A Review of the Nigerian Energy Industry

Growth in use of solar lanterns overwhelms importers in Kenya

solarpanels29 August 2013, Nairobi – The fast growth in use of solar lanterns in Kenya and other African countries at 300 per cent is piling supply pressure on manufacturers and importers, a new report shows.

The Lighting Africa Market Trends Report by the International Finance Corporation indicates that in Kenya, about 2.5 million people are using off-grid lighting products that are solar powered, surpassing the one million target set for last year. “A trade finance facility for 17 local importers is being organised in partnership with a local bank,” said IFC head of the Lighting Africa Program Arthur Njagi.

He said the corporation will not offer funds for on-lending to local banks but rather offer a guarantee to the banks for their trade finance service to the importers. The programe, which aims to mobilise the private sector to build and access markets in-off grid, renewable energy lighting equipment for homes and businesses has spent $10 million since 2008 with Kenya benefitting directly with a spend of $3million.

“I believe we can sustain a growth of 200 per cent. Banks just require a risk sharing facility to make this happen,” said Njagi. Despite the growth in use of these products, the IFC report shows that their market penetration across the continent is an average of 3 per cent while in Kenya this stands at 7.5 per cent. Compared to 2007 when 170,000 lanterns were sold, by end of last year, the number had swelled to four million.

The price of these products ranges from Sh1500 to Sh14,000 depending on its power capacity. A market study commissioned by IFC shows that about Sh11,000 is spent a year by low income households on kerosene at an average rate of an estimated Sh30 per day.

“These people using kerosene can now use a different option while waiting to be connected to the national grid,” explained Njagi. However he noted that the return of solar equipment, which was previously exempted, to the tax bracket under the new VAT law is a big blow to consumers bearing in mind that Kenya Power has also recently hiked its connection charges.

Despite the growth in use of solar lighting in Kenya, the IFC official noted that North Eastern region has largely been left out because of distribution hitches in that area.

– Lola OKulo, The Star

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