The German development finance institution DEG - Deutsche Investitions- und Entwicklungsgesellschaft, has invested in the Berlin-based solar company Mobisol, which is expanding in East Africa.

DEG provides the company, which supplies off-grid solar home systems to households in rural areas, with a convertible loan for expansion investments.

In addition, DEG also takes an equity stake in the company, thereby sending a signal to further lenders for financing in Mobisol.

Christiane Laibach, member of DEG's Management Board, said: "Accompanying German SMEs in future markets as well as our commitment to sub-Saharan Africa belong to DEG's strategic goals. With Mobisol we moreover support an innovative green economy company.”

Mobisol solar home systems, which come in varying capacities from 30 to 200 watts, combine environmentally friendly technology with an innovative payment system.

Mobisol has already equipped over 21,000 households in Tanzania and Rwanda with off-grid solar power systems.

The current financing enables the company to further expand: it is envisaged that 150,000 people in rural East Africa will use Mobisol systems in the future.

Moreover, 10,000 micro entrepreneurs are expected to generate an income amounting to 10m US-dollars annually.

Mobisol makes an important contribution to energy supply in rural areas of East Africa, where around three-quarters of the population are not connected to the national power grid.

The replacement of kerosene and candles with eco-friendly solar energy additionally leads to a reduction in CO2 of 15,000 t per annum.

DEG has been accompanying Mobisol, founded in 2010, through different growth phases.

Using funds from the German Federal Ministry for Economic Cooperation and Development's (BMZ) develoPPP.de programme, DEG financed a pilot project in 2012.

This way, Mobisol was able to pre-finance around 2,000 solar home systems.

Thereafter DEG provided financing on two more occasions using funds from its up-scaling programme, a programme to promote innovative business models.

Thomas Gottschalk, founder and Managing Director of Mobisol, said: "What makes our concept special is that it links affordable solar home systems with a microfinance model via mobile banking.”

“Already in 2012, DEG believed in this concept, and its commitment also facilitated the search for further investors," he added.