We are seeking expressions of interest from crowdfunding platforms that would consider participating in an initiative that would raise debt from the UK public to finance businesses selling solar home systems in sub-Saharan Africa. 

DFID is considering ways to enable people in the UK to lend to individuals and entrepreneurs around the world and is currently investigating various options, including as linked with the Energy Africa Campaign, which seeks to accelerate access to energy in Africa, via an expansion of the household solar sector.  
 
The initial target is £3.6m from the crowd. Some of this may come from DFID match funding.
 
The platform should attract significant numbers of small-scale individual UK investors and enable investments of modest value. 
 
The offer to the public should have a ‘peer-to-peer’ feel – i.e. the lender should feel they are helping pre-finance a system a family in Africa then pays for over time – but investments would in practice be aggregated into working capital loans to the businesses supplying the systems (although there would still be a tight linkage between number of schemes financed and money provided). 
 
Platforms may source suitable companies to lend to themselves. The project team could also make introductions to a small, pre-qualified list of businesses operating at reasonable scale capable of utilising significant levels of working capital, according to criteria to be approved by DFID. These companies typically operate in Kenya, Tanzania and Uganda.
 
The debt would need to be priced at a level which is competitive with other sources of debt already available to these businesses – this varies according to the maturity and track record of the business.
 
In return for the funding, the companies would be required to provide details of a select number of customers and other information required by the platform to support communication with potential lenders.
 
Loans to these companies could be partly underwritten so as to provide the crowd with an acceptable risk-adjusted return. The platform would be expected to take an appropriate share of risk.
 
The platform would be expected to manage the loans made to the companies, including managing non-performing loans or make suitable arrangements with an investment manager.
 
DFID expects to cover the costs of setting up and marketing the offer.
 
Communication with investors should also signpost other opportunities to support energy access businesses through crowdfunding – donation, debt and equity.
 
Companies interested in being considered are asked to provide brief details of their current operations and to share their initial ideas on how they would propose implementing this initiative.
 
The goal is for many small scale UK investors to lend rather than donate the money.  The projects would therefore offer financial as well as social and environmental returns. Appropriate regulation is therefore a key selection criteria.  If successful, the project has potential to extend to more partners and at a larger scale.
 
Expression of interest are due by Friday, May 27th at midnight GMT.
 
Frequently asked questions
 
Q: Do you have any indication of the potential terms for this project - i.e. what DFID / GVEP is able to commit to this?
A: At this stage in the process, we are looking to start a conversation with interested parties in order to take their veiws into account to determine the final shape that this initiative will take.  DFID would likely be committing significant financial support for this initiative in the form of matched funding and/or guarantees to UK crowdfunding investors and we will be discussing with all of you the best way that this can be put to work.  DFID is also likely to fund one off set up costs as part of an agreed package. Following this stage, we would issue a more detailed Request for Proposal to pre-qualified interested parties, with a view to launching the initiative in the second half of 2016. 
 
Q: Is the intention to give all of the platforms access to the answers that we have provided? This will put the early submitters at a disadvantage and also potentially gives away some of the platforms' strategic IP.
A: We will not be sharing survey answers by one partitipant with the other participants.  We will be sharing specific clarifications, questions and answers that come up during the EoI survey period, so that everyone benefits from them and is able to act on the basis of the same information.
 
Q: Are you looking for a standalone platform with the appropriate authorisation and management or do you have another model in mind?
A: We are looking for a platform with appropriate authorisation and management to run this initiative.  We will welcome and look for the platform's views on the best way to go forward, which may include a branded or a white lable solution.
 
Q: The model is based on UK retail investors funding debt products to East African corporations. Who determines the credit worthiness of these entities?
A: The terms of reference for this initiative will include a minimum set of criteria that DFID and other potential backers would require.  However, on a day-to-day basis, we expect the platforms to have the capability and resources to complete appropriate due diligence, determine creditworthiness and make decisions on a case-by-case basis. GVEP knows the businesses operating in this market and has a list of likely interested borrowers. These companies have been subject to due diligence by other investors. GVEP will be able to make introductions if this is required by the platform.
 
Q: What are the terms at which these corporations are willing to borrow and what collateral are they able to offer?
A: Terms for individual loans to these corporates will vary in line with their own business models, but they would likely be between 12 - 36 months and used to finance working capital as they invest in the equipment and installation costs which is then paid back over time by the housholds.
The DFID backing is designed to enable an approriate risk-adjusted low cost pound sterling-denominated loan to these companies, which would then deploy the proceeds to provide loans in local currency to their customers at an approriate risk-adjusted return.  Based on preliminary conversations with well-established companies in the region, we expect that there will be sufficient interest in this form of finance.
 
Q: What research has DFID or GVEP  done to verify that this model works?
A: This initiative is proposing a model which has not been tested before, though individual energy access businesses have raised funds through crowdfunding platforms to finance working capital on a modest scale. Discussions with platforms have indicated interest, and at least one major solar PV businesses operating in East Africa has shown strong interest in participating. Our preliminary modelling of the financial flows suggest a viable business model exists. This EoI is part of the process of testing the model can work.
 
Q: What assistance will DFID or GVEP provide to make this model work?
A: GVEP is assisting DFID to research and develop this initiative.  DFID would commit significant funds to support this initiative which may take the form of matched funding and/or guarantees to UK crowdfunding investors, and/or funding set up costs.  However, the overall aim is to put together a sustainable, scalable and commercially viable solution which would only count on DFID backing in as much as is necessary.
 
Q: How do you expect us to be remunerated and why do you think it is appropriate for us to take on any level of risk?
A: We are looking to engage in conversation with interested platforms to incorporate their views on all commercial terms.  We would expect that platform incentives and interests be properly aligned with the objectives of the initiative, DFID and that of the UK crowdfunding investors.  
 
Q: Regarding “* 14. How much do you feel confident you could raise in a year?”, could you please clarify what implies exactly? E.g. does it mean 1 year from start of the program or 1 year at some point later in the program?
A: You should focus on the first year from the start of the programme.