Access to finance for small energy businesses remains difficult but a series of targeted training programmes are set to change all this.
An entrepreneur demonstrating how a briquette machine works at the Lewero networking event
In a country of approximately 39 million people, only 14% of Kenya’s population have access to grid electricity. This statistic is even lower in the neighbouring countries of Uganda and Tanzania with many households in East Africa relying on biomass, dry cell batteries and kerosene to meet their energy needs. GVEP International is trying to change this.
Through its Developing Energy Enterprise Program (DEEP) it aims to develop a sustainable and widespread industry of micro and small energy enterprises, to make modern energy services more accessible to people in rural and semi-rural areas in East Africa.
The programme has so far provided business and technical support to over 500 entrepreneurs in start-up and existing small and medium enterprises (SME’s), but as these energy businesses develop a key factor in their expansion is access to appropriate finance. GVEP International East Africa recently held a series of training session throughout Kenya, Uganda and Tanzania to encourage financial institutes to engage in financing for energy enterprise development.
“Financial Institutes can contribute to the development of the energy sector by stimulating the supply of credit for rural and peri-urban SME’s as well as the demand for energy products through better access to consumer finance”, explains Phyllis Kariuki a Financial Institute Specialist from GVEP International.
The workshops which trained a total of 71 senior managers, 120 middle managers and 144 SME’s, employed several training methods including brainstorming, case studies, presentations and information and knowledge sharing sessions. Several videos produced by GVEP on improved cook stoves, solar pv, wind & biogas and briquette production, were shown to explain the different energy technologies and help managers and entrepreneurs appreciate the business potentials in these sectors. The workshops also explored different financial options, marketing strategies that can be tailored for energy products and the risks involved in managing energy portfolios.
In conjunction with the workshops a networking session was held in Luwero, Uganda to bring together entrepreneurs, suppliers and finances in the energy field. The event, which aimed to build relationships and exploit synergies within the sector, helped showcase the capabilities of the entrepreneurs and link them to financial institutes. Sales and several deals were done as a result of the networking session. Ugastove Ltd, a company making improved cook stoves, made sales of 800,000 UGX on the day (approx. £220) and contacts to supply their products to two companies that also attended the exhibition. The exhibition was also attended by financial institutions including Katikamu SACCO, who since receiving the energy
finance training have reportedly assigned 25% of their loan portfolio to energy and identified several suppliers from the networking session that they would recommend to their clients.
The training sessions received positive responses from both the financial managers and entrepreneurs. “As an expert on the ground, the knowledge acquired from the training has helped me advise clients on the various energy products available to them”, explains Kevin Ian, a sales representative for Faulu Advisory Services based in Eldoret, Kenya. During the training, the financial institutions noted that energy was one loan portfolio which could not only help improve their loan offerings but also support community development in the areas that they operate.
Several members of Big Fish Brands, a distributor of LED lanterns based in Nairobi, attended the SME training. David Mugah Operational Manger for Big Fish Brands explains what the company is hoping to differently as a result of the training; “We want to minimize getting short term credit as this can be very expensive. In the training we talked about the concept of business planning and how importance it is to plan our business, within our big team we want to put work plans together and present them to an institution to offer us more support”. Many felt the training videos created by GVEP were instrumental in highlighting financial gaps that can be tapped in the energy market. Feedback from the trainees recommended more networking sessions be held in the future as well as financial training for mentors who support the programme.
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