In addition, entrepreneurs need a deep knowledge of their particular industry and target demographic. Venture capitalists will invest money in people who they see as leaders in their fields.

2. The need for more entrepreneurial education.

Many entrepreneurs—whether in Africa or elsewhere—do not understand the basic elements that contribute to the success of a company. While people worry about securing funding, they often miss the bigger picture of what success requires. While funding is important, so is the entrepreneur’s ability to adapt to changing markets. In an increasingly global world, this ability also translates to adapting products across markets. Funding will come more readily when an innovator demonstrates an immediate need for a product in an African market, as well as a more global need that the product could eventually fulfill in the future. This kind of mindset demonstrates long-term strategy and instills confidence in potential investors. Entrepreneurs also need to understand the value of diversification and should plan to expand across product channels and revenue sources to encourage growth.

3. The lack of viable exit opportunities.

Funders will not invest in a fledgling company if they cannot see a viable exit opportunity in the future. According to the Accelerating Entrepreneurship in Africa report, released by the Omidyar Network and Monitor Group, nearly half of entrepreneurs in Tanzania, Nigeria, Ethiopia, Kenya, and Ghana reported concern about a lack of exit opportunities. In Africa, it is still fairly rare for business owners to sell firms through buyouts, which provides an incentive for investment in companies in many other parts of the world. One of the major issues contributing to the exit problem is regulation. In many countries, entrepreneurs are worried that regulations about selling companies are too rigid and may discourage this strategy. In addition, many business owners aren’t aware that private equity funds and multinational corporations can offer impressive buyout packages, and so they fail to pursue this potentially lucrative option.

4. A potentially discouraging international reputation.

Mobile communications technologies have made Africa more connected to the rest of the world than ever before. As a result, many people have had the opportunity to set up online businesses, which require relatively little startup funding and can generate a significant amount of income. Unfortunately, some of these business ventures have been harmed by the fraudulent activities of other “businesses” operating out of Africa. These fraudsters have caused some international customers and investors to be wary of African startups. As Africa’s position as a technological leader becomes increasingly established, this reputation will likely change, but it can still hurt many fledgling organizations that want to take their businesses across borders.

Luckily, online entrepreneurs have more tools than ever before for creating and guaranteeing secure and verified transactions. Implementing these sorts of payment and credibility systems can provide confidence to customers and investors alike.

5. A dearth of networking opportunities.

As the startup communities in African cities continue to grow, this obstacle will shrink. However, many entrepreneurs still struggle to create an effective professional network. This is unfortunate, as the size and power of an innovator’s network largely can determine the reach of his or her creativity. People with a broader and more robust network may feel more emboldened to take risks, which can lead them to an idea that redefines an industry. An entrepreneur’s network serves as a sort of support that provides protection in the event of failure.

Some African entrepreneurs have emphasized the need for more formalized seed and angel investing networks, which could provide invaluable support. Some such networks, such as the Tony Elumelu Foundation, have already emerged, demonstrating the feasibility of and demand for these organizations.