Financial access hampers renewable energy supply plan

Dar es Salaam. Renewable energy stakeholders have said the challenge of access to the finance is hampering the supply of renewable energy technologies to off-grid communities for developmental activities, especially in agriculture.

According to them, solar energy is not only meant for lighting homes, instead, it serves in businesses and help improve agricultural activities. 

They said there is a need for financial institutions  to come up with plans that will help  uplift the fast-growing industry.
“In this sub-sector of renewable energy there are many challenges, but the main one is public awareness, which makes it difficult for financial institutions to lend, due to perceived risks ,” said Fraxen Consult Ltd chief executive officer Francis Rwebogora.

He was speaking during the “Unlocking renewable energy Financing for productive use of renewable energy for off-grid Communities meeting”, which was organized by his company and the Tanzania Renewable Energy Association (TAREA).

According to him, there is a huge demand for solar power for off-grid communities, but it is not accessible due to distance and cost. “If the financial institutions allow more cash-flow to solar power enterprises, then access to electricity to such communities will go up,” he said.
 Speaking at the meeting, the CRDB specialist on Green Finance, Mr Hailo Kibiki admitted that presently they do not have specific products for renewable energy. Although the bank lends to large and medium businesses.

He said they still see it as a risky area, but will try to explore possibilities.
“We are ready to lend, but we need more dialogue with renewable energy stakeholders to see the best way, as this industry is growing fast and is promising, we also see the positive impact especially for the off-grid communities the way they run their activities by using solar energy,” he said.

On the other hand, TAREA Deputy Executive Secretary, Ms. Emma Laswai said the world is currently promoting the use of renewable energy to help reduce the impacts to climate change. “Indeed, there is a need for financial empowerment so that services can reach many people, especially in the rural areas,” she said.

She added: “The meeting was a long-standing wish for our stakeholders to bring them together with financial institutions especially banks so that they can collectively negotiate and today we have received a word of comfort as banks have said they can lend to us but more talks are needed.” 

Ms. Laswai said there was a huge gap between stakeholders and banks.

“We could not meet and mention the challenges and opportunities that exist in the sector and drop the notion that solar power is for light only.”

Other partners on this project, include Don Bosco TVET, IMED Foundation, TAMFI, Elico Foundation, KAKUTE Projects, TAREA and the project is funded by the C.S. Mott Foundation from Flint Michigan. The objective of this project is to develop the renewable energy ecosystem in Tanzania.
With 65.3 percent of rural households having access to electricity (Energypedia, 2020) there seems to be a huge potential for solar solutions in these areas.

Past awareness-raising campaigns by government and NGOs has helped raise knowledge and understanding of solar products among consumers.

The decision by the Government of Tanzania to drop VAT and East Africa Community to drop duties on principle solar products has made the solar market very interesting to entrepreneurs and many organizations and commercial institutions.