GreenMax's G4A: A Different Path to Off-Balance-Sheet Finance
This summer brought a slate of landmark deals in African off-grid solar: d.light's $50 million green bond in June, on the heels of Sun King's $286 million securitized debt transaction. Both marked an important milestone for the sector, transforming years of customer repayments into financial assets that could be sold to institutional investors.
Sun King's CFO called the transactions “pathbreaking,” and he was right. He also pointed to what makes them difficult to replicate. Investors typically want five to seven years of repayment history before they will invest in a securitization, and the legal, regulatory and credit-enhancement costs only make economic sense at significant scale. For a handful of the sector's largest and most established companies, securitization has become a viable financing tool. For most off-grid companies, it remains out of reach.
Both deals did real work beyond the headline number. They converted years of small customer repayments sitting on d.light's and Sun King's balance sheets into capital that could be redeployed into growth. It was one way of moving the receivable. The deals also pulled in a class of investor — institutional, yield-seeking, based in London and New York — that has mostly stayed outside this sector. There's a second benefit that gets less attention: once a receivables portfolio is sold, the company also transfers much of the customer credit exposure associated with those receivables, alongside the funding burden of carrying them. It doesn't just recover capital. It sheds exposure that would otherwise sit on its own ledger.
Pay-as-you-go companies typically finance their customers themselves. They deliver a solar system, electric vehicle or productive-use appliance today and recover their investment through small repayments made over several years. Those future payments sit on the company's balance sheet as receivables, tying up capital, increasing financing needs and limiting how quickly the business can grow.
That challenge is becoming more acute as the sector expands beyond solar home systems into productive-use equipment and electric mobility, where each financed asset represents a much larger upfront investment. Companies can tie up significant amounts of capital in relatively small portfolios long before they reach the scale needed to access capital markets.
“Securitization solves the receivables problem for companies that already have scale. G4A solves it for companies still trying to reach it.”
Securitization addresses that problem after the receivables have been created. By pooling thousands of customer loans into a standardized portfolio and selling or financing that portfolio through the capital markets, companies can unlock capital that was previously tied up on their balance sheets.
What securitization doesn't touch is the price the customer is paying for that financing in the first place. Financing costs embedded in typical PayGo contracts run 40 to 80 percent in local-currency terms — a function of high acquisition costs, thin underwriting data, and currency and repayment risk that companies price in because they're largely funding themselves through hard-currency debt. That pricing is a real contributor to an industry-wide collection rate for PayGo solar that hovers around 70 percent: something close to a third of customers, sector-wide, don't complete payment on the system they took home. Securitization doesn't change that arithmetic.
GreenMax's Green for Access (G4A) First-Loss Facility addresses the same balance-sheet constraint through a different financial architecture.
Instead of the delivery partner financing the customer, a local financial institution originates and holds the customer loan from the outset. The delivery partner is paid when the system or equipment is delivered rather than waiting years to recover its capital through customer instalments. The receivable does not disappear. It starts life on the financial institution's balance sheet instead of the company's.
G4A makes that possible by sharing credit risk with participating financial institutions. For commercial banks, G4A places a cash deposit fund covering up to 20% of the projected loan portfolio in a dedicated account that can absorb agreed portfolio losses. For non-bank financial institutions, G4A provides concessional junior capital that similarly covers up to 20% of losses. The participating financial institution remains responsible for originating, underwriting and managing the loans, but it does so with first-loss protection and technical assistance built into the structure from the beginning.
For participating financial institutions, the model opens a lending market that would otherwise sit outside their risk appetite. Rather than replacing commercial lending, the first-loss facility is designed to help banks and non-bank lenders develop the confidence, products and experience needed to finance clean energy customers on a commercially sustainable basis.
The delivery partner's operational role does not disappear. It still identifies customers, delivers and installs equipment, provides warranties, monitors and maintains systems and, where necessary, repossesses and redeploys assets. What changes is who finances the customer. The financial institution owns and administers the loan. The delivery partner focuses on delivering and supporting the technology.
This is where G4A's aim diverges from timing the receivable. The facility's underlying premise is that local banks and non-bank lenders, with a lower cost of capital than a PayGo company borrowing in hard currency, could originate the same loans at rates closer to what any other retail customer pays — if something absorbs enough of the risk to get them underwriting this customer base at all. Banks may recognize the long-run opportunity in serving these customers, but still price the near-term credit risk too highly to lend at scale. G4A's 20 percent first-loss cover is designed to absorb the level of losses banks perceive as preventing them from entering the market — not to cushion loans after they've already decided to make them. A bank lending directly to a solar or EV customer at something closer to standard retail rates does something securitization alone can't: it starts to close the gap between what off-grid customers currently pay for financing and what they'd pay if that financing ran through the same institutions serving everyone else.
That difference has broader implications than balance-sheet management. Because G4A-supported loans are originated by local financial institutions in local currency, the model mobilizes domestic capital while reducing delivery companies' exposure to the currency mismatches that have challenged businesses financed through hard-currency debt. At the same time, it helps local financial institutions develop the underwriting systems, lending products and experience needed to finance productive-use energy and electric mobility markets they have historically regarded as unfamiliar or too risky.
This is not a frictionless model. GreenMax's pilot experience has shown that building loan portfolios with commercial banks takes time, that many lenders require larger transaction sizes before the effort becomes commercially worthwhile, and that conventional underwriting processes are often poorly suited to informal enterprises, delivery riders and smallholder farmers. Making the model work requires substantial technical assistance: adapting loan products, training bank and delivery-partner teams, improving customer screening and documentation, and establishing systems for monitoring both loans and the underlying assets.
That work is already underway. With support from the IKEA Foundation, GEAPP and CLASP, G4A has launched pilots in Kenya and Nigeria and is building a new portfolio in the Democratic Republic of Congo. It has supported Fortune Credit in financing electric bicycles, MojaEV in expanding access to electric taxis in Nairobi, and LAPO Microfinance Bank in extending finance to customers purchasing solar and productive-use energy equipment.
The future of clean energy finance in Africa will not be defined by a single instrument. It will be built through a financing continuum — from first-loss facilities that help local lenders enter new markets, to commercial lending, to securitization and ultimately public capital markets. The challenge is not choosing one architecture over another; it is ensuring that every stage of company growth has access to the right form of capital.
Taken far enough, the model points toward a different capital market. Local financial institutions originate loan portfolios they have learned to underwrite through G4A's first-loss support, at rates that reflect their own cost of capital rather than a PayGo company's. As those portfolios grow and perform, warehousing facilities purchase the receivables directly from the banks — not from the off-grid companies that had to carry them for years. The receivable still reaches the capital markets. It simply takes a different route — a local financial institution rather than the delivery company that originated the customer relationship.