Clean Power

Published on February 1st, 2015 | by Important Media Cross-Post

18

Egypt’s Rooftop Solar Loan Initiative: Hot Or Not?

February 1st, 2015 by  

Originally published on Inspired Economist.
By Aisha Abdelhamid

solar-power-in-egypt-wikicommonsParticipating in an initiative to finance rooftop solar power units, National Bank of Egypt (NBE) and Banque Misr are offering loans to citizens in Egypt. As a preliminary stage, the initiative is being offered only within specific areas of Cairo. However, plans include expanding soon into Egypt’s other governorates.

Energy Committee Head Magid Eldeen Almanzlaoy reports the completion of the Egyptian Businessmen’s Association (EBA) study for establishing rooftop solar energy generation in Egypt.

An Egyptian’s Take on This News Release

As an Egyptian citizen and resident, I feel compelled to share my opinionated amusement regarding this news release. Let’s take this one step at a time.

First, citizens of Egypt are being offered loans for solar power systems on their rooftops. Almanzlaoy said that loans are being offered in accordance with a tripartite contract between banks, state-owned electricity companies and the EBA. I’m immediately suspicious of EBA conflict of interest, but let’s give Almanzlaoy and his EBA the benefit of the doubt for right now, and keep going.

Paying Interest is Forbidden for Muslims

Second, Almanzlaoy said that interest rates on the loans will range from 4% to 8%, as the value of the loan depends on the energy required per kilowatt per hour (KWH). In my experience, it will probably depend more on political party affiliation, but even this is not significant. What is significant is that this is a majority Muslim country. Paying interest on loans is forbidden in Islam. Perhaps that majority is not so devout since the latest uncoup in Egypt (and the subsequent unmassacre of political opposition unterrorists), but let’s give the Muslim majority the benefit of the doubt for right now, too.

Religious devotion, and equally significantly, lack of it, is not a positive motivation for paying interest on a loan in a country where the majority of citizens has never paid interest on a loan before this. Solar power up on my roof sounds great, but paying someone “interest” to get it put up there is just another word for paying “rashwah.”

In Egypt, Loans + Interest = #FAIL

“Rashwah” is the arabic word for Egypt’s corrupt system of paying for favors, or even common, everyday services like getting the light bulb changed on the state-owned electric pole on our street corner – keep in mind that we will supply the lightbulb, electricians tape, and even the ladder, and pay the guy who climbs the pole, too! If he is also getting a salary, so much the better for him, but we won’t get the bulb changed by it.

“Interest” is just another form of rashwah in just about any intelligent Egyptian’s opinion. In Egypt, loans + interest = #FAIL. But let’s give interest-charging loans the benefit of the doubt for the moment, and keep going.

Third, Almanzlaoy revealed that in the case of the initiative’s success, citizens who have finished paying loan premiums can invest by selling the electricity produced from their solar units. I don’t know how to say “caveat” in arabic, but I think we just read the fine print in the initiative. But let’s give the benefit of the doubt to the initiative’s success, and take a closer look at the initiative.

image (Image note and source: Yes, that’s our electric company serviceman changing the light bulb on our street corner. I took this picture last summer.)

Egypt’s Dependable Electricity Companies

Fourth, Almanzlaoy added that the initiative seeks to coordinate with state-owned electricity companies because the presence of electricity companies in this tripartite contract will lead to the success of the initiative. “After seven years it is expected that a citizen who owns a solar unit will get electricity without paying any bills. Moreover, the citizen will sell electricity to the government and benefit from the subsidised price of electricity at the same time,” explained Almanzlaoy.

Yes, I think it’s a good idea to have someone to sell the excess electricity produced from my solar unit… Provided I get my loan paid off… Provided I agree to pay interest… that a fat portion of which is probably lining the pockets of Almanzlaoy and his EBA, just for dreaming up this sweet scheme…

But let’s give state-owned electric companies the benefit of the doubt, and imagine they will be better at buying back solar-generated electricity than they are at buying lightbulbs, electricians tape, and ladders for the electric pole on our street corner, and keep going. (Please don’t even ask me to address electricity for free while still benefiting from the subsidized price of electricity. O.M.G. I am blindsided by such brilliance.)

A 20-Year Guarantee, Insha’ Allah

Fifth, Almanzlaoy explained that the solar unit, which will be established for the production of electricity, will have a guarantee of up to 20 years, during which the supplier will provide maintenance operations. Right. It takes an act of God approaching miracle proportions just to get that blasted lightbulb changed, and we foot the bill for time and materials!

The benefit of the doubt rightfully belongs to God, so we won’t question God’s ability to work the epic-proportion miracle it would take to keep anything in this country operating for 20 years. Maybe I’ll just say, “insha’ Allah” (God willing), and maybe you can forgive my sarcastic tone of voice.

Egypt’s Legislative Structure

“The initiative will be implemented during the first quarter of the current year, particularly as the legislative structure of the new tariff for renewable energy put Egypt on the map of countries producing electricity from renewable sources,” said Almanzlaoy. “Legislative”? Structure”? We don’t even have a Parliament right now…

Dear Mr. Almanzlaoy added that this agreement will be applied within specific areas in Cairo as a preliminary stage, and will then be expanded into different governorates. Epic. Proportion. Miracle. …Insha’ Allah.

image (Image note and source: This is not Egypt, but this is what my rooftop looks like in my dreams. Wikicommons)

“Solar Panels in Egypt”

Egypt is a country custom-made for solar power generation. The weather here is awesome. It’s mid-January, our grapevines are already budding, and last year’s leaves haven’t finished falling from the peach trees. I wore socks on my feet three times this winter. We have plans for solar panels on our rooftop, too. I was reading an article on cleantechnica.com and clicked on the “solar panels in Egypt” ad that targeted me. But if we get solar for our roof, insha’ Allah, I can give you a 20-year guarantee it will definitely be off grid.

Egypt’s plans for solar power generation are definitely heating up. Or maybe I’ll just say, “insha’ Allah,” and maybe you can forgive my sarcastic tone of voice.

image (Image note and source: This is a portable electricity generator in Egypt. It was hooked to a donkey. I’m not lying, I took this picture myself six months ago.)

(Top image source: wikicommons)

Reprinted with permission.


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About the Author

-- CleanTechnica is one of 18 blogs in the Important Media blog network. With a bit of overlap in coverage, we sometimes repost some of the great content published by our sister sites.



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  • cairene

    Hahaha. As a consultant in the field, working on the ground in Egypt, I can safely say that this is a nonsensical and clearly politicized article written by an “unterrorist” sympathizer aimed to further the West’s ignorance of Egypt, and the region.

    • Bob_Wallace

      OK, as someone with information how about writing up the solar situation in Egypt from your perspective?

  • Ronald Brakels

    Egypt has built up a functioning home loan market over the past decade or so. The value of loans is only about 1% of GDP compared to Turkey’s 7%, but the sector has come a long way. This century microloans have provided credit to many who previously were unable to receive it. Credit card penetration is about 7% and their interest free period is much the same as any other country. And looking online I see Credit Agricole Egypt is offering to lend up to a million Egyptian pounds at what they call competitive interest rates. Financial services have definitely not reached European or North American levels of penetration, but modern financial services are available and used.

  • “a country where the majority of citizens has never paid interest on a loan before this.”

    Who the heck wrote this drivel? and why is he talking about my country, when he/she obviously doesn’t know anything about it?! I mean, even “Islamic banking” (which doesn’t even have a significant market share in Egypt) applies interest on loans, where the heck did he/she get the idea that Egyptians don’t pay interest?!

    • Peace Man

      Obviously you did not read the article well….

      The writer is a she, not a he.

      The proper Islamic banking system is based on “risk and profit” sharing, not on a one-sided “security and interest” structure. It has worked well for over 1,200 years until the Western banking structure colonised the Middle East.

      • Um, I also made a point that Islamic banking is not even popular in Egypt (because it’s associated with several ponzi scheme cases that happened in the 90s), so the article is wrong either way, and the vast majority of Egyptians pay interests on loans. Oh, and btw, Islamic banking wasn’t invented until the second half of the 20th century, so I don’t know where you too get your facts.

        • Peace Man

          Please read the article on Islamic Banking in Wikipedia. Excellent summary.

          Islamic banking was started with the Prophet, though not in a system that we would recognize as a “Bank” today.

          In the 80’s I read many of the articles and books cited in Wiki. They changed my economic thinking from what I had been trained in University.

          The Egyptian banking system is primarily a copy of the Western system, and is not Islamically structured.. but I am not an expert in that.

          • The Egyptian banking system is unmistakably western, that was the whole point of my comment. I’m not here to discuss the merits of one system over the other.

  • Nothing Wrong With Interest

    “Interest” is just another form of rashwah in just about any intelligent Egyptian’s opinion”

    Surely, you must mean “in just about any dumb Egyptian’s opinion” here? Because there’s nothing wrong with interest on a loan. It’s just a premium paid to cover the risk taken by the loaning party. If there was no interest, the loaning parties would likely LOSE money, because more often than not, some debtors will default on their loans. Additionally, interest on a loan is also necessary as compensation for the effects of inflation. If this compensation did not exist, the loaning parties would again LOSE money, because they would get less valuable money in return. Finally, interest also exists as profit for the loaning party. There’s absolutely nothing wrong with that. Why should the loaning party give its hard-earned capital to someone free of charge, when instead, they could have invested it into something – let’s say stocks or government bonds – that would have earned them money?

    • JamesWimberley

      You need to take this up with Al-Azhar, not the readers here. The prohibition on usury goes back to a world where debt bondage was an institution, and personal and corporate bankruptcy unknown. It wasn’t unreasonable then to say that investments should be risk-assuming equity ones.

      The practical point is that many pious Muslims do think interest-bearing debt is usury and un-Islamic. It depends I guess on which school of jurists they follow; Turks don’t have problems with banking. The defiantly secular military still running Egypt have set up a solar scheme which will offend many of the ordinary Egyptians at whom it is aimed. They could easily have avoided this.

      • Peace Man

        Well written James.

        You may not totally understand the Islamic methodology, but you do have the essence of the problem with this structure that the current “government” has setup.

        There is no problem for Muslims with banking ‘per se’, it is just the issues of a one-sided relationship between the lender and the borrower.

        The Islamic method is more of a sharing of risk between the parties and the subsequent profit or loss that both parties will share in.

      • Nothing Wrong With Interest

        I did take it up with the author of this article, hence the quote. The purpose of the comment section is for readers to comment on the content of the article, which is what I did.

        And thanks for the history lesson James, but what has all of that to do with the present? In the past, interest on a loan was perhaps unusual, but nowadays, it is not extraordinary or immoral at all. If interest did not exist, our modern-day financial system, of which Egypt is part of, couldn’t function optimally.

  • JamesWimberley

    Don’t worry about the panels, as long as they made in China or (Muslim) Malaysia not Egypt. Here’s the satisfied owner of a 30-year-old Arco Solar module. working better than factory specs.

    http://www.greenbuildingadvisor.com/sites/default/files/PV%20module%20plus%20MH%20-3.jpg (Source link)

    This is not surprising. Silicon is basically a rock, and there are no moving parts to go wrong. Good engineering, as with the Pyramids, stands the test of time. How many old foot-operated Singer sewing machines have you seen in Egypt, still working perfectly after 80 years or so?

    The failure of the government to adapt to the Islamic prohibition on usury is a shame. Solar lends itself very well to small cooperatives, which SFIK are fine in shariah.

  • onesecond

    Thank you for this insight into Egypt. Us Westerners definitely have a hard time imagining what it is like, that was a sobering reminder.

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