Stimulating Local Capital for “Pay as You Go” Energy Access Companies
New Africa Hotel
Azikiwe Street/Sokoine Drive, Dar es Salaam
April 28 2016
Develop a dialogue on how international Development Financial Institutions (DFIs) and donors working in Tanzania can leverage their existing relationships with local financial institutions and public organizations such as the Rural Energy Agency to support to the rapidly growing “pay as you go” (PAYG) industry in providing energy access to the underserved populations of Tanzania.
The “pay as you go” companies have developed technology that allows households to use renewable energy systems without paying cash upfront or taking out loans: consumers consume renewable energy through an affordable leasing or a fee for the service arrangement. The model uses information technology enabled automated payment with remote activation. About a hundred and fifty thousand households have already benefited from these systems in Tanzania. This entrepreneurial activity has been generously supported by private sector investors. According to our research, 17 foundations, 21 impact funds, four venture capital funds, two corporate venture capital funds and eight large companies have invested in the PAYG companies in East Africa.
PAYG companies however have not been able to raise debt from local banks. This has forced them raise debt in international markets, which exposes them (and their customers) to currency risks and forces them to build complex and costly financial structures. This represents a substantial constraint to the growth of existing companies and also creates an entry barrier for other entrepreneurial organizations to solve the energy access challenge in Tanzania.
International DFIs have the necessary wherewithal to resolve this constraint. The World Bank for instance has channeled local debt through the IDCOL model, in Bangladesh. To ensure the correct utilization of funds and timely repayment, a monitoring and evaluation system was set up. This program has led to the installation of over three million Solar Home Systems in Bangladesh.
The convening aims to probe three inter-related issues:
- Lines of credit to local banks in Tanzania for PAYG companies?
- Monitoring and evaluation systems to ensure targeted deployment of public funds?
- Mapping technologies to identify location specific energy access options
The convening will be focused and in order to facilitate a constructive dialog we propose the following set of participants from:
- DFI and donor country offices in Tanzania.
- Local banks
- The Rural Energy Agency
- Entrepreneurs providing/interested in providing pay as you go solutions
- IDCOL and its main supporting DFI (World Bank) from Bangladesh
- Entrepreneur support organizations
We have already received confirmation of participation from AFD, IFC, Development Partners Group Tanzania, the European Union, KfW, the Norwegian Embassy, USAID and organizations such as SNV and GVEP. We have also received confirmation of IDCOL and World Bank colleagues from Bangladesh.
|8:30 am- 9:00 am||Registration|
|9.00 am- 9:15 am||Welcome: Davida Wood, WRI, Jeffrey Prins, DOEN Foundation|
|9.15 am- 9.30 am||Participants Introduction (first round)|
|9:30 am-10:00 am||Presentation of the WRI-NV research on the pay as you go energy access markets in Tanzania and suggested recommendations for DFIs and donors|
|10.00 am-10.15 am||Coffee Break|
|10:15 am-10:30 am||Participants Introduction (second round)|
|10.30 am-11.30 am||Panel discussion on “Importance of pay as you in providing energy access in Tanzania & evaluating recommendations ”|
|11.30 am-12.15 pm||Panel discussion on “Encouraging companies to provide pay as you go facilities”|
|12.15 pm- 1.15 pm||Lunch Break|
|1.15 pm- 2.15 pm||Brief presentation (10 minutes ) of the survey of the financial institutions interest followed by panel discussion|
|2.15 pm- 3.15 pm||Presentation of the Bangladesh model by IDCOL /World Bank representative of IDCOL followed by Q&A|
|3.15 pm- 3.30 pm||Coffee Break|
|3.30 pm- 4.15 pm||Can mapping technologies help in energy access planning and channelizing private sector investment?|
|4.15 pm- 5.00 pm||Joint session on co-creating next sessions.
Participants will collaboratively provide insights and suggest potential areas for further research
|5:00 pm- 5.15 pm||Closing Remarks (Davida Wood with participant responses)|