It’s late but Abdikarim, an investment broker, agrees to listen to one more pitch from an entrepreneur. The heat continues to linger over Berbera, Somaliland even though the sun has been down for hours.
“I started with nothing more than forty dollars in my pocket and I have become the owner of a successful fishing business,” the businessman tells Abdi as they sit outside at a café.
“Now, I want to try something different,” the man continues. “I am starting an ice cream business and I’m looking for investors to help me purchase panels. I will use solar power to run the refrigeration.”
During the hottest months, the population of Berbera, a coastal town, shrinks when its residents seek refuge from the heat by fleeing to Hargeisa, the slightly cooler capital city.
If there were more air conditioning or even a few strategically placed ice cream stands around town, Berbera would be a much different place. The challenge for entrepreneurs is affording the electricity to start businesses that could address Berbera’s heat wave. At $1 – $2 per kilowatt hour, electricity is prohibitively expensive to most Somalis.
Finding ways to lower that cost could change the way the city is able to do business. Fishing is a staple of Berbera’s economy, for example, but without widespread access to ice machines and refrigeration, much of the daily catch is lost before it can be transported to lucrative landlocked markets like those in neighboring Ethiopia. Fortunately, relief may not be too far away.
Berbera Hospital is a signal of the coming change. Solar panels crowd the facility’s rooftops, supply the hospital with energy during the day, and feed the electric company’s grid in the evening. Before the panels, electricity was expensive and unreliable, now the hospital can keep the lights on during surgeries.
Until recently, affordable electricity was only achievable with large-scale infrastructure development to capture the economies of scale needed to bring down prices. In Somaliland, the energy sector is typically filled with independent power producers who buy diesel generators and set up small distribution grids. Relying on imported petroleum based fuel, traditional energy suppliers find it difficult to make a profit and stay sustainable.
Now, micro-grid and off-grid systems that draw on renewable sources, particularly solar, are changing the energy landscape. Internationally, the prices of photovoltaic solar panels and battery storage have plummeted in the last five years. Just as cellphones have found their way into the majority of Somali’s pockets, avoiding the tedious steps of building landline infrastructure, renewable energy seems poised to be Somaliland’s next leapfrog technology.
In Somaliland, solar panels have popped up across the country on top of public buildings like health centers and international agency compounds, but also on private homes. The new installations aren’t just limited to urban areas either. In Ber Village, in Togdheer region, solar panels sit next to farmers’ aqal Somali homes, fashioned from branches and woven mats.
Many of these new solar installations can be traced back to one company: Golis Energy. Successful business enterprises in Somaliland are usually run by diaspora. Golis, however, is homegrown.
“I was born here, I grow here,” said Sayid Ali-Abdi, the company’s founder. “I got the electrical training from FAO in 2000 and the renewable energy training from USAID in 2002,” said Sayid. “Most of the companies that produce products, we get training from them. Homer [Energy] is the best. We participate in every webinar they produce.”
Trainings that increase local technical capacity are key if Somalis wish to expand their renewable energy sector.
Another is financing. Even as the price of solar energy declines, the initial purchase of panels remains out of reach for the average household. Globally, countries have addressed this problem by offering government subsidies and creative financing mechanisms. Yet, Somaliland faces financial challenges that not only make policy-based incentives difficult, but that also pose obstacles for attracting capital.
Somaliland has no central bank, and therefore has limited access to credit. Much of the capital that is infused into the region arrives in the form of remittances sent from the diaspora abroad. Lately these cash flows have been put in jeopardy as Western governments have cracked down on money-transfer companies that they worry may be funding terrorists.
Golis, however, has been fortunate to connect with private investment brokers outside of Somaliland. This funding allows Golis to procure a surplus of panels and batteries, giving the company the ability to respond quickly to consumer demand. In this way, the company has created a credit facility that allows its customers to pay for solar panels in installments.
Golis’s market now spans across Somaliland and into Djibouti, Ethiopia, Puntland, and South Central Somalia. The company has entered into partnerships with the Somaliland government, electric companies, and international organizations like the United Nations. The company has expanded into other types of renewable energy as well. The turbines of a massive wind farm installed by Golis spin outside the Hargeisa airport.
“Many people are coming to us at the moment,” said Isahak Ahmed, operations manager of Golis. “This has increased our sales 43%.”
Faisa Ibrahim Said, a homeowner in Hargeisa, purchased her Golis solar panels with four payments.
“What we have done so far is pay 50 percent from the general cost that we have estimated based on my need,” said Said, describing how she financed the panels for her home. “Then from there you can give other installments: 30%, 20%, and the final will be 10%.”
Now that she has solar panels, she is less concerned about affording the costs of her energy needs.
“When I was using electricity from the grid it was very expensive. This house, the cost at this time could be $150 (USD) a month,” said Said. “Simultaneously, I use the TV, the Internet, the refrigerator and the lighting as well, including the security lights outside,” she said.
Somaliland will likely not have to wait for large-scale projects to renovate the city grids or extend into rural areas. With the right technical training and access to financing, solutions to the energy deficit can come through the resilience and pioneering spirit of local entrepreneurs.