Somalia’s MicroDahab to Lend Solar Powered Water Pumps Under New Microfinance Initiative

MicroDahab MFI, a microfinance subsidiary of Dahabshiil Group, has announced a collaboration with SolarGen Technologies to create the first ‘ijarah thumma Iqtina’ (‘lease to purchase’) sustainable energy product in Somalia.

The initiative will enable clients to own a solar-powered water pump which would otherwise be prohibitively expensive for farmers and other small business owners to buy. MicroDahab’s potential for success is due, in large part, to making greener financing decisions informed by real knowledge of what is happening in climate-affected places.

Somalia is often cited as one of the most expensive countries in the world for electricity costs with the average Somali farming village spending US$80,000 in fuel costs to power generators for water every year. However, the company did not provide the rental charges it is collecting from the customers.

"We have introduced leasing products to transform the lives and fortunes of many communities in a socially responsible yet sustainable way. MicroDahab will bear both the capital cost and risk of asset ownership, while our clients reap the benefits of using the water pumps, at minimal rents," said Dahabshiil Group Chief Executive Officer, Abdirashid Duale.

The Somali territories have an abundance of solar energy which can be harnessed to both decrease cost-inefficiencies for businesses and provide a safer and more sustainable clean energy solution for hundreds of communities across the region.

MicroDahab claimed that it is offering a key bridge to climate change adaptation and mitigation strategies. MicroDahab has the potential to help the most vulnerable adapt to climate change by providing individuals and households with a means of accumulating and managing the assets and capabilities needed to become less susceptible to shocks and stresses or cope with the impact. Agribusiness remains the most prominent trade in the Somali territories given the favourable conditions for agricultural development.

The water pumps project is a pilot for a wider social impact agenda driven by Dahabshiil Group to provide enterprising micro business owners with access to machinery such as tractors and irrigation equipment coupled with an education programme to increase technical know-how among agriculture professionals.

The solar powered water pumps project was announced at an event which marked the one-year anniversary of MicroDahab, that was created in July 2014. To date MicroDahab has invested a gross financing of over $1 million to date. The initiative has served over 15,000 beneficiaries – which has created new employment opportunities – while 70 per cent of MicroDahab’s customers are female and predominantly low-income earners.

MicroDahab customer Abdirashid Ahmed Ibrahim, from Hargeisa, who received the solar lamp loan said: "I was successful in receiving a lease on a solar powered water-pump. This allowed me to double the size of my farm and save $400 a month which I would previously spend on fuel."

One comment

  1. Very interesting.

    Solar for villagers in Africa is indeed picking up.

    For those who would like to learn more about the various funding, products, and approaches, I’ve compiled relevant resources here:

    Hope this helps,

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