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African Rural Energy Enterprise Development: A New Approach to Public-Private Partnership

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 SOKONA Executive Secretary

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African Rural Energy Enterprise Development: A New Approach to Public-Private Partnership

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  1. UNFCCC Workshop on Innovative Options for Financing the Development and Transfer of Technologies27-29 September 2004, Montreal, Canada African Rural Energy Enterprise Development: A New Approach to Public-Private Partnership Youba SOKONA Executive Secretary Sahara and Sahel Observatory (OSS) Boulevard de l’Environnement BP 31 – 1080 Tunis, Tunisia

  2. 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

  3. Rural Energy Services Framework Rural Areas Number of People Urban Areas CBOs SMEs Utilities $1/day Poor Wealthy Income Levels

  4. 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

  5. The AREED Enterprise Centered ModelThe Basics Investors Donors Charities Public Purpose Specialty Organizations Services Capital Entrepreneurs Their Customers

  6. Demonstrating that needed energy services can be delivered on a sustainable basis by small/mid sized local enterpriseand multiple partnerships MFC Others ENDA E+Co NJ UNEP Paris UCCEE Risoe UN Foundation KITE TaTEDO Countries Senegal Mali Ghana Tanzania Zambia CEEEZ E+Co Africa

  7. Multiple Partnerships 1. Finance 2. Program 3. Implementation 4. Enterprise 5. Service Delivery www.areed.org/partners UCCEE

  8. Finance partnerships: to bring together the “hard” and “soft” resources that must be blended to launch sustainable enterprises e.g., United Nations Foundation Investors Donors Charities Public Purpose Specialty Organizations Services Capital Entrepreneurs Their Customers

  9. Program Partnerships: to bring together the governance, specialty expertise and local presence required e.g., UNEP, E+Co, ENDA and KITE for AREED Investors Donors Charities Public Purpose Specialty Organizations Services Capital Entrepreneurs Their Customers

  10. Implementation Partnerships: to deliver the services and capital to entrepreneurs e.g., E+Co and ENDA in Senegal, KITE in Ghana, MFC in Mali, TaTEDO in Tanzania and CEEEZ in Zambia Investors Donors Charities Public Purpose Specialty Organizations Services Capital Entrepreneurs Their Customers

  11. Enterprise Partnerships: the creation and growth of sustainable businesses e.g., Bagani, Ubwato, VEV, Anasset Investors Donors Charities Public Purpose Specialty Organizations Services Capital Entrepreneurs Ther Customers

  12. KBPS, Zambia • 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.

  13. 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.

  14. Bagani, Mali • 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.

  15. Anasset, Ghana • Business: LPG distribution • AREED Support: $ 38,000 loan Enterprise Development Support • Investment 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

  16. 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

  17. Enterprise Centered ModelHow Organizations Working TogetherAdd Value Investors Donors Charities Specialized Funds + Programs Public Purpose Specialty Organization Program Partners Implementation Partners Co-finance Services Capital Government + Policies Entrepreneurs Their Customers Independent Evaluators + Best Practices Dissemination

  18. How Specialized OrganizationsWorking TogetherAdd Value UN Foundation UNEP AREED Ghana UNEP KITE Services Capital Entrepreneurs e.g., Gladymanual Their Customers

  19. 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

  20. Donors, Grant- Makers and Contract Service Providers Energy Enterprise Social + Strategic Investors Local Financial Institutions + Specialized Funds Services Pre- and Post Investment Capital Seed and Growth Enterprise-Centered Model – Value Chain Specialized Intermediaries Energy Services Customers

  21. AREED Deal Flow Initial Go-No Go Investment Committee Solar Bakery Solar Dryers PV SHS Efficient Lighting Fuel Switching Water Pumping Solar Crop Drying Concept Stage Solar Hot Water Salt Drying Butane Dist. Biomass fuels Coffee Husk Pelleting Sawdust Briquetting Formal EDS Stage Financed Stage Entrepreneur Training Stage

  22. 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

  23. Thank youand for more informationwww.areed.org/partners

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