1. Clean Energy and Entrepreneurship Development AREED Model

2. Outline Clean energy barriers AREED concept and partners Results Lessons learnt

3. Clean energy general barriers Lack of focussed policy to promote clean energy Lack of awareness on clean energy investment opportunities on the part of : –Public sector decision makers (partly blinded by short-term political expediency) –Private SME sector entrepreneurs –Programme managers in international financial, development and aid institutions –Financial Institutions

4. Clean energy general barriers Weakness of skills to develop business proposals Lack of appreciation of opportunities to metigate/adapt climate change such as CDM and adaptation funding facilities

5. Innovation capitalTransaction financeOperating capital Often secured Occasionally secured Supplier credit Entrepreneur’s equity Grants Consumer credit Working capital loans Finance + capacity gaps Weak business planning skills Insufficient risk capital (growth and start- up) Inadequate experience of Banks Non- existent end-user finance options Stage 1: 0-10 yearsStage 2:10 - 20 yearsStage 3:20+ years Interventions Enterprise development services Seed and Patient capital funds Capacity- building and risk sharing with local banks User finance, micro- credit, lease/rentals, third party financing: Target group = Productive users of RE Policy support for SMEs SME finance + capacity gaps

6. The AREED model EntrepreneurEntrepreneur NGOs / Dev. organisations FinancialInstitutions - 2nd stage financing Start-upFinancingEnterpriseDevelopmentServices Enabling Gov’t policies Energy business: services and products for rural and urban clients

7. Partners UNEP: Initiator and facilitator, fund mobilization E & Co : Seed Fund Manager Donors : UN Foundation, Sida, BMZ, Dutch Government

8. 5 African Partners 5 African Partners MFC, Mali ENDA, Senegal KITE, Ghana CEEEZ, Zambia TaTEDO, Tanzania

9. Key facts May 1999: UNEP and E+Co present a proposal to the UN Foundation to adapt the “enterprise-centered” model in Africa Total Amount : about US $ 7,5 m Seed fund size: $1.4 m (2000) to $1.7m (today). Enterprise development costs: $0.20 - $0.50 per $1 invested Impacts: Slow to produce direct impacts (job creation, GDP effects, GHG mitigation, etc) but can be significant over time.

10. Type 1 Investment: Proof of Concept e.g., Jatropha, crop drying, solar grinders. Very low risk-adjusted returns. High Innovation impact on sector dev. Typical Loan Size: $25,000 Ave defaults: 30% Ave returns: <3% Type 3 REED Investment: Expansion e.g., Urban LPG, efficient lighting Moderate risk-adjusted returns High direct impacts Low Innovation impact Ave Loan Size: $130,000 Ave defaults: 10% Ave returns: 5% - 8% Type 2 REED Investment: Commercialization e.g., Waste to energy, rural LPG Low risk-adjusted returns Ave Loan Size: $70,000 Ave defaults: 15% Ave returns: 3%-5% AREED enterprise types

11. Results (cont) Enterprises supported:  35 Customers served:  331,000 Qty C02 emissions avoided p.a:  422,000 tons Qty charcoal/firewood displaced:  263,000 tons

12. Lessons learnt Enterprise Centered Model is workable and can be replicated Innovative because it can be adapted with local context of entrepreneurship Removes barriers of financing of SMEs under traditional financing conditions Concept of partnership is crucial for success

13. Lessons learnt To enhance market base of end users requires consumers credit facility Need to provide post investment support and monitoring

14. Merci beaucoup