AI and Solar: Why Financing Is the Missing Piece in Africa’s Clean Energy Puzzle with Dami Olawoye

[00:00:00] You're listening to the Unlocking Africa Podcast.

[00:00:30] The Clean Energy Financing opportunity is massive. It's a couple of hundred billion dollars a year in financing opportunities. Stay tuned as we bring you inspiring people who are unlocking Africa's economic potential. You're listening to the Unlocking Africa Podcast with your host, Terser Adamu.

[00:00:55] Welcome to the Unlocking Africa Podcast where we find inspirational people who are doing inspirational things to unlock Africa's economic potential. Today we have Dami Olawoye, who is CEO of Rivi, formerly Pei Hippo. Rivi empowers individuals and SMEs with the financing needed to purchase clean tech equipment, including solar energy solutions.

[00:01:22] Welcome, welcome, welcome to the podcast. Dami, how are you? I'm fine, thank you. Thank you very much for having me on your podcast. It's a pleasure to have you on the podcast. As usual, I like to get the conversations going straight away. So I was hoping you can just give us a brief introduction and tell us a bit more about Dami. Okay, a bit more about me. Dami, as you introduced, I'm the CEO at Rivi.

[00:01:51] So I have about 20 years of finance experience in both Nigeria and the UK. I was actually born in Nigeria, lived there until I was about 16. Then I moved over to Ireland for a couple of years and then the UK. I studied in the UK. I studied accounting at the University of Liverpool. I can tell that you have a slight Liverpool accent, so I could pick that up.

[00:02:20] Yeah. I studied accounting at the University of Liverpool. After that, I started my career at Deloitte in the UK. I worked there for about four years. I qualified as a chartered accountant. Then I moved back to Nigeria. So when I moved back to Nigeria, it was mainly because, you know, I wanted to work in private equity. And I wanted to work in Africa-focused private equity.

[00:02:48] So moved back to Nigeria. I worked at two private equity funds over an 11-year period. During that period, we were making investments in high-growth SMEs within West Africa. So I did that. Then I moved back to the UK and I joined an asset finance business that was providing loans for people to buy supercars.

[00:03:17] So cars that cost up to two million pounds. So, yeah, I did that for about a year and a half. And then I joined Payhipo as initially the head of corporate finance. I did that for a few months, then became the CFO. Did that for about six months.

[00:03:38] Then, yeah, became the CEO of the company and started driving a pivot to what is now known as Rivi. Yeah. You've given us an introduction into your professional and personal life experience journey, leading us to what you're doing now at Rivi. As you mentioned, Rivi was formerly Payhipo, but can you walk us through, I guess,

[00:04:05] the evolution of the company and how it actually ended up focusing on renewable energy financing? Sure, sure, sure, sure. So Payhipo started off in 2019 and it was founded by three people. At the point that Payhipo was founded, the problem that Payhipo was solving was access to working capital loans for small businesses within Nigeria.

[00:04:34] We know what we found then, small businesses didn't really have access to working capital. And that was mainly because the traditional banks or the traditional lenders, we know, weren't really focused on that space. So there was a huge financing gap. And that was the problem that Payhipo was looking to solve.

[00:04:55] So Payhipo built technology that enabled it to underwrite a loan to a small business within a relatively short period of time. So that was the first version of Payhipo went on to, you know, disperse about 35,000 loans, worth in aggregate about $70 million. And yeah, that went relatively well.

[00:05:22] One thing that we did notice, right, from engaging with the small businesses that we were serving was that one of the biggest challenges they faced operationally was around electricity. So electricity from a reliability point of view and also from a cost point of view.

[00:05:41] So on the reliability side, right, typically in Nigeria, right, homes and businesses would get on average about four hours of electricity a day from the grid. And then the rest of the time, right, they need to provide themselves with electricity using generator sets. So, you know, diesel and petrol generator sets. And these, you know, generator sets are expensive to run.

[00:06:09] And they're also bad for the, like, environment, right, because of the CO2 emissions. So we were thinking about how we could help these small businesses to solve this problem. Solar energy sounded like a, you know, a viable alternative to the generator sets that they were using. But we found the challenge that they faced was with them switching to solar, right, was that high kind of like upfront cost.

[00:06:35] So we started thinking about, okay, how can we help these small businesses to buy solar systems? So we started an asset finance product, which was initially targeted at just small businesses to enable them buy solar systems and spread the costs out, you know, over a period of time. That was how we started venturing into the space that we are in at the moment.

[00:07:01] So we started off with small businesses, you know, we saw that was going very well. And we saw the impact that the solution, you know, had on their productivity. So we then expanded our coverage to include consumers too. So you don't necessarily have to be a small business to get an asset finance loan from us, you know, it could be a household as well.

[00:07:28] So we started off doing that, you know, that was skilled pretty quickly. And then we started seeing, you know, other kind of gaps within the distribution chain for solar energy equipment. We found that, you know, even solar installers and, you know, dealers of that clean tech equipment, you know, lacked access to working capital, basically to, you know, to buy equipment in bulk.

[00:07:57] So we started building financing solutions, you know, targeted at them to solve that problem for them. And then, you know, at that point, we noticed that a lot of what we were doing, right, was now skewed towards kind of like clean energy financing. That wasn't our intention at the beginning to be like honest, right? We saw this more as kind of like product expansion.

[00:08:23] So just, you know, adding another product to the SME lending that we were doing. But we saw that, you know, this clean energy financing space is a very fast growing space. And it's also niche in the sense that, you know, you kind of need to understand the assets that you are financing.

[00:08:42] So we took a step back, right, and, you know, we just thought we should just focus on this space and, you know, just kind of like build out relevant expertise to be a market leader here. So we decided to wind down our SME working capital lending business and focus solely on clean energy financing.

[00:09:05] And that's also what kind of like leads us to really with the new business focus, right? We just felt that the name PayHippo didn't really kind of like align with what we were doing. You know, when most people hear the name PayHippo, because there's the pay there, what immediately goes to your mind is, okay, this is a payments business, right? But it isn't.

[00:09:33] So, yeah, so that kind of like drove the name change. And we went with the name Rivi. So Rivi is actually an ancient Hindi. So it's associated with sunlight and brilliance. And just for that, you know, this is a fantastic name for the business, right? Because we are, we're building innovative finance solutions, you know, that are basically driven by renewable energy.

[00:10:00] So, yeah, so we've recently rebranded as Rivi. Fantastic. You touched on this earlier with regards to the use of generators in Nigeria and Africa-wide. We often see figures such as over 600 million people in sub-Saharan Africa lack reliable access to electricity. I was wondering, how do you see Rivi helping solve this massive challenge?

[00:10:31] Right. Solar energy is a very suitable solution, right? To solve the energy access problem. And that's mainly because of the scalability. It's a scalable solution, right? And it's quicker to deploy.

[00:10:49] So you can bring energy access to like underserved areas much quicker using solar or using renewable energy. The challenge that we see is mainly around financing. These solutions, they could be expensive at times for most people.

[00:11:12] And that's really the problem that we are tackling here by providing financing to like enable the purchase of clean tech equipment, especially solar. So we definitely see this as a way to solve the energy access issue that the continent faces. We also see this as an opportunity to leapfrog traditional infrastructure, right?

[00:11:37] So because in most parts of Africa, right, especially Nigeria, you have this kind of like massive demand and supply gap with regards to like energy, right? Instead of building out, you know, traditional kind of fossil fuel power energy infrastructure to fill that gap, right? We have an opportunity to just bypass that and go straight into renewable energy.

[00:12:02] It's kind of like similar to what we saw in the telecom space and, you know, the banking space within Africa. For example, in the telecom space, right, we basically leapfrogged the kind of like traditional fixed line infrastructure, right? And just went straight into GSM mobile phone type infrastructure. And the same with banking, too, right? We kind of leapfrogged the traditional way of doing banking, right?

[00:12:29] Which is basically having, you know, bank branches, you know, all across the country. And we kind of leapfrogged that and went straight to fintech. So yes, definitely renewable energy presents Africa with an opportunity to leapfrog traditional fossil fuel type infrastructure and just, you know, go straight into energy of the future. Thank you for that.

[00:12:56] You mentioned about the scalability of renewable energy. And I guess if we keep on the theme of scalability and look at the scalability of Rivi, you recently secured 4 million funding recently, which was a huge, significant milestone. I wanted to know in terms of securing that 4 million, what will this funding allow Rivi to achieve in terms of scaling up?

[00:13:22] Yeah, so I mean, it gives us a lot more firepower to scale. In the business that we are in, right, you know, we disperse loans. So for us to scale, right, we need to keep on raising like more firepower, mostly debt, to be honest, in the future equity. And the more debt we raise, the more capacity that we have to like on lend that debt to our work customers.

[00:13:50] So yeah, so this fundraiser is basically like the first in a series of fundraisers that we plan over the next few years. And our objective is with this fundraiser is, you know, basically to just kind of expand into more states within Nigeria. And then with future financing rounds, you know, we'll be looking at expanding across Africa. It also enables us to build new products.

[00:14:20] So, you know, I've spoken about two lending products that we currently have. We're looking at building products, even outside lending. Products that will like enable access to clean tech equipment, right? So this funding, yeah, just basically sets us up to scale, to scale our existing business and also to kind of like build new products. Fantastic.

[00:14:47] So if we go into detail of the new products specifically, I wanted to understand how does Rivi provide affordable financing to households and SMEs looking to transition to solar energy? Right. So we're taking a digital approach. So we built an app and we've also got a web version, right?

[00:15:10] Where art borrowers can access and you literally either download the app or you go on the website and yeah, you just make an application. We've also built a feature on our app as well that kind of guides people to the right type of solar solution that they need, right? Based on their like energy requirements.

[00:15:33] What we find is that for most people, most people basically don't know what capacity of a solution that they should be going for. So we built a feature where they can select the type of equipment that they would like to power. And then we would recommend a solution in terms of the capacity.

[00:15:57] And we could also put you in touch with an installer within your radius, you know, so you can connect with them, find the exact solution that works best for you. And then you can now apply for credits on our financing platform. If you scale through the credit assessment process, we disperse the funds to your installer or dealer. Yep.

[00:16:25] You get your solution and you just repay over the agreed period of time. So would you say that the technology and the platform that you have developed is what sets you apart from other lenders or financing companies in the renewable energy sector? Definitely, without a shadow of a doubt.

[00:16:48] I think what makes our credits on the writing engine even kind of better for what we are doing now is the fact that we built this initially to cater to unsecured working capital loans. Because that was the first iteration of PayHIPPO. And this segment, right, it tends to be, I would say, like the most risky space to lend to within Nigeria, right?

[00:17:11] It is like unsecured and it's to like SMEs, which could be a relatively kind of like riskier segment to play in. Yeah. And we were able to build tech to disperse loans to them and, you know, keep our loan losses to a relatively low rate.

[00:17:31] So we've now been able to kind of just tweak that engine to focus on the space that we are currently playing in, which I would say is probably a less risky space. So I would say we were fortunate to have started off in the space that we did because now we've built a very robust credits engine, you know, that can even do better for us in the new space that we are operating in. Fantastic. You highlighted the risks.

[00:17:59] So I was wondering how is data and AI used to assess risk and ensure loans are repaid successfully? Yeah. So, I mean, we take a combination of approaches here, right? But our end-to-end process is digitally driven. So we built a KYC system, right? Primarily through connecting with, you know, different service providers.

[00:18:26] So, you know, when a loan application comes with what we've built, right, we just call on the relevant APIs. And we're able to kind of like quickly able to tell if a borrower is kind of who they say they are. And then we built machine learning to basically drive our underwriting process. Without going into too much detail, I got these are kind of like trade secrets, right? The tool that we built, it's basically driven by machine learning.

[00:18:56] And it does a relatively good job at like assessing a borrower's ability to repay. We've also built a credit scoring platform where we use the data around the borrower's behavior to credit score them. And then, you know, if they were to come for a second loan, they basically have a credit score with us. And we can use that to decide, you know, if we are going to borrow.

[00:19:24] And even if we are, you know, and if we are borrowing as well, we use that to decide how much we should borrow. Interesting. So if we look at the wider space, how do you see AI transforming clean energy finance in the next five to 10 years? I think just with almost every industry right now, right, AI creates an opportunity to do things a lot more seamlessly.

[00:19:51] We see the same trends in, I won't necessarily say clean energy financing, but just financing in general. Well, AI, we expect, you know, AI to play a role going forward. Two sides. One, enhancing the seamlessness for the borrower, making their experience on our platform a lot smoother. And AI can also play a big role in helping them make better credit informed decisions.

[00:20:21] So, yep, I see this playing a massive role within finance more broadly. I guess we could say that the use of AI is about making impact at scale and speed. But if we look at the impact on the ground, how do you believe your financing options would change the way people access energy in their homes and in their businesses?

[00:20:44] I mean, we can see the impact, right, that our financing is already creating from the cost side of things. Right. As I said earlier, you know, these like homes and businesses are currently kind of running on generator sets that are expensive. So our financing helps them to bring their costs down. So that's with a solar solution or a renewable energy solution. Right. You don't have that maintenance cost.

[00:21:12] You're not constantly buying diesel to power the generator set, you know, or buying petrol. Right. And you make significant cost savings from that. So one thing that we try to do as well is to kind of like amplify what those potential cost savings should be to potential customers. So on our app or on our website, a customer can actually just go in there, you know, key in some details and kind of get an estimate of the cost saving.

[00:21:41] I guess if we look at the customer for an average Nigerian looking to switch to solar power, how easy is it for them to access Rivie's financing options? Yeah. I mean, to be honest, right, the process is seamless, right? What it does boil down to at the end of the day, right, is a customer's credit worthiness.

[00:22:02] We find that I would say about 90 percent of applicants that don't scale through is mostly around their credit record. Right. So, I mean, if you have a good credit record, you can come on our platform and you can get financing within 24 hours. Speed is one of our USPs.

[00:22:25] Speed is, yeah. So we pride ourselves on being quick, arguably being like one of the quickest in the market in this energy financing space. So if a borrower or if a potential customer has, you know, built a decent credits record, then yeah, they should be able to seamlessly access our financing. As you mentioned, you pride yourself on being quick.

[00:22:50] Like, I guess, despite that, there are certain barriers that customers will face that are outside of your control. So from your experience, what is the biggest barrier preventing specifically Nigerians from adopting solar energy? Yeah, the biggest barrier is really financing, right? Most people that you speak to would like to switch to solar. But the challenge that they face is that upfront costs can be relatively high for most people.

[00:23:19] And that's the main challenge that they face. And that's the problem that we are solving here. So financing is the main challenge. So how do you ensure that the financing terms that you offer are accessible and realistic for everyday Nigerians and not just large businesses? Yeah, a very, very good question.

[00:23:42] So what we do, right, is that when we structure our loans, right, the objective is always to ensure that the customer is in a better off position financially, right, than if they were to stick to generator sets. So we structure our financing in a way that on a monthly basis, right, you will be paying.

[00:24:03] So even if you are the everyday Nigerian, you know, and you currently use a generator set, even if it's a small petrol generator set, right, we structure our financing in a way that your monthly repayments to us are lower than what you would have been paying buying petrol. And also, you know, bear in mind that, you know, you're not going to be paying us forever, right?

[00:24:31] You're just repaying us within like a period of time. And then after that, you literally don't have any costs associated with the solution. While, you know, if you were using the petrol or diesel generator set that you were using, right, you have that running cost every month, right, without diesel or petrol, right, the generator is not going to come on.

[00:24:56] So we ensure that the customer can see the value in our solutions, right, because it saves them money. So the objective here when we structure is to, you know, structure in a way that the end user is in a better off position than they were before switching to Sola. I think from the conversation, it's clear that you're bringing a lot of innovation to the work that you're doing.

[00:25:23] But also in order to keep innovating, you have to be aware of new trends and what's happening in the space. So are there any current trends that you're seeing in clean energy financing that you're quite excited about? Yes, yes, yes, yes. The products that we've kind of like spoken about so far are lending related products. There's also carbon finance.

[00:25:48] So carbon finance is at a relatively nascent stage globally, right, but almost non-existent in countries like Nigeria, right? What it is, is, you know, it's basically access to carbon credits or renewable energy certificates, assets that generates clean energy could qualify for. So we've been building solutions in this space for about over a year now.

[00:26:15] And the end point, the objective of the carbon finance solution, you know, that we're building is ultimately to make purchasing clean tech equipment even cheaper for borrowers than, you know, than it currently is. So, yeah, we're super excited about the carbon finance solutions that we are building. And I'll be able to go into much more detail probably like towards the end of Q2. No problem.

[00:26:44] Look forward to hearing that. So if we move from current trends and look to the future, where do you see clean energy financing in Africa or in Nigeria in the next five to 10 years? The opportunity is huge. The opportunity is massive, right? The picture that I like to kind of paint or visualize, right, is a Nigeria where you don't have generator sets.

[00:27:10] If you could use solar energy or clean energy to replace generator sets within Nigeria alone, right, that's like an opportunity in like the hundreds of billions, right? And financing is a key part to enabling that transition to happen. Financing is like critical, right? Without financing, it's not going to happen.

[00:27:37] So if you look at it from that perspective, the clean energy financing opportunity is massive. It's a couple of hundred billion dollars a year in financing opportunities. Amazing. So if we look closer to home, what's next for Rivi? What's next for you? Do you have any exciting plans or initiatives coming up that you can share with us? Yes.

[00:28:02] So really, right, for us in the stage that we're at now, it's really just about getting our heads down and just focusing on skill. So that's really what we're going to be doing, you know, between now and the end of the year.

[00:28:22] Just focusing on skill and also building out our carbon finance products, you know, yeah, which we aim to kind of like go more public with in the second half of the year. So we're super excited about the growth opportunity that we see.

[00:28:42] And more importantly, we're really excited about the impact that we are creating because we can see the impact that we create with every loan that we disperse in this space. Right. Because we're doing two things. We're avoiding CO2 emissions and we're also making life more comfortable and cheaper for our Burmas. Last question for today.

[00:29:11] Quote of the week. As people, we often have quotes, mantras, proverbs or affirmations that keep us going when times are challenging or when times are good. Do you have one that you can share with us today? Yeah. So mine is pretty simple. It's just one more. So I just tell myself that in different scenarios, right? You know, if I'm in a scenario where, you know, I'm in a business situation that is like really challenging or, you know, things are not going well. Or even if I'm in the gym, right?

[00:29:40] And, you know, you've done like eight reps and you've got like two reps left to go and you're finding it difficult. Just I just repeat to myself one more. So that just tells me like, you know, push yourself harder. Just push. Just do one more. It could be like during like the fundraising period, you know, where like, as you know, fundraising is a beast on it. So, you know, and things are going well. You know, you're peeling down, but you're just like, you know what? Don't give up.

[00:30:10] Send one more email out to a potential investor or, you know, just, just or raising debt to, you know, when things are going hard. You know, just do one more. We reach out to one more bank. Oh, yeah. So one more is my kind of like mantra. Yeah.

[00:30:30] Thank you so much, Dami, for sharing your insights today and detailing how you're making renewable energy financing accessible to everyday Nigerians and businesses. Also looking forward to see how the company continues to grow and the impact that you have on the renewable energy space. So, yeah. Thank you for joining us today. Thank you very much for having me here. Really enjoyed this chat with you. Take care.

[00:30:57] Thank you to everyone who has listened and stayed tuned to the podcast. If you've enjoyed this episode, please subscribe, share or tell a friend about it. You can also rate, review us in Apple Podcasts or wherever you download your podcast. Thank you and see you next week for the Unlocking Africa podcast.