Green People's Energy for Africa - Knowledge Hub - Financing

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Green People's Energy for Africa
Knowledge Hub

Financing

Green People’s Energy provides financial support and capacity development measures to financing institutions, end-users and private companies to improve access to finance for rural enterprises and promote productive use of energy in off-grid rural communities.

I. Overview

Access to energy and connected productive technologies have the potential to promote the economic development of local enterprises in rural areas. However, financing productive use of energy (PUE) appliances, such as solar water pumps, mills or dryers, remains a challenge for small enterprises and rural populations in most countries in Sub-Saharan Africa.

More than 350 million people on the African continent do not have access to an account at a bank and are hence deprived of financial services. At the same time, the high upfront cost of the equipment needed for productive energy use often by far exceeds the financial capacities of small entrepreneurs, especially in rural areas. Without collateral which could act as a security towards the bank and comprehensive data on the creditworthiness, access to finance remains a central entry barrier for small enterprises and rural populations. Since finance institutions consider financing productive use of energy as risky, the interest rates are high and jeopardise promising business cases for many users. It is therefore important to facilitate access to finance for end-users.

Green People’s Energy provides financial support and capacity development measures to financing institutions, end-users and private companies to improve access to finance for rural enterprises and promote productive use of energy in off-grid rural communities.

Support to finance institutions to provide green finance

  • Building links between micro-finance institutions (MFIs), solar companies and organised savings and loans associations or cooperatives to access funds
  • Establishing guarantee funds to reduce the risk of micro-loans provided to village loan associations for the procurement of PUE appliances
  • Offering financial incentives to microfinance institutions to develop and introduce credit-lines for renewable energy-based PUE appliances
  • Introducing revolving funds that can be re-used to fund new credits once they have been paid back by initial lenders
  • Training of financial institution staffs on financing renewable energy solutions

Support to local enterprises as energy users to acceess finance

  • Energy assessments and technical advice to local enterprises when applying for finance
  • End-user grant schemes that make PUE appliances affordable in rural communities
  • Capacity building to ensure maintenance, and therefore longevity of the financed asset
  • Matching local enterprises with suitable MFI
  • Provide market trainings to improve market links and sales techniques of entrepreneurs

Support to solar companies to sell affordable products incl. financing solutions

  • Offering results-based finance (RBF) schemes that provide incentives to solar companies for each PUE appliance sold to enable price reductions for end-users and slowly develop the market
  • Facilitating cooperation between solar companies and MFIs
  • Providing funding for vouchers or other incentive schemes
  • Support to solar cpmpanies in organising appliance showcases and reaching rural customers

II. Case Studies

Many of the Green People's initiative's projects revolved around sustainable financing mechanisms and innovative approaches to overcoming the high initial costs of renewables. To learn more about the different financing mechanisms, read the following case studies and project factsheets:

Case Studies

Small Projects Fund

III. Publications


The GBE Thematic Knowledge Products are designed to share the knowledge and learnings about the topics gathered during the implementation and to make them accessible for practicioners. The following knowledge product outlines the latest approaches to PUE projects at the time of project implementation as well as learnings and recommendations from the GBE projects.


This knowledge product focuses on innovative approaches to promote end-user financing, particularly for solar PUE appliances for farmers and small businesses, such as solar water pumps/solar-powered irrigation systems (SPIS) and solar cooling. Sector-specific challenges and intervention approaches are first described before GBE programme findings are presented to enrich the sector discussion.


IV. Countries

Blue flags show the location of the relevant Small Projects Fund projects. The relevant case studies can be seen by hovering over the green highlighted countries.
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