Energy access: good business and good for business

An additional 1.2 million people across four sub-Saharan African countries now enjoy improved access to energy and increased livelihood opportunities as a result of a three-year multipronged initiative focussed on strengthening the capacity of small and medium enterprises to deliver clean energy solutions.

The Energy Business for Development programme, which ended last February having largely exceeded its targets, was implemented by Energy 4 Impact, with funding from the Russian Federation’s ESME Trust Fund, administered by the World Bank.

Over 400 energy enterprises in Kenya, Tanzania, Senegal and Uganda, providing a range of solar lighting products, energy-efficient cooking solutions, as well as mini-grid electrification projects, benefitted from advisory services and capacity building support. These included advice to early stage businesses serving the energy market; technical assistance to project developers to support and accelerate the development and growth of small, renewable energy projects; support for women to become energy entrepreneurs in rural areas; support to cookstove manufacturers, schools, and financial institutions to reduce market and financial barriers to the adoption of improved cookstoves in schools; and support to Senegal’s National Biogas Program (PNB) to deploy biogas systems for rural households.

Overall, the 429 energy enterprises assisted by the programme saw their sales increase by an average of 29% annually. 

In Senegal, women entrepreneurs recorded a 48%, growth in sales, with most of the women setting up new lines of businesses selling energy products, resulting in additional income streams. 

Furthermore, over 700 biogas plants have been installed by biogas enterprises supported by the project, benefiting more than 6,000 people; and 400 schools in Uganda have adopted improved institutional cookstoves, benefiting 200,000 school children, teachers and other support staff.

Besides advising energy enterprises, the Energy Business for Development programme also focussed on developing productive use activities in newly electrified villages by engaging with both energy providers and the local communities receiving the power, in Kenya, Tanzania and Senegal.

Energy 4 Impact worked with 15 mini-grid developers as well as two government agencies and their respective utilities in Tanzania (Rural Energy Agency – REA) and Senegal (Agence Sénégalaise D'Electrification Rural (ASER).

We provided support to nearly 300 non-energy businesses (welders, millers, shops owners, barbers, etc.) operating in the areas served by these utilities to use electricity to increase the productivity, efficiency and viability of their businesses.

Electrical appliances can transform the performance of agro-processing, manufacturing and service industries and provide opportunities for additional lines of business. However, small rural businesses with little access to financing and distribution networks find it hard to source and purchase powered appliances.

Formal financial institutions are rarely present in remote areas or not incentivised enough to create new financial products for a few customers with poor collateral in sparsely populated areas.

Given that rural electrification projects rely on steady levels of electricity consumption, one option is for the energy providers, such as mini-grid companies, to source and finance powered equipment for their customers.

Energy 4 Impact helped 166 business owners acquire 264 electric appliances, from hair-clippers and sewing machines to larger industrial machinery for milling and processing. Approximately 20% of enterprises financed their electrical equipment through loans, while some made use of a rental scheme. In many cases the heavier load machines, such as mills, welding and carpentry equipment, were made available via appliance leasing and financing provided directly by the mini-grid operators.

As a result, the electricity providers in the assisted areas recorded a 75% increase in monthly electricity consumption and local businesses achieved a 50% increase in monthly profit annually.