Lendahand crowdfunding guarantee

The contribution is a guarantee to the Crowdfunding Platform Lendahand, that arranges funding from private individuals to borrowers who are small and medium-sized energy service companies that offer renewable energy solutions, often in the form of rent-to-own, to customers who do not have access to electricity and who cannot afford to pay the entire investment up-front. Crowdfunding is a growing form of financing and has the potential to mobilise considerable amounts. Furthermore, Crowdfunding fits well with the financing needs of companies that fall between start-ups and mature, companies that are too big for microfinance loans and too small for bank loans as they are assessed by commercial banks to have too low creditworthiness. The focus is mainly on lending to renewable energy services companies in Tanzania, Rwanda, Kenya, Mozambique, Senegal, Zimbabwe, Mali, Sierra Leone and Zambia. The guarantee contribution is expected to mobilize 12 MEUR private capital and provide 42,680 connections/systems installed or approximately 313 000 people access to renewable energy services. The contribution is also expected to influence the crowd by demonstrating the actual risks associated with lending to small and medium sized energy service companies through a competent Crowdfunding platform and thereby contribute to expanding the debt market further. The expected loss on the guaranteed amount, 59 760 000 SEK, has been calculated by the Swedish National Debt Office to 296 014 EUR. The majority of the expected loss will be covered by Lendahand’s risk premium of 3,32%. The outstanding part of EUR 37 404 will be subsidised by Sida. In addition there is a cost of Sida administration related to the guarantee that amounts to 950 000 SEK. This will also be subsidised by Sida under the African regional strategy. Sida’s costs for guarantee will be 1 336 009 SEK. Sida is of the opinion that the guarantee contribution involvs a guarantee to the Crowdfunding Platform Lendahand, during the period 2018 - 2023 meet the requirements of current regulations and rules. Sida further estimates that the contribution is effective in increasing production of and improving access to renewable energy in ways that benefits the environment and the lives of people in poverty. Finally, Sida makes the assessment that the guarantee has the potential to be catalytic in expanding the volumes that can be provided as debt through Crowdfunding platform and over time reduce the need for guarantees for this type of financial business model.