A March 20 report by the Intergovernmental Panel on Climate Change (IPCC) warned that the world is on the brink of catastrophic temperature rises in the next 10 years, and that could lead to the loss of millions of lives by the end of this century – if nothing is done to halt climate change.

As countries acknowledge that there’s an urgent need to shift towards clean energy, many startups are looking into solutions that can help secure human survival in the next century.

It is within this premise that Melanie Keita teamed up with Ian Minjire Kibira three years ago to co-found Melanin Kapital to design innovative ways to help African SMEs access finance.

“The beginning of our journey started more on how to link SMEs towards access to finance from banks or from the African diaspora in Europe,” Keita, who is the CEO, tells Nodo News. “But since last year, we pivoted heavily into climate financing.”

Inside Melanin Kapital’s 3 Business Verticals

They now help small businesses access solar equipment or electric mobility solutions in Kenya. Keita says the venture has three verticals.

The first one is what we call Kijani Farm. It provides financing for solar irrigation, solar water pumps, and solar greenhouses, she says. ‘Kijani’ means ‘green’ in Swahili, Africa’s biggest language.

The second vertical is Kijani Power. It focuses on small retail shops located outside urban areas. The startup provides them with solar panels and solar fridges to help them keep food and fresh produce at the right temperature.

The third one is Kijani Move Green Mobility which focuses on e-logistics. “And we have to finance electric buses. We use commercial lending as well as carbon credits to finance this. This is where Web3 comes in because it’s very difficult to get access to certification and very costly to be certified as a carbon savior,” Keita explains.

The startup, which has been UN-certified to lead green energy transition efforts, calculates carbon credits through its AI algorithms “because all our equipment that we finance are IoT connected.”

How Kijani Token Carbon Offsetting Works

It has created what it calls Kijani tokens for business owners who want to offset the carbon footprints they have. “They can do it by buying our tokens. And this way we use the money to finance those solar equipment at a lower cost.”

E-mobility has helped Melanin Kapital in the transition from Web2, as it ensures it does not only tokenize carbon credit processes but also the assets it provides “so that anyone outside of Kenya is able to contribute by purchasing a small piece of each asset and making it again cheaper for the entrepreneur to acquire the equipment.”

SMEs are required to sign up into the platform, create a wallet and get to the dashboard where they see different equipment that they can buy through the Buy Now, Pay Later model. But the difference is that when users acquire the product and utilize it, they also earn Kijani tokens based on the carbon that they have saved by transitioning to using clean energy equipment.

For instance, someone who wants to purchase an electric motorbike can use his smartphone to sign up on the app, get his wallet and choose what electric motorcycle he can buy. When he finds it, which is around $1,800, then he can put a deposit of $500 and pay the rest every day in small amounts.

“And since the e-motorcycle is linked to our system, we can see in real-time how much carbon dioxide he is offsetting per kilometer,” Keita says. “We have priced one Kijani token at the market rate for one carbon credit which is $55.” With this model, instead of repaying the loan for his bike at 35% interest, he pays at 5%. And then, he redeems his Kijani tokens in local currency via mobile money platform M-Pesa.

Melanin Kapital is also working with electric bus company BasiGo to entrench its services. “Uber is also interested.” Absa and Emurgo have been the financial partners.

Why Africa Needs This Kind of Financing

The problem with access to finance for small businesses in Africa does not only stem from lack of supply of credit, but also the cost of the loans, which make fossil fuels cheaper than clean energy.

“We’re seeing annual interest rates from 45% to even 98% in Kenya. If you go to Uganda or Zambia, it is between 10% to 12% per month, which are completely insane rates,” Keita says.

The more she worked in financial sustainability, the more she got convinced on carbon financing as an affordable type of financing, through carbon credits. The carbon credit voluntary market is currently estimated to be worth more than $900 billion annually, and is projected to grow to match major commodity markets, according to Swiss-based private bank Lombard Odier.

“That’s why we thought of a way to tap into those covered credits, while still focusing on needs that SMEs strongly have.”

The startup, according to Keita, has already disbursed $100,000 in SME climate financing so far, and now targets to finance between 500 and 1,000 SMEs, with disbursements totaling upto $3 million.

The Intersection of Blockchain and Climate Change Adaptation

Melanin Kapital has created smart contracts with asset providers to get the authorization to share data from its IoT system.

Tokenization of the green energy assets themselves is being done with system checks from the Capital Markets Authority, which is now interested in the deployment of blockchain to create inclusivity in managing financial assets.

The whole carbon credit process is done via a blockchain system. “This has a strong trust element. We have a stringent process with Verra, which is UN-certified.” This allows Verra to verify the carbon Melanin Kapital has prevented from getting into the atmosphere is correct, eliminating chances of duplication.

The startup is aiming to help e-bike and electric bus owners get carbon certification. “We aim to be the intermediary who certifies and verifies carbon credit calculations because we use a certified methodology.” It aggregates the data of all the players, captures all carbon offsets, calculates the money and pays everyone their carbon credits.

“We want to be the top go-to place for SMEs to raise carbon credits in Africa, faster and cheaper. Our key focus this year is more blockchain development to allow more SMEs access to our platform.”