2022 ENERGY IN EMERGING

MARKETS CASE COMPETITION

Part of Energy Week at Duke

Sponsored by

and
TABLE OF CONTENTS
Table of Contents .................................................................................................................................................. 2
RULES AND GUIDELINES........................................................................................................................................ 3
Instructions – Please Read in Detail ................................................................................................................. 3
Round 1 Case ................................................................................................................................................ 3
Case Submission Instructions and Format.................................................................................................... 3
Round 2 Case ................................................................................................................................................ 4
Final Round ................................................................................................................................................... 4
Rules and Considerations ................................................................................................................................. 4
Questions .......................................................................................................................................................... 5
CASE SUMMARY.................................................................................................................................................... 6
NITHIO................................................................................................................................................................... 6
Company Overview........................................................................................................................................... 6
Nithio FI (Financial Intermediary) ..................................................................................................................... 7
Energy Operators and Products Covered by Nithio FI’s Financing Facilities .................................................... 8
Typical Loan Characteristics ......................................................................................................................... 9
Nithio FI Projects Geographic Distribution ....................................................................................................... 9
Nithio FI Capital ................................................................................................................................................ 9
Nithio’s Mission and Values............................................................................................................................ 10
MARKET OVERVIEW ............................................................................................................................................ 11
Energy Access in Africa ................................................................................................................................... 11
Electrification.............................................................................................................................................. 12
Solar Home Systems (SHS) Market ................................................................................................................. 13
PAYGO model ................................................................................................................................................. 13
Market Trends ................................................................................................................................................ 13
Country-Specific Markets ............................................................................................................................... 14
Kenya .......................................................................................................................................................... 14
Uganda........................................................................................................................................................ 15
Nigeria ........................................................................................................................................................ 16
CASE QUESTIONS ................................................................................................................................................ 18
GLOSSARY ........................................................................................................................................................... 19
SOURCES ............................................................................................................................................................. 20

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RULES AND GUIDELINES
Instructions – Please Read in Detail
The competition will be comprised of two initial rounds and a final in-person round that will combine
analysis of the first two rounds into a final, polished presentation with a Q&A session. A total of 10
teams will advance to Round 2 and 5 teams will advance to the final round.

Round 1 Case
Case Release: Monday, September 12th- Tuesday, September 13th (on a rolling basis) (updated)
Submission Deadline: 11:59 PM ET, Saturday, September 24th (updated)
Round 2 Teams Announced: September 31st

All registered teams participate in this portion of the competition. The Round 1 deliverable is an
executive summary of the team’s solution to questions posed in the case. However, the length of the
document should not indicate reduced quality. With many teams competing for limited finalist spots,
teams must clearly communicate the depth of understanding, contextual sensitivity, and strong analysis
to differentiate themselves and advance.

Each Round 1 submission will be graded blindly by multiple readers, and the 10 top-scoring teams
(maximum 2 teams per school) will be invited to participate in Round 2. Please note that the team
rosters included with the Round 1 submission are final.

There will be an opportunity to ask questions regarding case rules to the EEMCC leadership team.
Questions related to specific content within the case will not be answered unless clarification is deemed
necessary by organizers. Please submit your questions into this Online Form by 11:59 PM EST on
Wednesday, September 17th. The EEMCC team will answer them as best as possible by 11:59 PM EST on
Monday, September 19th.

Case Submission Instructions and Format

Teams should submit their solutions in a zipped file with the executive summary (in PDF format) and
additional documents to this Form. Your university, team name, team member names or any other
identifying information should NOT be included anywhere in the deliverables of your submission
(besides the title page).

(1) Deliverable
Page 1: Title page: Team Name, Final Team Roster, Honor Statement acknowledging the
competition’s rules (described below)
Page 2: Executive summary with the solution (11pt font, single spaced, 1-inch margins)

You may attach an appendix with an Excel model and/or a Word document including figures and
graphs, research sources or any analyses you conducted to inform and support your decision. All

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 figures provided should be purposeful and referenced in the solution. There is no length limit for the
appendix. However, please note that only the executive summary will be scored by judges.

(2) Resumes
Resumes of all team members should be combined in one PDF document and submitted. The
document will be shared with the case sponsor and judging panel after the competition and will not
be considered in evaluating case submissions or presentations.

Round 2 Case
Case Release: Monday, October 3rd
Submission Deadline: 11:59 PM ET, Sunday, October 14th
Final Round Teams Announced: Monday, October 24th

Final Round
Finalists Announced: Monday, October 24th
Submission Deadline: 11:59 PM ET, Saturday, November 5th
Final Round: November 7th, 2022

Final round teams will be invited to Duke’s Fuqua School of Business to present their solution and
answer questions from the judges on November 7th, 2022. We will provide an online option for teams
that cannot attend in person, although attending in person is highly preferred. After finalists are
announced, they will have 3 days to confirm that their team (minimum of three team members) can
attend the Energy in Emerging Markets Case Competition Final.

Only one team per school will be included in the Final Round invitations, although that rule may be
relaxed if a team declines their invitation, and an alternate is needed. Advancing teams will have until
November 5th to further develop their ideas and prepare a presentation that will be given before a large
public audience and the full judging panel on November 7th, 2022. More details will be provided to
finalists upon invitation.

Rules and Considerations

• All team members must currently be enrolled in a graduate program at the same accredited
university.
• Teams may conduct external research and discuss the case with individuals outside their team,
provided the final deliverable is solely the original work of the listed team members. Teams may
not contact sponsoring firms or judges regarding the case. Information on sponsors and judges
will be added to our website over the next few weeks.
• If specific figures are not provided within the case document, please make reasonable
assumptions based on outside research. State these assumptions clearly in your response.
• The links to relevant resources in the endnotes are a good starting point for your research, but
additional research is expected.

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 • We have provided a glossary at the end of this document with terms that we feel might not be
commonplace outside of the energy access and finance space. However, not all terms have been
defined.
• Not all the information presented here will be relevant to your solution.

Questions
If you have any questions regarding logistics of the competition, please email Austin Brandt at
austin.brandt@duke.edu with the following subject line: [2022 EEMCC Question]. Please do not email
questions regarding the case itself, as there is a form for all case related questions (see above in Round 1
Case).

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CASE SUMMARY
Nithio FI is a financial intermediary (FI) that uses advanced data analytics and machine learning to
efficiently deploy capital in the off-grid solar sector in Africa, addressing equitable energy access and
climate change adaptation and mitigation issues on the continent. The company leverages its
proprietary analytics technology to underwrite off-grid solar companies’ debt facilities more efficiently
and at scale. Currently, Nithio FI is focused on building a pipeline of investments in the development of
the pay-as-you-go (PAYGO) off-grid solar, especially those catering to underserved markets.

To unlock and scale capital deployment, Nithio FI is considering expanding its financing services beyond,
but not necessarily limited to, solar home systems to a full range of energy access and service providers
within the climate finance space including off-grid, mini-grids and appliances, cooking solutions, diesel
generator replacement, and productive use of energy (see glossary for definitions). The company values
social impact in the form of increased energy access along with CO2 emission reductions, but also seeks
to grow its sales and profits rapidly.

NITHIO
Company Overview
After years of energy access work for institutions like the World Bank, USAID and African Development
Bank, and private companies such as Citigroup and Google, Nithio’s founding team saw an opportunity
to address this challenge by enabling capital flows to off-grid solutions providers in the continent.
Founded in 2018, Nithio aims to advance clean energy access in Africa. It is an AI-driven platform for
clean energy investments that serves as a sustainable infrastructure for capital delivery and offers
underwriting tools and information-sharing for stakeholders to identify high-need credit-worthy off-grid
energy customers in the African market.

Nithio has identified that companies that provide off-grid products to end users (“operators”) need
investment to grow. However, operators and investors cannot accurately assess customers’ ability to
pay and repayment risk (Figure 1). This has stalled capital flows to these small, medium, and large
operators working towards energy access in Africa. As a result, global investment to the sector is only
hundreds of millions of dollars when $250 billion is needed to achieve universal energy access by 2030 1.

To connect the right capital to the right end user, Nithio developed a proprietary Risk Analytics Engine,
an AI-powered tool that combines end-user repayment data, geospatial population characteristics, and
climate change exposure and vulnerability to produce a standardized credit risk assessment at the
individual customer and portfolio levels. The Risk Analytics Engine not only analyzes past consumer
performance but also forecasts portfolio-level cashflows and estimates the portfolio value.

6
Figure 1. Lack of scalable financing infrastructure due to inability to accurately assess risk led to Nithio’s
founding (Source: Nithio Analysis)

Nithio FI (Financial Intermediary)

This case will focus on Nithio FI. Managed by Nithio Holdings, Nithio FI is a financial intermediary
(Figure 2), designed to underwrite off-grid solar companies’ debt facilities more efficiently and at scale
by using the company's proprietary Risk Analytics Engine and its innovative data-driven approach to
understanding credit risk.

Nithio FI’s financing options include a variety of facilities for energy operators that provide off-grid
products to end users. Operators can choose to secure financing using collateral (receivables or
inventory that is in storage or in transit). Only operators with more established credit worthiness have
access to the unsecured loans. Additionally, in some cases, receivables can be ring-fenced in a Special
Purpose Vehicle (SPV).

Nithio FI is structured as a multi-country, blended finance Permanent Capital Vehicle. It raises

investment capital from development finance institutions (DFIs), foundations, commercial and impact
investors, and family offices in the form of senior/subordinated debt or equity.

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 Figure 2. Nithio FI Corporate Structure (Source: Nithio)

Energy Operators and Products Covered by Nithio FI’s Financing Facilities

Nithio FI invests in financing energy products that serve households and small businesses. Currently,
Nithio FI primarily finances operators that sell solar home systems (SHS) with the PAYGO model to off-
grid customers in key African markets and is exploring opportunities with distributors of other energy
products and services.

Nithio FI aims to finance operators across portfolio sizes, split up into three tiers as defined in the table
below:

Operators Definition
Annual revenue > $25M
Tier 1
e.g. larger, established, often international companies
$2.5M < Annual revenue < $25M
Tier 2
e.g. newer international entrants
Annual revenues < $2.5M
Tier 3
e.g. small local companies
Figure 3: Energy operator tiers

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Typical Loan Characteristics
• Loan sizes: $500k to $5M
• Interest rates: 6-13%
• Tenor: 3 to 4 years
• Loan schedule: typically allows borrowers to draw down financing over 12-month period
following closing
• Average grace period for borrowers: 12 months on principal repayment
• Payments Frequency: Quarterly
• Facility Fee (paid by borrowers): 1% of financing upon drawdown

Note that for Tier 1 borrowers, loan sizes would typically be on the higher end with interest rates on the
lower end of the ranges given; conversely Tier 3 borrowers are generally on the lower end of the loan
size range and upper end of interest rates; and tier 2 borrowers are more likely to fall in the middle of
both size and rate ranges.

For the purposes of this analysis, you assume a WACC i or discount rate of 7%.

Nithio FI Projects Geographic Distribution

Nithio FI has an initial focus on lending activities in markets in Kenya, Uganda, and Nigeria, where it has
financed projects supporting household-level and other last-mile deployment. These three markets
were particularly attractive to Nithio because of the high number of people without energy access and
the significant number of companies (distributors, operators) in the solar off-grid sector there.

Nithio FI has performed particularly well with small, Tier 3 operators in these markets (defined in the
table above), where it is currently the market leader.

Nithio FI Capital
Currently, Nithio FI has $23M in committed capital (Figure 4). It secured $13 million in equity from
Nithio Holdings, ElectriFI, and FSD Africa, and $10 million in debt from U.S. International Development
Finance Corporation (DFC).

Current 2022 YE 2023 YE 2024 YE 2025 YE

Committed $23M $35M $60M $100M $160M

Capital
Figure 4. Nithio FI Committed Capital including forward looking minimum targets through 2025 (Source:
Nithio)

i
Weighted Average Cost of Capital

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Nithio’s Mission and Values
Nithio is a mission driven business aiming to ensure an equitable and just energy access transition, while
also driving progress towards UN Sustainable Development Goals (SDG) 7 and 13.

Equitable and just energy transition is a core value for Nithio. Recent commitments from COP26 ii have
focused almost entirely on emissions reduction, failing to address issues directly affecting climate-
vulnerable populations, including the urgent need to achieve universal energy access. This has pulled
attention away from low-emitting, energy-poor countries like those in sub-Saharan Africa, where 75% of
people without energy access currently live 2. There are also challenges in efficiently and effectively
deploying the funding that gets allocated to reach the most vulnerable. To address this gap, Nithio aims
to 1) gain a better understanding of affordability to ensure that everyone, including poor and/or
women-led households, is reached; 2) understand household ability to pay and ensure those households
can be reached; and 3) identify populations disproportionately impacted by climate change, including
smallholder farmers, microentrepreneurs, and households, to finance operators that equip these
populations with necessary appliances. These appliances have the potential to not only enhance quality
of life, but also enable communities to lift themselves out of poverty.

Nithio is committed to driving progress towards achieving UN

Sustainable Development Goal 7 (SDG 7 - Universal Energy Access) and
13 (SDG 13 – Climate Action). SDG 7 comprises targets to ensure access
to affordable, reliable and modern energy services for the global
population by 2030 and to increase the share of renewable energy in the
mix. SDG 7 emphasizes the 13% of the global population who lack access to modern energy and 3 billion
people who rely on wood, coal and charcoal for cooking and heating 3. On the other hand, achieving SDG
13 requires government and business leaders to take urgent action to combat climate change in
accordance with the Paris Agreement, adopted in 2015 to ensure that the global temperature rise this
century is contained to well below 2 degrees Celsius above pre-industrial levels 4. Nithio’s growing focus
on solar productive use is aimed at financing climate change adaptation and mitigation strategies. The
company estimates that by 2025, its investments will bring energy access to 4 million people and avoid
more than 250,000 tons of CO2 emissions.

Driving progress towards achieving Sustainable Development Goal 7 (SDG 7 - universal energy access by
2030), it also helps create credit risk evaluation standards that can expand financial inclusion.

26th Conference of the Parties (COP) to the UN Paris Agreement which took place in Glasgow, Scotland in November 2021,
ii

which brought together 120 world leaders and over 40,000 scientists, professionals, party delegates, observers, and media
representatives to discuss the science, the solutions, the political will to act, and clear indications of action to address climate
change. Source: https://www.un.org/en/climatechange/cop26

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MARKET OVERVIEW

Energy Access in Africa

Access to modern energy is critical for the provision of clean water, sanitation, and healthcare, as well as
reliable lighting, heating, cooking, mechanical power, transport and telecommunications services 5, 6.
However, access to reliable electricity and clean fuels and technologies remains a significant challenge in
many African countries in the form of unconnected populations – those not connected to the power
grid, and populations that are connected but do not have reliable access to electricity (Figure 5).
According to a 2021 survey by Afrobarometer, 57% of households (98 million) do not have reliable grid
power supply, and 16% of households (27 million) rely exclusively on diesel generators for electricity 7.
Looking toward 2030, nearly 90% of the households in the world without electricity access will be in
Africa.

Figure 5. Energy access (% of country population) in Africa in 2019 (Source: International Energy Agency
2021)

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To achieve full access to energy solutions by 2030, required annual investments have been estimated at
over USD 25 billion 8. Solar home systems (SHS) and mini-grids offer an opportunity to reach households
that are currently not connected to the central grid. Even in urban and peri-urban areas with grid
connectivity, there is a strong demand for SHS to solve the issue of grid unreliability.

Populations that fall into these categories are quite diverse, distinguished by population growth,
urbanization trends, consumer preferences and expectations, and divergent government policy
environments, and as a result require diverse solutions, considering whether energy services are
adequate, available when necessary, reliable, of good quality, convenient, affordable, legal, healthy, and
safe for all.

Electrification
Electrification is an important aspect of energy access. Many researchers and energy access
professionals believe that reaching 2030 electricity access targets will require a combination of grid
connectivity, mini-grids and standalone off-grid solutions 9, 10 such as solar home-systems (Figure 6).

Figure 6 describes the existing electrification options:

Electrification Options Brief Description

Very small independent PV-powered systems up to 11 W usually providing lighting
Pico-solar
services or simple cell phone charging.

Small independent supply systems powered by solar PV. Currently, the most
widely spread off-grid option in many African markets. Combined with battery
Solar Home-Systems
storage and control devices, they are usually designed to directly power lighting,
(SHS)
cell phone charging, and appliances such as TVs or fridges. They can be in a range
of 12–300 W.

Small stations powering local low distribution grids serving specific settlements,
which can be off-grid or connected to the central grid. Mini grids are generally
Mini-grids
deployed in rural areas with a higher population density and serve reliable power
to commercial loads as well.

Extension of the medium voltage (MV) and low voltage (LV) distribution grid to
Grid extension connect households or other customers to the central energy supply system. This
central system includes power generation, transmission, and distribution.

Figure 6. Options for electrification and their descriptions 11

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Solar Home Systems (SHS) Market
A household’s decision to purchase an SHS is based on various factors such as price, lighting hours and
quality, as well as opportunities for educational improvements, health benefits and productivity-
improving appliance. Gaining longer and better‐quality lighting hours compared to previous lighting
sources (e.g., kerosene lamps) is a common determinant. SHS adoption can facilitate the addition of new
appliances, such as TVs and radios and extend the usage of existing devices, such as mobile phones.
Charging phones at home is a top purchase incentive. Increased lighting can provide social benefits by
extending study or work hours after dark and providing electricity to hospitals. Televisions and radios
also provide social benefits in the form of entertainment and can enhance social networks in
neighborhoods.

At the end of the SHS financing term, customers have three pathways, which are retaining their SHS,
upgrading, or switching to other energy sources. The option to upgrade could involve a higher regular
payment to add additional solar panels and/or appliances. Some studies suggest, however, that the
perceived marginal value added for households decreases with every additional appliance purchased, as
they move out of energy poverty toward improving their quality of life 12.

PAYGO model
Recent SHS combine the system with smart meter or “pay-as-you-go" (PAYGO or PAYG) solutions to
enable microfinancing or leasing. PAYGO models are a pre-paid alternative to cash purchases of energy
products and services offered by operators and distributors of these solutions. With PAYGO, providers
allow customers to pay for their energy products in pre-paid installments over a period, usually from six
months to three years. Payments are mostly through mobile money with some companies accepting
cash or offering scratch cards 13.

For SHS purchases with the PAYGO model, SHS companies usually require a down payment before the
equipment installation, after which the customer chooses how much to pay on a regular basis (e.g.,
weekly) to receive a pre-specified amount of energy services. Some companies require a minimum
amount. Many operators using the PAYGO model will repossess a customer’s product if they default on
their payments 14. Rent-to-own or service-based payment models are both commonly offered by
companies 15.

Market Trends
Over the last decade, an emerging off-grid energy sector has developed to address the daunting need
for energy access in Africa. Businesses have leveraged new technologies in mobile money and cloud-
connected wireless communications and benefited from falling solar PV and battery costs 16. Over
$300M in debt financing for energy access over the last few years demonstrates the bankability of the
off-grid sector, particularly solar home systems (SHS) 17.

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Kenya and Uganda are two of the most mature markets in terms of the number of operators and
customer awareness of PAYGO off-grid, and there is still significant sales potential there. Many early
leaders in solar home systems, as well as several local companies, see Nigeria as the best commercial
opportunity for SHS due to its large, unconnected population. For more details, see the country sections
below.

In 2019, PAYGO solar home system (SHS) sales in Africa were around $400 million 18 and the sector is
only just getting off the ground in several markets. While initially the sector was driven by sales of small
kits with lighting and cell phone charging, the size and cost of the systems are growing with consumer
demand for higher levels of service 19. According to GOGLA, the global association for the off-grid solar
industry, both cash and PAYGO sales grew in 2021 compared to previous years. Sales of PAYGO products
in particular reached a record high of over 1.5 million units in the last six months of 2021. This was
driven by the growth in sales of PAYGO solar lanterns, the most affordable line of products in the off-
grid range 20.

However, growth was not distributed evenly. While some markets like Uganda, Zambia, Rwanda and
Malawi reported strong growth in off-grid sales, other key markets such as Kenya and Ethiopia
experienced a decrease in the same year 21. According to GOGLA, this could be due to pronounced
disparities between off-grid solar markets and products and an uneven recovery from the COVID-19
pandemic. Supply chain issues became leading factors of market disruptions, and key appliances sales
decreasing in 2022 by 20% compared to the first half of 2021.

Country-Specific Markets
Kenya
Kenya has a landmass of 224,081 square miles and a population of 51 million people 22, of whom 15%
are not connected to the grid (IEA).

Off-Grid Market
Energy access market players in Kenya have evolved beyond an early-stage pilot phase and have
successfully reached more than half a million households through rapid sales growth. The energy market
in Kenya has also evolved, as suggested by the participation of 52 international private sector investors –
ranging from foundations to large companies.

Kenya is the market leader in solar home system (SHS) sales in Africa due to the regulatory environment,
government support, and the adoption of business models such as pay as you go (PAYGO). Yet, to
achieve broader impact, the PAYGO companies will require about one billion dollars 23.

Energy Sector
In 2018, the total electric generation capacity in Kenya was 2,670 megawatts (MW), with peak demand
of 1,841 MW. Electricity generation mainly comes from renewable sources at 78%, of which 40% was
from geothermal energy and the remainder from hydropower, wind, and solar power. As of June 2018,

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access to electricity was estimated at 75% (both grid and off-grid). The annual demand growth rate for
electricity is estimated at 6.7%, reaching 3,348 MW by 2030.

Energy Regulations
In Kenya, past reforms in the energy sector have separated the regulatory and commercial functions of
the sector. The 2019 Electricity Act outlines the obligations of the national and county governments for
providing electricity and the establishment of powers and functions of energy-sector entities 24.

In 2020, the Kenyan government reinstated the 14% VAT iii on off-grid solar products and subsequently
increased it to 16% in January 2021. A tax exemption was reintroduced, but products in stock during the
second part of 2021 were likely still affected by the price increase and as well as uncertainty around the
enforcement of taxes 25.

Uganda
Uganda is a landlocked country in East Africa with a total of 93,065 square miles landmass and a 44
million population 26. Despite achieving a huge progress in electrification (3% annual access growth rate
between 2010 and 2019), it still ranked among the top 20 access-deficit countries with 26 million people
without access to electricity in 2019 according to the International Energy Agency (IEA) 27.

Off-Grid Market
In Uganda, more than 73% of people use mobile phones and mobile money penetration is estimated at
59%. As such, PAYGO offers a promising digital solution to provide clean and affordable energy for low-
income and rural households in Uganda 28. However, many customers do not use mobile money
platforms, cellular system access is not always reliable, and distributors find that some customers make
payments using other people’s phones

To date, only 11 operational mini-grid projects have been installed in the country, servicing
approximately 4,000 households 29. Development of the mini-grid sector in Uganda has been hampered
by an unclear regulatory framework that has limited private sector participation, while public resources
have focused on the expansion and densification of the main electricity grid 30. There is no mini-grid
regulation, so concerns around licensing, tariffs, and costs are considerable 31. Mini-grid development is
mostly supported by concessional finance from development finance institutions (DFI) and
governments. Debt is expected to comprise approximately 33% of the projected capital required.
Investors perceive mini-grids as high risk due to uncertain connections and low returns on investment.

According to the Uganda Off Grid Market Accelerator, SHS will play a role in achieving universal access in
the country and will require cumulative investment of around $1.4Bn by 2030 32.

Energy Sector

iii
Value Added Tax

15
Uganda’s electrification rate is growing rapidly, but 59% of Ugandans still do not have access to
electricity 33. This number is even lower when we look at the rural population, where only 32% of people
have access to electricity. However, market surveys from USAID found that there is a strong market for
DC-compatible solar appliances in Uganda, with a relatively wide variety of products sold compared to
other surveyed markets in sub-Saharan Africa 34.

Regulations
Uganda’s current electricity regulations are more suited for larger-scale, grid-connected generation,
transmission, and distribution 35. Uganda has undertaken rapid policy changes in the energy sector in the
past two decades to create an enabling environment for energy; however, many of these policies and
frameworks do not specifically guide off-grid energy sector work 36.

Nigeria
Nigeria is Africa’s largest economy and has a landmass of 356,667 square miles 37. Nigeria also has the
largest population in Africa - about 200 million people 38. The Nigerian population is estimated to grow at
2.6% and the adult literacy rate is 59.6% 39, 40.

Off-grid Market
The potential value of the off-grid appliance (including TVs, fans, refrigerators and solar water pumps)
market in Nigeria was $537 million in 2018 and is expected to almost double to $929 million by 2030 41.
Nearly 93 million people, 45% of the population in Nigeria, do not have access to the electric grid. Given
the country’s relatively high degree of solar radiation, particularly in the northern states that are most
affected by limited access to electricity, the primary renewable technologies for supplying power to off-
grid locations in Nigeria are SHS and solar-powered mini-grids. These platforms have only recently
reached a point of price competitiveness with more traditional off-grid generation options.

There is a limited availability of locally manufactured solar technologies for mini-grids and SHS with the
use of PAYGO systems in Nigeria, so external companies usually supply many of the more technologically
advanced components within the generation, management, and storage segments of the mini-grid value
chain, while local companies engage in the project development and support the implementation 42.

In 2019, the Efficiency for Access State of the Off-Grid Appliance Market Report identified that upfront
cash payments were the most common financial model for purchasing products in Nigeria and mobile
money penetration was relatively low. However, the usage of mobile money has grown significantly in
the last several years 43. Expanding the use of PAYG and electronic payment systems is complicated by a
cash-dominant Nigerian economy.

Energy Sector
The current daily power demand in Nigeria is estimated at 17,520 MW while peak generation capability
is 5,300 MW. The Central Bank of Nigeria has stated that energy demand in Nigeria is projected to grow
by about 52% over the period 2010 through 2035. Currently, just about 55% of the population has
access to electricity, an increase from 45% in 2000 44.

16
The use of diesel generators (22 million small generators) is significantly higher in Nigeria compared to
other African markets with annual spending of approximately $14b on diesel (Dalberg, A2EI).
Regulations
The Nigerian market is consolidated and strongly regulated by different government agencies.
In recent years, the Nigerian government has seized on the need to drive supply to meet demand and
has begun providing power sector development incentives. This new practice has been catalyzed by
proposed funding from the World Bank through its Nigeria Electrification Project (NEP), envisaged to
invest $350 million across mini-grids SHS, power systems for universities, and technical assistance. For
mini-grids alone, the amount of public financing coming available exceeds $230 million across multiple
publicly funded donor programs. Hundreds of possible mini-grid sites for developers have been
identified, estimating that they can derive a return on investment for a medium scale (approximately
200kW) solar home system in three years.

To further support the initiative, the Nigerian Central Bank has relaxed licensing regulations 45.

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CASE QUESTIONS

1. Decide which adjacent clean energy access sector(s) and/or product(s) Nithio FI should prioritize for
expanding their lending services within their existing markets, Nigeria, Kenya, and Uganda. A few
examples include productive uses of energy (products might include solar water pumps, refrigeration or
agricultural processing equipment), urban residential solar (products could be mini-grids or SHS) to
promote diesel generator replacements, e-mobility (electric vehicles, charging infrastructure, etc.), and
mini-grids (particularly systems focused on household electrification). These examples are a non-
exhaustive list, and you may propose any viable combination of sectors, products, and their applications.
Please note that Nithio FI does not intend to move into commercial and industrial (C&I) and larger utility
scale investments.

2. For your proposed solution, estimate the total addressable market size in the 3 initial countries where
Nithio FI operates. Consider the existing infrastructure of distributors and financial institutions,
regulatory framework, and currency issues. Propose what the percentage makeup between Tier 1, Tier 2
and Tier 3 operators in Nithio’s portfolio should be for your chosen solution.

3. Estimate the profitability of your chosen sectors/products.

4. Given Nithio’s mission and values, please consider how your recommendations might align with
progressing an equitable and just energy transition and targeting populations most vulnerable to climate
change

Only the executive summary will be scored by judges, so please clearly describe your process and
justify your recommendation with numbers and supporting evidence as to why Nithio FI should choose
one approach over another. An excellent submission will provide a cogent argument, backed up with a
clearly explained analysis, cited sources, and assumptions clarified. Clearly cite sources and the numbers
used in your analyses, and explain any assumptions made.

You may attach an appendix with an Excel model and/or a Word document including figures and graphs,
research sources or any analyses you conducted to inform and support your decision. There is no length
limit for the appendix.

While the case might seem intimidating, it was intended to resemble the real world, where individuals
need to frequently learn new concepts and decide what information is and is not relevant. Remember to
focus on the case questions and think about how you might solve that and what information you might
need. GOOD LUCK!

18
GLOSSARY
• Mini-grid/microgrid - There is no universally accepted definition of the difference between mini-
grids and microgrids – the two words are often used interchangeably to mean small stations
powering local low distribution grids serving specific settlements, which can be off-grid or
connected to the central grid.
• Off-grid – Solutions that are not connected to the main grid. For example, a solar home system
consisting of solar panels installed on the roof of one’s house that directly power the lights in
the home and a single phone charger outlet.
• On-grid – Solutions that are interconnected with the main electricity grid. For example, solar
panels on a house that are interchangeable with electricity provided by the utility provider
through the grid. This is most common in developed countries such as the US where grid
connectivity is high.
• Sector - Energy access sectors might include agriculture, households, communities, mobility
• Product – Energy access products might include mini-grids, solar water pumps, electric vehicles,
SHS, etc. - each of which can be used across sectors
• Energy – There are different types of energy (electricity, heating, cooling, fuel combustion for
mobility, etc.)
• Electricity – Electric energy used to power home and commercial appliances.
• SHS – Solar home systems are off-grid solutions that include independent solar panels with
appliances directly connected to them. The type of appliances depends on the size and type of
solar PVs.
• Productive use of energy – The use of any energy for agriculture or commercial purposes. Often
refers to off-grid solutions that power a particular technology directly, such as solar water
pumps – water pumps used in agriculture which are directly powered to a solar panel that is
connected to them but not the grid.
• PAYGO – A pay-as-you-go model is used to finance the purchase of off-grid or mini-grid solutions
in many African markets. It operated on a pre-paid basis for energy products and services.
• Operators – Providers of energy products and services (most often distributors, but could also
be manufacturers or utilities)
• Mobile money – Mobile money is a system that allows people without bank accounts to transfer
money using their phones 46.

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SOURCES

1 https://www.iea.org/reports/sdg7-data-and-projections/access-to-electricity
2 Blankenship, Mary, and Christina Golubski. “Figure of the Week: Increasing Access to Electricity in Sub-Saharan Africa.”
Brookings, 18 June 2021, https://www.brookings.edu/blog/africa-in-focus/2021/06/18/figure-of-the-week-increasing-
access-to-electricity-in-sub-saharan-africa/
3 https://www.un.org/sustainabledevelopment/energy/
4 https://www.un.org/sustainabledevelopment/climate-change/
5 https://www.iea.org/articles/defining-energy-access-2020-methodology
6 https://www.worldbank.org/en/results/2020/11/10/off-grid-solar-electricity-is-key-to-achieving-universal-electricity-

access-the-lighting-global-story
7 https://www.afrobarometer.org/wp-content/uploads/2022/04/ad514-pap10-

still_lacking_reliable_electricity_from_the_grid-many_africans_turn_to_alternative_sources-afrobarometer-
10april22.pdf
8 https://www.channelstv.com/2022/06/20/africa-needs-25-bn-a-year-for-full-electricity-access-

iea/#:~:text=The%20IEA%20said%20600%20million,after%20a%20decade%20of%20progress
9 https://energyaccess.duke.edu/wp-content/uploads/2020/12/Lessons-for-Modernizing-Energy-Access-Finance-Part-

2.pdf
10 https://www.sciencedirect.com/science/article/pii/S2211467X21001000
11 https://www.sciencedirect.com/science/article/pii/B9780128168356000140
12 https://www.researchgate.net/publication/348336704
13 https://www.researchgate.net/publication/348336704
14 https://www.researchgate.net/publication/348336704
15 https://www.usaid.gov/sites/default/files/documents/Power-Africa-PAYGO-Guide-for-Off-grid-Energy-Companies.pdf
16 https://www.gogla.org/sites/default/files/resource_docs/2018_mtr_full_report_low-res_2018.01.15_final.pdf
17 https://shellfoundation.org/app/uploads/2018/10/2018-UOMA-Market-Map.pdf
18 https://www.gogla.org/sites/default/files/resource_docs/global_off-grid_solar_market_report_h1_2018-opt.pdf

19 Source: Nithio
20 https://www.gogla.org/sites/default/files/resource_docs/gogla_sales-and-impact-reporth2-2021_def2.pdf
21 https://www.researchgate.net/publication/348336704
22 https://www.imf.org/en/Countries/KEN
23 https://www.wri.org/research/stimulating-pay-you-go-energy-access-kenya-and-tanzania-role-development-finance
24 https://www.usaid.gov/sites/default/files/documents/1860/PAOP-Kenya-MarketAssessment-Final_508.pdf
25 https://www.gogla.org/sites/default/files/resource_docs/gogla_sales-and-impact-reporth2-2021_def2.pdf
26 https://www.imf.org/external/datamapper/LP@WEO/UGA?zoom=UGA&highlight=UGA
27 https://www.iea.org/countries/uganda
28 https://uoma.ug/wp-content/uploads/2020/10/Download-2020-UOMA-Market-map_vFUpdated.pdf
29 https://pdf.usaid.gov/pdf_docs/PA00W5JT.pdf
30 https://www.seforall.org/
31 http://pdf.usaid.gov/pdf_docs/PA00W5JT.pdf
32 https://uoma.ug/wp-content/uploads/2020/10/Download-2020-UOMA-Market-map_vFUpdated.pdf
33 https://efficiencyforaccess.org/updates/ugandas-off-grid-appliance-market
34 http://pdf.usaid.gov/pdf_docs/PA00W5JT.pdf
35 https://www.naruc.org/international/news/ugandan-regulators-draft-isolated-grid-system-regulation-to-achieve-

rural-electrification-goals/
36 https://pdf.usaid.gov/pdf_docs/PA00W5JT.pdf
37 https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVEC/WEOWORLD/AFQ

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38 http://worldpopulationreview.com/countries
39 http://worldpopulationreview.com/countries/
40 https://www.indexmundi.com/nigeria/literacy.html
41 https://www.clasp.ngo/updates/nigeria-has-the-potential-of-becoming-the-continents-largest-off-grid-appliance-

market-according-to-new-efficiency-for-access-country-profile/
42 https://pdf.usaid.gov/pdf_docs/PA00XGH7.pdf
43 www.clasp.ngo/research/all/off-and-weak-grid-solar-appliance-market-nigeria/
44 https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=NG
45 https://pdf.usaid.gov/pdf_docs/PA00XGH7.pdf
46 https://www.economist.com/middle-east-and-africa/2022/06/30/africas-mobile-money-agents-face-an-uncertain-

future

21