GVEP International Wins Funding For East Africa Energy Project
GVEP International is pleased to announce that it has been awarded €4m of funding for a project to increase access to energy services in rural East Africa. The Developing Energy Enterprises Project East Africa (DEEP-EA) will provide crucial support for the development of micro and small energy enterprises providing rural and peri-urban energy services in Kenya, Tanzania and Uganda. The project aims to improve energy management and governance as well as cross-border cooperation in the energy sector. The project also hopes to increase employment opportunities for the rural communities in which it operates.
The GVEP International-led initiative brings together private sector expertise, community mobilisation and business management in the development of private businesses, from their inception as ideas in villages to established energy service providers and employers. The project bridges boundaries between sectors while enabling each partner to work in specialist areas. This approach will offer the most efficient and targeted support services and capacity building to the micro and small energy enterprises located in the villages of East Africa which will develop and provide energy products and services to unserved rural and peri-urban communities.
The existing lack of energy services is a severe impediment to achievement of the UN Millennium Development Goals (MDGs) in East Africa, (in Kenya for example, less than 15% of the population has access to electricity), and Kenya, Uganda and Tanzania have all set overall objectives to increase provision of these services as a crucial pillar of their Poverty Reduction Strategy Papers (PRSPs). By targeting energy service providers up-stream of the final beneficiary, the rural poor themselves, the action will contribute significantly to each government’s energy access objectives in rural areas of East Africa and towards the achievement of the MDGs.
More about DEEP-EA
DEEP-EA is an innovative, enterprise support mechanism designed to develop energy access supply chains for poor communities in rural and peri-urban areas which are currently inadequate, underdeveloped and frequently financially unsustainable. DEEP-EA will support the development of energy enterprises founded by and for poor rural and peri-urban communities, to assist them in identifying energy market opportunities, technology options and service structures which they can exploit to generate the revenue required to sustain a business.
DEEP-EA will assist entrepreneurs through training and mentoring to develop business plans and then access the financing to put them into practice. One important source of financing will be the complementary GVEP Energy Access Fund for East Africa, a €11.8M investment fund that will provide business finance in the €75 to €75,000 deal range to small-scale enterprises providing energy access, products and services to unserved populations in East Africa.
Post-investment, DEEP-EA will continue to provide management mentoring services in accounting, strategy planning, marketing and legal issues relevant for businesses to survive and grow sustainably.
Experience from other initiatives has shown that sustainable growth of viable energy enterprises in rural and peri-urban markets is vital for increasing the accessibility, variety, quality, appropriateness and cost efficiency of energy services in rural and peri-urban areas. A level of willingness to pay exists along with demand even in the poorest communities but lack of access to finance and business development assistance has led to a huge shortage of viable, reliable suppliers of energy access goods and services to poor communities.
Being locally based, owned and staffed, the enterprises targeted by DEEP-EA, are in a unique position to respond to local needs and market opportunities if they have the right support in developing their ideas and their business. The fact that the enterprises will be run by people from the communities to be served will also be economically beneficial. The businesses will increase local wage-earning opportunities and generate the economic multiplier effects which lift people out of poverty and in turn improve the viability of the enterprises themselves.
The €4m funding for the 60th month project has been provided by the EU and the Government of the Netherlands. It is estimated that 1,800 micro and small East African energy enterprises (MSEs) will be directly supported by DEEP-EA in the 5 year duration of the project.
Experience suggests that if a track record can be established, it is then possible for businesses to leverage a variety of sources of private capital to finance growth and escape the limitations of donor funding and to achieve the self-sustaining impact at scale which is the ultimate objective of DEEP-EA. In addition to the development of energy MSEs, the project will train, qualify and employ 300 business mentors in rural and peri-urban areas of East Africa which will provide important business capacity in the region long after project completion. Supported businesses are also expected to employ 1300 people directly and, through provision of energy services, to enable the creation of a further 1300 employment opportunities in the rural and peri-urban communities which they serve.
For more information please contact Sarah Adams at sarah.adams@gvep.org