Financing Opportunities for Energy Access Companies in Mozambique

Access to Financial Services and Products

Access to finance is difficult for renewable energy companies in Mozambique due to sectoral and legal framework conditions, high interest rates, required collateral and lack of information.

According to World Bank’s Doing Business report, Mozambique scores 25 with regard to getting credit (with 0 being the lowest and 100 the highest score). The degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders, and thus facilitate lending, is especially low with an index of 1 (out of 12). Furthermore, only 7.6% of individuals and firms are listed in a credit registry.

Commercial banks have high lending rates, making it difficult for small retailers and micro- or medium entrepreneurs to get access to working capital, e.g. for stocking products. According to the findings of the FinScope MSME Survey Mozambique 2012, about 75% of micro enterprises and 50% of small enterprises lack access to financial services and products in the country.

However, the lack of access to finance is not only hampered by high interest and required collateral, but also due to the mere fact that banking institutions are not easy to reach in rural areas nor do all provinces have the same coverage of bank branches.

For an overview about the accessibility of financial services for individuals, read the article about end-user finance.

Mozambique’s financial sector is comprised by the following Credit institutions and financial companies:

	2019
Commercial banks	19
Micro-banks	9
Credit unions	9
Electronic money institutions	3
Savings and loan organisations	12
Representations of Savings and Credit Unions, Micro-credit operators	529

Provincial distribution of bank branches as of 2019

Micro Finance

The microfinance sector is still small and concentrates predominantly on Maputo city and Maputo province.  High interest rates make credit from Micro Finance Institutions (MFI) very expensive. Given the difficulties in accessing local credit, most off-grid solar companies either depend on their own finances or are raising international capital.

The lack of affordable loans limits the ability of energy access enterprises to manage their inventory levels, give credit to dealers, expand their distribution networks and invest in the marketing of their products. It also limits the ability of SMEs to import larger quantities of stock and thereby secure better price offers from their suppliers. This in turn leads to higher prices that are often unaffordable for low-income groups.

Credit Lines in Place

State-owned Banco Nacional de Investimento (BNI) is Mozambique’s development and investment bank. It offers a range of credit products to projects that contribute to the sustainable development of Mozambique. BNI finances infrastructures  with inter-sector links, such as energy, agriculture or transportation, for example. As of September 2021, there was no online information available about interest rates or specific credit lines.

In 2018, Banco Comercial e de Investimentos (BCI) launched a credit line “Eco Ambiental” for renewable energy production projects. This credit line will be available until 20 December 2024 and has in total 3 million Euros available. The credit line also finances energy efficient equipment, if CO2 emissions are reduced for at least 15%, or if renewable energy use is involved. Beneficiaries include private customers, micro and small and medium enterprises (SMEs), single entrepreneurs as wells as large corporations. While individuals can get from MZN 5.000 to 5 million Meticais, companies can get up to 20 million Meticais, at a fixed rate of 15%.

Financing Opportunities on a National Level

There are a number of public funding opportunities, tendering or offering catalytic grants and results-based financing (RBF). RBF is an approach that rewards companies for delivering previously-agreed results. Unlike traditional grant schemes, RBF schemes disburse grant incentives only against achieved results that have been verified. Read more about RBF here.

Fundo de Acesso Sustentável às Energias Renováveis (FASER)

Faser (Fund for Sustainable Access to Renewable Energy) is a results-based financing fund, which finances the dissemination of modern, renewable energy technologies (e.g. PV systems, solar irrigation pumps, improved cookstoves) in peri-urban and rural off-grid areas. It furthermore aims at assisting vulnerable populations to have access to reliable and modern energy. FASER has been set up by Green People’s Energy, EnDev Mozambique and the Foundation for Community Development (FDC).

Find more information here.

Market Development Fund - BRILHO

Businesses can apply for BRILHO’s Market Development Fund financial support ranging from £50,000 up to £1,500,000. Two grants-based mechanisms are offered: catalytic grants and results-based financing (RBF).

Find more information on energypedia or on their homepage.

Energising Development (EnDev)

EnDev Mozambique supports SHS and picoPV companies along the value chain, strengthens the market development of improved cookstoves, and enables grid densification. Along with the financial support via results-based financing approaches, EnDev also supports private companies by providing trainings related to business development services. Check their homepage here for more details.

ProEnergia – Energy for All

This program of the Government of Mozambique is financed by the World Bank and implemented by Fundo de Energia (FUNAE) and Electricidade de Moçambique (EDM). It has 3 components: (1) connecting households to the grid; (2) off-grid electrification with subcomponents for mini-grids and results-based financing; and (3) technical assistance and implementation support to FUNAE and EDM.

Invitation for bids, requests for expressions of interest etc. are available on the World Bank’s project page, at the procurement section.

Find more general information here on energypedia.

PROLER (Promoçao de Leilões de Energias Renovaveis)

The PROLER program supports the Mozambican government in tendering renewable energy power generation projects connected to the national grid. It aims at building three 40 MW solar plants in the districts of Dondo, Manje and Lichinga, respectively, and a 40 MW wind project in Inhambane.

The total cost of the four projects of the Initiative is of approximately 200 M€, from which 37 M€ will be co-funded by the European Union (EU), and the remaining will come from selected Private Investors.

A first tender was carried out in 2020. Further tenders for solar PV advisors and consultants to conduct a one-year wind measurement campaign and feasibility studies are expected to be opened in 2021.[1]

For more information, read here on energypedia or visit their homepage.