1 EU Energy Initiative for Poverty Eradication and Sustainable Development Lilian Munyeka Zulu Centre for Energy, Environment and Engineering Zambia (CEEEZ) Plot No Malambo Road, Contract Haulage Premises, Private Bag E721 Lusaka, Zambia. Tel: Fax: AREED - small energy enterprise development, experience in 5 African countries Facilitation workshop & Policy Dialogue on Energy access for the Rural Poor Maputo, Mozambique April 2005

2  The greatest social challenge that most African governments face in the 21 st century is that of poverty reduction.  Virtually all governments in Africa have embarked on poverty reduction programmes BACKGROUND (1)

3  It is now widely accepted that the lack of clean and sustainable energy is a significant barrier to the successful implementation of poverty reduction programmes in most African countries.  Addressing these issues, however, is a difficult financial and political challenge for African governments who often place the needs of concentrated urban populations ahead of those in peri-urban and rural areas. BACKGROUND (2)

4 GENERAL EXPERIENCE Experience has also shown that despite the existence of a wide range of business opportunities in rural areas of Africa, local entrepreneurs have not taken advantage of such opportunities due to:

5 GENERAL EXPERIENCE Lack of capacity and resources by local entrepreneurs to develop robust business plans Lack of seed finance To overcome these constraints requires a holistic approach involving execution of all phases of business development cycle

6 Technical - Financial Analysis and Evaluation Topography, Hydrology, grid Load, legal communities, social awareness Concept development Pre-feasibility Investment (Fund Manager) Project Identification Project Developer Developer and Financial Institution Feasibility or Business plan KEY PHASES OF BUSINESS DEVELOPMENT CYCLE

7 BUSINESS DEVELOPMENT It is a well known fact that the first three stages (Project identification, concept development and pre-feasibility) are often difficult and slow going requiring significant investment, in time and capital.

8 In Africa, few programmes offer support to entrepreneurs involving these stages, whilst on the other hand, traditional financial institutions require ready made robust business plans One notable institution and programme which offers support to entrepreneurs from idea to business plan is AREED

9 AREED AND ITS EXPERIENCE IN PRE- INVESTMENT AND SEED FINANCING  AREED Program was established in 2000 by a group of multi-lateral (UNEP), international (E&Co) and national partners (Ghana, Mali, Senegal, Tanzania and Zambia) to:  Address this need by helping to build and sustain energy enterprises capable of delivering energy services, and promotion of clean and sustainable energy technologies for productive uses for income generating activities.  Meet on-the-ground needs of entrepreneurs and start-up businesses with a business orientation.

10 OBJECTIVES OF AREED  Based on an enterprise development approach pioneered by E+Co and AREED partners, the AREED specific objectives are:  Establish and strengthen enterprises (private sector and public-private partnerships) that offer clean modern energy services to rural and peri-urban populations.  Increase the capacity of local NGOs to offer enterprise development services critical to the start-up of small and mid- size energy enterprises.  Engage local and regional financial institutions to invest in the clean energy sector.  Enhance the ability of local, regional and national governments to support business-like, solutions to the delivery of sustainable energy services by small and mid-size energy enterprises.

11 Entrepreneur AREED Support Energy Services Rural Clients Enterprise Development Services Start-up Financing NGOsBanks AREED Partners AREED ARRANGEMENT

12 AREEDAREED AREEDAREED Proposal EDS EDS and $ $$ and 2 nd Stage $$$ Idea Fact-Finding Feasibility Analysis Business Planning Implementation Expansion TOOLKIT ENTREPRENEURENTREPRENEUR STAGES OF THE TOOLKIT PROCESS

13 AREED EXPERIENCE  Enterprise-centered model can be a powerful means for achieving concrete and sustainable solutions to problems in energy and a variety of other development sectors.  Growing evidence from the five countries where AREED is active demonstrates that these types of energy enterprises can generate measurable co-benefits beyond the provision of energy services including:  creation of jobs;  protection of land and forest resources;  increased productivity and incomes;  provision of clean water;  other development priorities.

14 AREED ACHIEVEMENTS (1)  Since 2000, the following accomplishments have been obtained through the AREED partnership:  Training of 250+ entrepreneurs on business planning and enterprise development;  $1,133,800 invested in 23 enterprises, including enterprises active in the following:

15 AREED ACHIEVEMENTS (2) CountryInvestment Name Technology Applied Description of Business Financing US$ Investment Type GhanaTranslegacy Venture LimitedLPGFabrication and sale of LPG stoves $20,000Debt GhanaAB ManagementEnergy EfficiencyPower factor correction$122,400Debt GhanaAnassetLPGRetail of Liquefied Petroleum Gas $38,000Debt GhanaFee Hi VenturesLPGOperates a Liquefied Petroleum Filling plant $33,500Debt GhanaGladymanuelEnergy Efficient Lighting Sale of compact fluorescents$70,000 GhanaLambark GasLPGRetail of Liquefied Petroleum Gas $109,945Debt GhanaM 38 LPG Filling PlantLPGRetail of Liquefied Petroleum Gas $59,000Debt

16 MaliBaganiBio FuelJatropha powered multifunctional platforms to peel, ground cereals and charge batteries $15,170Debt MaliEco'HomeEnergy Efficient Lighting Sale of compact fluorescents products $112,782Debt MaliSodigazLPGDistribution of Liquefied Petroleum Gas $183,088Debt MaliUSISSSolar ThermalDrying of food crops$19,665Debt SenegalAMESolar ThermalRepair and installation of solar water heaters $41,563Debt SenegalFoyers AmeliorésBiomassManufactures and Sales cookstoves $19,455Debt SenegalVEVWindRepair and installation of wind pumps $22,395Debt AREED ACHIEVEMENTS (3)

17 TanzaniaBETLBiomassSourcing Biomass Waste for Cement Production $25,000Debt TanzaniaMona Mwanza Electrical 2PVInstalls and maintains Solar PV Systems $50,000Debt ZambiaChavumaEnergy EfficiencyInstallation of EE motor control gear $22,300Debt ZambiaChavuma2Energy EfficiencyInstallation of EE motor control gear $40,500Debt ZambiaKBPSBiomassManufacture of charcoal from renewable eucalyptus waste $75,300 ZambiaRasma Engineering Co.Energy EfficiencyManufacture and sale of energy efficient stoves and ovens $20,000Equity ZambiaRCIBiomassManufactures and Distributes Nyemba Oil Fuel and its by products "pressed cake/fertiliser" $8,000Debt ZambiaTSADCSolar ThermalSolar Bakery$10,000Debt ZambiaUbwato EnterprisesEnergy EfficiencyManufacture and sale of energy efficient stoves $15,700Debt AREED ACHIEVEMENTS (4)

18 CHALLENGES (1)  While it is acknowledged that a good start and foundation have been achieved, the most pressing challenge is attainment of long term sustainability and contribution of AREED to national development priorities of partner countries.  Problems that are seen as threatening the long term sustainability include:  limited flow of rural-based enterprises (RBEs) through the pipeline  insufficient resources to support long term EDS delivery and investments

19 CHALLENGES (2)  The problems above are being caused by the following negative conditions prevailing on the ground.  Contact between partners and RBEs is limited  Entrepreneurs do not have knowledge of technologies for delivery of energy products and services  Entrepreneurs, particularly those in rural area, are unaware of application of clean/renewable energy technologies for productive use.  Entrepreneurs have limited awareness of business opportunities in the energy sector  Entrepreneurs capacity to write project proposals is limited.

20 T he problems identified above require provision of funds to increase and sustain the flow of proposals through the pipeline through the following strategies:- WAY FORWARD

21  Increase dialogue between partners and umbrella organisations who support entrepreneurs for increased production through provision of energy as part of their production.  Initiate targeted marketing of packaged technologies.  Work closely with national and international agencies in the demonstration of viable energy technologies as a business.

22 CONCLUSIONS The AREED model has demonstrated that use of clean and renewable energy can go along way to contribute to poverty reduction and the EUEI can play a big role in leveraging these efforts