Nairobi-based street trader Jonathan Kahora is about to enter the world of digital marketing, build his business and give his family the life he’s always dreamed of.

He’s one of the 56 million people in sub-Saharan Africa – almost the entire population of South Africa – whose lives are about to be changed forever, thanks to a fintech deal which aims to unlock $5 billion worth of credit by 2025 for the region’s unbanked population – primarily to purchase solar-powered products which will give them the opportunity to access pumped water, sanitation and zero-emission electricity and bridge the digital divide.

Kenya-based M-KOPA has empowered over 3 million customers with digital credit to access productive assets such as high-quality smartphones and solar home systems and unlocked $1 billion of credit for the underbanked. Now, a syndicated deal totalling $192 million ($165m in Kenya and $37m in Uganda) brokered by Standard Bank and Stanbic Bank will enable the expansion of the business into new markets such as South Africa and reach 20 million more customers.

The funding was raised in both local currencies and US dollars, with Standard Bank and Stanbic Bank simultaneously acting as mandated lead arranger (MLA), facility agent, security agent, sustainability coordinator, hedge counterparty and largest funder to the syndication. The Group has been mandated to arrange up to $500 million in senior secured local currency-equivalent debt financing for the M-KOPA Group over the next five years.

More than 44.5 million Kenyans and 33 million Ugandans don’t have access to grid-based electricity and although Kenya leads the way in Africa in terms of renewable energy development, solar photovoltaic systems remain too costly for millions of households. 85% of adults in sub-Saharan Africa live on less than $5.50 per day, meaning that any purchase over $100 represents over 60% of their monthly expenditure. That makes access to credit essential – but challenging in the face of a massive unbanked population.

“Over the course of our partnership, we’ve seen the tremendous impact that M-KOPA’s solutions have had on the continent and know that our continued support in providing innovative debt financing solutions will help the company positively impact the lives of millions more people across Africa,” says Stephen Lovell, Head: Corporate Financing Solutions, who led the deal team of Nick Riley, Sharon Brighton, Sheldon Phaguda, Kyalo Ngaamba and George Mukiri.

“This deal demonstrates our ability to act as MLA and arrange a complex syndication as the only commercial bank in the transaction,” he adds.

M-KOPA CEO Jesse Moore says that the deal will help further unlock credit for 60% of the adult population across Africa who don’t have bank accounts. “Scaling our fintech services with this funding will help us usher in a new wave of financial inclusion for millions of people across Africa, giving them more than access to products that improve their lives – it will offer them dignity,” he says.

“This deal will fundamentally empower people like Jonathan to build their businesses, help their children study, light their homes, change the way they access basic services and solve some of their countries’ greatest challenges. It’s a powerful example of what can happen when businesses and banks commit to Africa’s growth.”

This deal demonstrates our ability to act as MLA and arrange a complex syndication as the only commercial bank in the transaction
Stephen Lovell