E+Co Introduction Sheet (IS)
GENERAL INFORMATION:
Investment Number: 06-997
Proposed Investment Amount: US$200,000
Country: Tanzania
Technology: PV
IO: Kofi Nketsia-Tabiri
Expected Final Term Sheet Date: April 18,
2006
Expected Date to Submit FS: April 28, 2006
Expected Investment Date: July, 2006
Date first circulated: March 23rd, 2006
Date feedback expected from Bloomfield: March 30, 2006
Investment Officer: Kofi Nketsia-Tabiri
Title: Zara Solar
Investment Number: 06-997
Date of first contact: December 7, 2005
How was the opportunity identified: Zara Solar evolved out of Mona Mwanza Electricals and
Electronics Limited which an existing E+Co investment.
DETAILS:
1. Summary and Support Statement:
Zara Solar Limited is an existing trading business that was established in January 2005 to trade,
design, install and maintain complete solar pv systems for households in the Lake Region of
Tanzania. Zara Solar evolved from the solar pv division of Mona Mwanza Electricals and
Electronics limited(MMEE), a 10-year old company that deals in assorted electrical and electronic
items. The company is headquartered in Mwanza.
The Lake Region is the most populous and least electrified region in Tanzania. It has a total
population of 6,344,648 people represented by 1,136,128 households out of which only 1% has
access to grid electricity. It is against this backdrop that the region was selected for the
implementation of the pilot phase of the “UNDP/GEF Transformation of rural photovoltaic market
in Tanzania project”. The project aims amongst other things to increase awareness of solar pv
systems amongst rural dwellers, provide policy support and strengthen institutions within the
value chain of solar pv delivery in rural Tanzania.
Since the UNDP/GEF project commenced in 2004, there has been tremendous growth in the
solar pv business. In 2005 Zara Solar grossed US$90,000 in sales revenue representing 600
complete Solar Home Systems (SHS). In order to widen its market base and increase the
affordability of SHS, Zara Solar intends to implement a credit scheme with reputable institutions
based in Mwanza and its 8 surrounding districts. It will offer SHS to employees of these
institutions that will guaranteed by the employers. The scheme will take into account mitigation
measures for incidences of default and death of prospective customers. Beyond the credit
scheme, there is a growing interest in consumer finance of SHS by local banks and savings and
credit cooperative societies within the region. Zara Solar intends to cash in on the opportunities
presented by these developments in the region.
Zara Solar is therefore requesting for a US$200,000 loan from E+Co to import 400 complete
systems for the burgeoning SHS market in Mwanza.
2. Impacts:
Social:
 Zara Solar expects to meet the energy(primarily lighting) demands of more than a 1000
households annually following E+Co investment
 Eradication of indoor pollution from the kerosene lamps and candles and the potential
dangers they pose for households particularly children
 Improvement of living conditions of households as a result of access to light for studies
and trading in the evening
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Creation of jobs for over 20 self employed technicians trained by the Tanzanian Solar
Energy Association
Creation of jobs for people who are employed by battery company to collect dead(run out
batteries) for recycling(lead replacement)
Environmental
 Significant displacement of candles and kerosene(exact numbers will be investigated
during due diligence, correspondence with entrepreneurs and interaction with prospective
household clients)
 Potential GHG savings will be achieved over the life(over 15years) of the use of PV
systems
3. Sponsor and Management Information:
Zara Solar is equally owned by Mr. and Mrs Mohamedrafik Parpia. Both have immense
experience in the solar pv retail business. Mr. Parpia is a civil engineer by profession and an
astute business man. He started was started MMEE with his brother .The couple also own two
other business; Zara Furniture Supermarket and Zara Tools and Hardware shop.
Mr Parpia has attended several training workshops in solar pv system design and marketing. He
is the chairman of the Tanzania Solar Energy Association(TNSEA) in the Mwanza region and has
immense influence in the solar pv sector in Tanzania. He is highly respected by technicians who
are distributed all over the various districts in the Lake Region. Over the years he has build
immense experience with suppliers and has a reputation amongst suppliers. E+Co IO has
observed great improvement in his business plan writing skills compared to five years ago when
he attended the first AREED training workshop for entrepreneurs.
The company has 3 full time technicians and will utilize trained technicians who have been
trained by TNSEA and live within the community of end-users.
4. Main Risks and Mitigation Measures:
Key risks envisaged in this investment are:
 Market Risks:
This refers to the ability and willingness of end-users to pay for the
SHS and thereby sustain the business of Zara Solar.
 Mitigation Measure: Zara Solar will cash on cash basis to end-users that have
consumer finance from local banks. For end-users that will be
serviced under the credit scheme, it will do thorough due diligence
on employees and will service employees with good credit history
with credit and welfare associations and demonstrated loyalty to
employer (at least 5 years with the employer).Employer commits to
pay for SHS with pension savings of employee in the event of a
default or death or employee.
 Technical Risks: Shoddy design and installation of equipment has the potential to
reduce the life of the systems and create consumer rebellion and
boycott of SHS.
 Suppliers Risks: Following increased demand for SHS from the developed economies
globally, solar pv suppliers do not give much attention to relatively
small distributors like Zara Solar.
 Mitigation Measure: Over the past 5 years the owners of Zara Solar have build
excellent working relationships with reputable suppliers in Europe,
USA and Asia. These suppliers offer discount prices for Zara Solar
for large quantity orders.
 Entrepreneur Risks: This refers to the succession plan for Zara Solar in the absence
of the owner.
 Mitigation Measure: Presently Zara Solar has no succession plan, however, the
brother of the Mr. Parpia who runs MMEE has the ability to run the
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business, though is he is not a shareholder of Zara Solar. E+Co IO
will discuss with Mr Parpia the succession plan for the business and
explore the options for establishing or working towards one.
5. Preliminary Financial Information:
Income Statement
Year 1
Year 2
Year 3
Year 4
Sales(US$)
360,000
450,000
600,000
800,000
Gross profit
90,000
112,500
150,000
200,000
Expenses
30,000
35,000
40,000
45,000
NPBT
60,000
77,500
110,000
155,000
Balanced Sheet and Cashflow analysis are not completed yet.
6. Technical
The Lake Region has a solar insulation value of 5.54kw/sq.m. Zara Solar will install decentralized
solar pv systems due to the geographic characteristics of the region to be served. Polycrystalline
PV Modules and system accessories approved for use in the field will be utilized. Zara Solar will
offer complete system of 14W, 20W and 50W of the following brands: GE Energy, Sundaya
Solar, Solar Orange, Kaneka PV and Tripp Lite. All of the PV panels used by Zara Solar come
with a certificate of guarantee from the manufacturer for 25 years and if they fail due to a
manufacturing problem will be replaced by the manufacturer at no cost to the end-user or to Zara
Solar.
The solar home systems will include 2 to 6 LEDs and fluorescent type lights of 8W - 15W,
12V each with its corresponding switches. The regulating and control system will be
installed between the multi-crystal PV module and the 12V, 40AH - 105AH deep cycle
batteries, with one adapter for the connection of a radio.
7. Preliminary Terms and Financial Needs
Zara is requesting for a four-year US$200,000 loan remunerated annually at 7%. E+Co IO will
perform a thorough financial analysis to determine the most suitable terms for the business based
on market conditions, the credibility of the entrepreneur and E+Co’s investment philosophy.
Work completed to date:
 Review of business plan and correspondence with entrepreneur on key aspects of the
business plan
 Compilation of institutions for the credit scheme
 Study of the UNDP/GEF project progress report
Work Plan:
 Thorough assessment of the market in the Lake Region
 Review the activities of MMEE and its impact of Zara Solar
 Thorough financial analysis
 Due Diligence trip
 Negotiate recommended terms with entrepreneur
Enterprise Development Services (EDS):

Institute template for tracking M+E data
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Support with the structuring of the credit scheme and provide entrepreneur with critical
breakeven figures for a successful scheme to ensure the company does not encounter
cash flow problems
Cash flow management
Installing a succession plan for the business
Expected submission date of recommended Term Sheet: April 18th, 2006
Expected submission date of FS: April 28, 2006
Expected investment date: 3/06
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