Energy Behavior-Backed Financing by KarmSolar and EFG Hermes

EFG Hermes Corp-Solutions, the leading leasing and factoring company in Egypt, and KarmSolar, Egypt’s largest private solar utility company, signed an agreement today that will see EFG Hermes Corp-Solutions provide Arkan Plaza tenants with premium financing services backed by their contracts with KarmSolar. The service is called the Tenants Financing Program, and we’re very excited to be adding it to our commercial offering in Arkan Plaza and other commercial developments where we are the private energy distributor.

How does the Tenants Financing Program work?


Arkan Plaza tenants, who purchase their energy from KarmSolar as the energy distributor in Arkan, will have access to exclusive loans and other financial services provided by EFG Hermes. Tenants are scored based on a unique energy behavioral scoring system that rates tenants on a number of factors such as energy consumption and electricity bill payment punctuality, and then offered financing based on the behavior score.

The system will evaluate electricity consumption patterns to determine credit limits granted to each individual tenant and a tailored financing program by EFG Hermes will be recommended accordingly. Moreover, KarmSolar will act as the collections arm using their operational facilities.

What is behavior-backed financing and why is it better than commercial loans?

In February of this year, the Central Bank of Egypt issued a circular regarding the use of  Alternative Data in Credit Assessment via Behavioral Scoring Models. This regulation allowed for financiers to ue alternative data to generate credit limits and provide services to previously underserved businesses.

Applying for commercial credit is a tedious and time-consuming process for businesses that could take more than 2 months to facilitate. Financing provided by EFG Hermes backed by their energy consumption behavior data can be facilitated within two weeks.

Furthermore, credit scoring SMEs and startups by banks and traditional financial institutions is difficult due to unorthodox business models, revenue streams, and financial structures. Behavior scoring allows EFG Hermes to utilize alternative data such as energy consumption behavior to assess credit worthiness and unlock better financing opportunities.

What is next for the Tenants Financing Program?

We are piloting the program with our clients and partners in Arkan Plaza and working closely with them to tailor the offering to their specific needs with regards to financing. Next up, we will be rolling the program out, in collaboration with EFG Hermes, to the rest of our distribution clients at commercial developments around Egypt. The offering will also be added to future energy distribution proposals so malls, plazas, centers, and more can benefit from the solution.

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