By Sophie Aryeetey, MBA’23
This article was written in response to a seminar given by Rotimi Thomas, CEO & Co-Founder of SunFi, in an EDGE Seminar at Duke University’s Fuqua School of Business in Fall 2022. This article voices one student’s perspective and does not necessarily represent the views of either Duke University or the seminar speaker.
In the EDGE seminar series, we were honored to hear from Rotimi Thomas, co-founder and CEO of Sunfi, a fintech platform offering buy-now-pay-later (BNPL) services, also popularly known as “Hire Purchase” in Africa for solar energy providers and their consumers. One of the biggest challenges inhibiting economic and social development in the African region has been the limited energy supply to power industries and home units. With a population of about 1.4 billion, 40% of sub-Saharan African countries do not have access to electricity (IEA,2022). The continent’s energy crisis has been exacerbated by the Covid-19 pandemic and Russia’s invasion of Ukraine, causing power rationing and often complete blackouts in some parts of Africa. Organizations struggle to find more sustainable means to achieve a constant energy supply. However, one clear path forward is using renewable energy to meet the increasing energy demand—particularly since the continent has a substantial supply of sunshine, wind, hydropower, and geothermal resources. Biomass and hydropower have been the African continent’s primary energy sources for centuries. However, with increasing technologies and investments, we see the move by some economies to diversify energy sources.
In the case of Nigeria, Sunfi is providing a financing platform to accelerate the purchase and installation of solar panels. The company’s business model is to charge an interest amount on the financing facilities and obtain repayments through standing orders on customers’ bank accounts. The challenge in this context, however, is that this model is primarily accessible only to the upper echelon of the Nigerian population. An estimated 65% of the population remains unbanked/ underbanked (Olatunji, 2022), which automatically limits their access to such financing. This situation is not unique to Nigeria; it is prevalent in Ghana and many parts of Africa. In my opinion, fintech companies are merely scratching the surface of this opportunity, hence the need for a more aggressive, holistic, and government-led approach to tackle this challenge.
In the Ghanaian context, the country has faced severe power supply challenges costing the nation about $2.1 million (Kumi,2017). Ghana’s primary source of power is hydropower from the Akosombo Dam. The country also exports power to neighboring countries such as Burkina Faso, Benin, and Togo, even though it cannot meet its internal demand for energy. I grew up in the capital city, where outages and power rationing were the order of business; the situation is ten times worse for those living in rural areas. According to reports, 85.9% of the population currently have access to electricity (Worldbank, 2022). Some factors contributing to the power crisis are over-reliance on hydropower and fossil fuels, poor distribution systems and equipment leading to power losses, poor tariff structure, and non-payment of the cost of power by individuals and organizations. Since January 2022, electricity tariffs have increased by 27.15% (Longdon, 2022), while gasoline prices have increased by 71% (Statista, 2022). The increasing cost of energy makes it impossible for most people to afford it, resulting in often illegal connections and the loss of revenue by utility companies.
In recent years, there have been initiatives to diversify the power mix with renewable sources such as solar energy, whose costs have decreased by 77% between 2010 and 2018 (Schwerhoff et al., 2020). One such initiative is Sunref Ghana, an innovative program to mobilize public and private banks to finance private sector investments in green technologies and sustainable energy. Sunref has a similar model to Sunfi. However, the distinction here is that Sunref partners with local banks to provide financing for sustainable energy to home units and organizations. Additionally, the EU offers Sunref technical assistance and investment grants for qualifying projects. (Sunref,2022).
Although these initiatives are laudable, a lasting solution to the energy crisis in Ghana and, for that matter, the rest of Africa cannot be achieved without strong government policies to accelerate the path to renewable (clean) energy. Directed investments into R&D, manufacturing, and commercialization of climate technologies will result in a constant power supply while helping solve one of the most critical challenges of our time—climate change. The abundance of natural resources such as sunlight and wind puts Africa in a strategic position to significantly reduce world carbon emissions even though it currently accounts for less than 3% of the world’s greenhouse gas emissions (IEA, 2022). Introducing tax incentives in the form of credits, rebates, or deductions, particularly in the energy fintech space, will help spur the growth of companies such as Sunfi and Sunref. Government intervention to negotiate favorable interest rates for these fintech companies will catalyze the adoption of solar energy across multiple households and industries.
Admittedly, Africa faces a unique set of challenges different from that in the U.S. or other parts of the world. Hence, leaders in the region may not be able to invest heavily and readily in energy development projects to accelerate the path to net zero. One such challenge is the severity and extent of poverty on the continent. As of 2022, 460 million out of 1.4 billion Africans live below the extreme poverty line of $1.90 (Statista, 2022). Given the circumstances, the continent’s leadership would prioritize economic factors over environmental ones. This argument is based on human motivation as best captured by Abraham Maslow in his five levels of hierarchical needs. Until the basics are taken care of, African leaders will continue to struggle with the dilemma of what to prioritize as the rest of the world transitions to a low-carbon economy using advanced technologies.
 IEA (2022), SDG7: Data and Projections, IEA, Paris https://www.iea.org/reports/sdg7-data-and-projections
 Olatunji Kehinde. New platform to deepen inclusion among Nigeria’s unbanked, underbanked. The Guardian January 28, 2022. Accessed September 23, 2022. https://guardian.ng/business-services/new-platform-to-deepen-inclusion-among-nigerias-unbanked-underbanked
 Ebenezer Nyarko Kumi. 2017. “The Electricity Situation in Ghana: Challenges and Opportunities.” CGD Policy Paper. Washington, DC: Center for Global Development. https://www.cgdev.org/sites/default/files/electricity-situation-ghana-challenges-and-opportunities.pdf
 World bank Global Electrification Database: The Energy Progress Report- Access to electricity, %of population Ghana (2022). https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=GH
 Longdon Bervelyn.PURC announces 27.15% hike in electricity tariff, 21.55% for water. Citinewsroom August 15, 2022. Accessed September 25, 2022. https://citinewsroom.com/2022/08/purc-announces-27-15-hike-in-electricity-tariff-21-55-for-water/
 Sasu Dokua Doris. Weekly price of petrol in Ghana 2020- 2022. Statista. September 21,200. Accessed September 25, 2022. https://www.statista.com/statistics/1200108/weekly-gasoline-prices-in-ghana/
 Schwerhoff Gregor et Mouhamadou Sy. Where the sun shines, (March 2020) https://www.imf.org/en/Publications/fandd/issues/2020/03/powering-Africa-with-solar-energy-sy
 Sunref Ghana. https://www.energycom.gov.gh/renewables/sunref-ghana-programme#
 IEA (2022), Africa Energy Outlook 2022, IEA, Paris https://www.iea.org/reports/africa-energy-outlook-2022
 Saleh Mariam. Extreme poverty as a share of global population in Africa 2022 by country. Statista. July 15, 2022. Accessed September 24, 2022. https://www.statista.com/statistics/1228553/extreme-poverty-as-share-of-global-population-in-africa-by-country/