Rwanda is a landlocked East African country, also known as the “Land of a Thousand Hills” because of its mountainous terrain. Until the onset of the Covid pandemic in 2020, Rwanda’s economy was one of the fastest growing in all of Africa and in 2021 this trend continues. Despite strong economic development, 50% of the population does not have access to electricity, so many households rely on fossil fuels such as diesel and kerosene or candles for light. The simplest tasks prove tedious without electricity, daylight must be used for work and study, and entertainment is also scarce. In addition, harmful emissions cause respiratory diseases and affect the quality of life of many people.

With its business model, Munyax Eco actively contributes to 5 of the UN’s sustainable development goals („SDGs“):

The solar products Munyax sells to its customers are powered by sustainable solar electricity, so their distribution and use actively contributes to Goal 7.

The use of solar products also reduces health hazards such as indoor air pollution that can cause respiratory illnesses (Goal 3.9). It also emits less CO2 (Goal 13), which helps combat climate change.

Many of Munyax’s customers are businesses or other organizations and institutions. Solar products provide them with clean, reliable, and affordable electricity, which indirectly has a positive impact on the customers’ economic, sustainable growth (goal 8.1). In addition, the company’s growth plans include hiring 30 new employees by 2030.

Munyax is committed to the advancement of women and gender equality (Goal 5) and currently employs 30 employees, 60% of whom are women. In addition, Munyax offers special training programs for young people, in which 60% are women.

By using the products powered by solar energy, fuel is saved, generating a large CO2 saving potential.

With the total loan, + 3000 solar products will be purchased, generating CO2 savings of approximately 3071 tons of CO2 per year. Over the life of the project, it is 21,494.71 tons of CO2.

The investment risks associated with the subordinated loan are described in detail in the VIB under item 5 and in the risk notes. With a view to assessing and limiting the risks for investors, the issuer draws attention to the following special features in the design of the project:

1) Use of a special purpose vehicle:

For the crowdfunding campaign on bettervest, a special purpose entity called Afrika Emissions 3 UG (haftungsbeschränkt) based in Germany was established to act as the borrower in this project. It forwards the collected capital as a secured loan to the project owner in Rwanda, Munyax Eco Limited (Munyax Eco). Shareholders and managing directors of Afrika Emissions 3 UG (haftungsbeschränkt) are independent of Munyax Eco. In addition, Afrika Emissions 3 UG (haftungsbeschränkt) has a liquidity buffer of up to 25,000 euros of the money collected in the crowdfunding, which serves as a financial cushion for any necessary measures if Munyax does not meet its payment obligations.

2) Collateralization of the on-lending loan:

The on-lending loan from Afrika Emissions 3 UG (haftungsbeschränkt) to Munyax Eco includes the following risk mitigation measures:

(i) pledge of shares of Munyax Eco Limited in favor of the special purpose vehicle Afrika Emissions 3 UG (haftungsbeschränkt)
(ii) ancillary loan agreements (“financial covenants”) between Munyax Eco Limited and Afrika Emissions 3 UG (haftungsbeschränkt) to maintain the financial stability of Munyax at a high level

The project’s risk will be mitigated by an additional equity injection of an estimated EUR 1 million in the first year. The first round is expected to be completed by the end of 2023.

Investment requirements

The cost of the overall Munyax Eco project is expected to be EUR 2,000,000. This will finance materials, salaries for employees, office space, a bank guarantee of EUR 300,000, as well as the liquidity buffer and fees.

Material includes costs for:
– 10 containers of 62 new solar water heaters,
– 4 containers of 134 new solar panels each, 6 energy storage systems (RESS), 15 LED solar street lights & accessories,
– 4 containers each of 5 new sandwich panels, 8 solar coolers, 9 thermostats, 1 box, 4 solar charge controllers, 3 battery fuses, 6 batteries, 1 air heat exchanger, 1 control system, 1 LED lighting unit, 1 water pump & accessories,
– 1 container each with 431 new solar reading lights, 161 solar lantern with cell phone charger, 319 solar lantern with additional bulb and cell phone charger, 267 solar light with cell phone charger, 194 solar home systems, 113 solar home systems, 137 solar home systems, and
– 1 vehicle.

Therefore, 2,000,000 euros (incl. fees) are to be collected via crowdfunding. The term of the loan is 7 years and has an annual interest rate of 6.5% p.a. for the crowd investors. Investors who invest in the project within the first week receive an additional early bird bonus of 1% p.a. (i.e. a total of 7.5% p.a.). The funding threshold for this project is 50,000 euros. If only this amount is reached, the project owner will still use the investor funds for the purchase of material and invest to a lesser extent in the investment objects mentioned above.

Repayment
The repayment of the loan will be made from liquid funds generated by Munyax Eco in the course of its business activities as income from the sale of solar products.

Type of products:

Solar water heaters
Solar-home-systems
Mini-Grids
Solar Outdoor & Street Lights
Solar Pumping
Solar Cold Room
Solar Fridge
PV-System

Sales & Distribution

MUNYAX ECO get customers in different ways
– (physical contact or e-communication),
– door to door marketing;
– television/radio adverts;
– social media, website
– billboards, and vehicles branding;
– participation in business exhibitions/exposition

Once the company is in touch with the customer, the sales and technical team do the preliminaries to ensure the technical feasibility of the project, payment and contract signing.
The products are then taken from the warehouse to the customer’s premise for direct installation which can take in average from 4 hours to 2 weeks depending on the size of the installation

MUNYAX ECO is currently developing more partnerships in order to get more “agents”, access points and visibility in the region.

Business Model

MUNYAX ECO generates revenue through the sale of solar products, offering customers the option to make purchases on credit with payment spread over 3, 6, up to 12 monthly installments.

In addition, Munyax Eco already signed an MoU with the Rwandan Electricity Group (REG) under the Solar Water Heater subsidy program where Solar Water Heater customers get a 2 years loan to finance SWH at zero interest rate, project implementation to start this October 2023.

MUNYAX ECO is also currently negotiating with other institutions in order to let them put in place an efficient system to finance all end users. That is the reason of the guarantee fund to be financed in the second call.