UNFCCC Workshop on Innovative Options for Financing the Development and Transfer of Technologies

27-29 September 2004, Montreal, Canada

African Rural Energy Enterprise Development:

A New Approach to Public-Private Partnership

Youba SOKONAExecutive Secretary

Sahara and Sahel Observatory (OSS)

Boulevard de l’Environnement BP 31 – 1080 Tunis, Tunisia

Key Challenges for African Rural Energy Prospect

• Widening Access to Energy Services

• Massive Self Sustaining Scale-up

• Market Creation and/or Stimulation Within & Across Countries

• Combination of Good Practices, Instruments & Technological Options

Number of

People

Income Levels$1/day

Rural Areas Urban

Areas

CBOs SMEs Utilities

Poor Wealthy

Rural Energy Services Framework

The AREED Approach

• Focusing on the critical enablers: enterprise and entrepreneur

• Combining services and capital• Bringing together resources from

multiple sources• Targeted, customized tools and activities• Real time, working, evolving partnerships

to plan, implement and improve• Cross platform learning

The AREED Enterprise Centered ModelThe Basics

Investors Donors Charities

Services

Entrepreneurs

Capital

Their Customers

Public Purpose Specialty Organizations

Demonstrating that needed energy services can be delivered on a sustainable basis by small/mid sized local enterprise and multiple partnerships

ENDAMFC

KITE

TaTEDO

CEEEZ

E+Co Africa

E+Co NJUNEP ParisUCCEE RisoeUN Foundation

Others

CountriesSenegalMaliGhanaTanzaniaZambia

UCCEE

www.areed.org/partners

Multiple Partnerships

1. Finance2. Program

3. Implementation 4. Enterprise5. Service Delivery

Finance partnerships: to bring together the “hard” and “soft” resources that must be blended to

launch sustainable enterprises

Investors Donors Charities

Services

Entrepreneurs

Capital

Their Customers

Public Purpose Specialty Organizations

e.g., United Nations Foundation

Program Partnerships: to bring together the governance, specialty expertise and local presence

required

Investors Donors Charities

Services

Entrepreneurs

Capital

Their Customers

Public Purpose Specialty Organizations

e.g., UNEP, E+Co, ENDA and KITE for AREED

Implementation Partnerships: to deliver the services and capital to entrepreneurs

Investors Donors Charities

Services

Entrepreneurs

Capital

Their Customers

Public Purpose Specialty Organizations

e.g., E+Co and ENDA in Senegal, KITE in Ghana, MFC in Mali, TaTEDO in Tanzania and CEEEZ in Zambia

Enterprise Partnerships: the creation and growth of sustainable businesses

Investors Donors Charities

Services

Entrepreneurs

Capital

Ther Customers

Public Purpose Specialty Organizations

e.g., Bagani, Ubwato, VEV, Anasset

Business: Charcoal production from sawmill waste

AREED Support: $73,000 loan + Enterprise Development Support

Investment Activity: - Construction of 15 argentine brick kilns- Development of marketing and distribution network

Status:Construction of kilns completed. Production, distribution and sales of charcoal started Feb 2003

Using a waste product for fuel and a conversion process twice as efficient as traditional methods, KBPS is proving that a clean energy enterprise can both solve an environmental problem and be good business.

KBPS, Zambia

VEV, Senegal

Business: Servicing of wind-powered water pumps in rural Senegal. AREED Support: $17,000 loan + Enterprise Development Support

Investment Activity: - Expanding inventory to shorten service times- Offering short-term credit to qualified clients

Status:VEV has expanded its inventory and operations.

Together, these services should help to ensure that most wind pumps in Senegal become - and remain - operational.

Business: Own and operate multi-functional platforms in the Kita area of Mali. Platforms powered on Jatropha oil, derived from Pourghere nuts.

AREED Support:

$14,500 loan + Enterprise Development Support

Investment Activity: - Own and operate two platforms; eventually expand.

First commercial business and investment in a multi-functional platform in

Africa.

Bagani, Mali

Business: LPG distribution

AREED Support: $ 38,000 loan Enterprise Development SupportInvestment Activity: - Purchase plant & equipment - Increase sales

Status:Bought new bulk LPG tank and installed car dispenser. Increase in sales and profit margins

The upgrading of infrastructure increase the delivery and service levels and makes the product more accessible to the community, decreasing dependence on traditional fuels

Anasset, Ghana

Service Delivery Partnerships: to deliver modern energy to the under-served…to create choices for

services and income generation

e.g., Village and its six farmer-customers

Enterprise Centered ModelHow Organizations Working Together

Add Value

Investors Donors Charities

Services Capital

Entrepreneurs Their Customers

Specialized Funds +Programs

Public Purpose Specialty Organization

Program PartnersImplementation

PartnersCo-finance

Government+ Policies

IndependentEvaluators +

Best PracticesDissemination

How Specialized OrganizationsWorking Together

Add Value

AREEDGhana

UN FoundationUNEP

Services Capital

Entrepreneurse.g., Gladymanual

Their Customers

UNEP KITE

What’s New Here

• Partnership of value adding entities, driven by bottom line of service delivery and sustainable market presence– Small/Medium energy enterprise development– Local partner capacity building– Financial institution linkages– Policy linkages

• Targeting two levels sustainability– Enterprise– Enterprise developer

Donors, Grant-Makers and Contract

Service Providers

Social + StrategicInvestors

Local Financial Institutions + Specialized

Funds

CapitalSeed and Growth

ServicesPre- and Post Investment

Specialized Intermediaries

Energy Enterprise Energy Services Customers

Enterprise-Centered Model – Value Chain

Solar Bakery

Solar Crop Drying

Efficient Lighting

Solar Hot Water

Solar Dryers

Salt Drying

PV SHS

Investment Committee

Initial Go-No Go

Fuel Switching

Coffee Husk Pelleting

Butane Dist.

Formal EDS Stage

Entrepreneur Training Stage

Financed Stage

Con

cept

Sta

ge

Biomass fuels

Sawdust Briquetting

Water Pumping

AREED Deal Flow

Why is this important?

• Network of partnerships need to link together different levels presently disconnected

• Different levels of “go between” value adding services are needed:

- Specialized public purpose intermediaries,- Local intermediary organizations- Local SMEs- Customers

The point of REED is to leave behind the discussions of “projects”, move to the creation of “portfolios” and reach the point where we are discussing “systems” of capital, products and services that are self-supporting. The key to getting there are sets of VALUE-ADDING PARTNERSHIPS

Thank you and for more information

www.areed.org/partners