Nearly 80% of Zimbabwe’s rural households do not have access to electricity, and even those connected to the grid face frequent outages.
In 2013 Zimbabwean entrepreneur Simbarashe Mhuriro (30) partnered with a Swiss-German renewable energy company to develop grid-connected solar plants. Their joint venture, Oursun Energy Zimbabwe, is set to connect projects with a total capacity of up to 30MW to the national grid by January 2016.
Mhuriro tells Dinfin Mulupi how he joined forces with the European group, his experiences doing business in Zimbabwe and what he hopes to accomplish.
Tell us a bit about Oursun Energy Zimbabwe.
This is a joint venture between my investment vehicle Oxygen Africa and The Meeco Group. When I started Oxygen Africa we initially focused on investment advisory services and natural resources (minerals). Through the investment arm we encountered Meeco.
I’ve always had an interest in solar but did not dabble in it on the scale presented by Meeco. Our two companies decided to partner and establish Oursun to develop grid-connected solar plants in Zimbabwe. Towards the end of 2014 we raised €6.4m (about US$7m) from Meeco to begin development of two 5MW grid-connected plants.
So far we have secured the sites and agreements with local contractors and suppliers, and development partners have been signed. We have engaged the Zimbabwe Energy Regularity Authority and are waiting for the Independent Power Producers’ licences to be approved and issued. The aim is to have the construction commence this month and be connected by June. Our goal is to connect up to 30MW worth of projects to the national grid by January 2016.
What was the process like of partnering with the Swiss group?
We began speaking to Meeco’s principal shareholder whilst I was based in Dubai. We exchanged notes and embarked on a long dialogue on the energy business and began to look to Zimbabwe as a potential opportunity. After close to a year of discussions the process was seamless, and both teams gelled together well. Towards the end of 2013 we began setting up a local joint venture in Zimbabwe.
We chose to partner with Meeco because of its impressive track record. The group has a presence in 42 countries, more than 84 years of experience in the energy sector and has achieved a tremendous track record in emerging markets such as India, Maldives, Pakistan, Paraguay, Malawi, Ghana and Mauritius. When we looked at the energy deficit in Zimbabwe it was pretty much a no-brainer to have them establish themselves in Zimbabwe and for Oxygen to focus on renewable energy as our core business.
From your experience in that process, what advice would you give other African entrepreneurs looking to partner with foreign investors? How should they go about it?
You should manage expectations and be entirely objective, and in some cases critical about your own strengths, capabilities and weaknesses. Have a solid plan and clear road map of how you intend to unlock value for your investor, as well as build their brand and grow their market share within your territory.
Look for companies which have Africa and your country at heart, companies that have a strong track record in similar markets as yours. Understand the culture of your prospective partner/investor, such as the way they do business and why. Replicate the same within your territory whilst merging it with your own local best practices.
You should also look for companies wanting to establish themselves permanently in your country, not merely sell a project and leave. They must aim to be a driver in the particular sector they are participating in.
Describe the challenges your business faces today?
Zimbabwe’s economy, though still fragile, has many opportunities and a number of international businesses are faring well – Puma Energy is an example. But for Oursun the biggest challenge so far is shipping to Zimbabwe which, at the present moment, accounts for 10% of our project cost. We can also expect challenges in accessing domestic funding at affordable interest rates, together with sourcing and assembling products locally at prices that do not inflate our project costs.
In the past we have faced delays in key projects. Our challenges have been mainly linked to Zimbabwe’s economic situation. To be honest it would be entirely unfair to say we have experienced a lot of downs in our journey so far that would cause major setbacks. We have received overwhelming support from the policy makers and stakeholders within the energy industry, including the relevant ministries. This boosted our confidence and that of our partner Meeco to take a $7m punt on Zimbabwe and put us high on its focus territories in Africa.
Lastly, where do you see Oursun Energy in five years?
A main thrust for us is developing clean energy solutions for the wellbeing of the population, especially in the remote rural areas. They are the ones in urgent need of stable and reliable power. We aim to develop a 230MW project in clusters of between 1MW and 5MW. From the total investment we expect up to 2,000 jobs created during the realisation and operation.
We also intend to stimulate growth opportunities within the local industry by transferring knowledge to local partners, a large majority being women and youth. This represents the interesting and unique combination of stimulating the local industry and know-how transfer by generating renewable energy in Zimbabwe.