Energy Smes in Sub-Saharan Africa: Outcomes, Barriers and Prospects in Ghana, Senegal, Tanzania and Zambia
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Downloaded from orbit.dtu.dk on: Dec 20, 2017 Energy SMEs in sub-Saharan Africa: Outcomes, barriers and prospects in Ghana, Senegal, Tanzania and Zambia Haselip, James Arthur; Desgain, Denis DR; Mackenzie, Gordon A. Publication date: 2013 Document Version Publisher's PDF, also known as Version of record Link back to DTU Orbit Citation (APA): Haselip, J. A., Desgain, D. D. R., & Mackenzie, G. A. (2013). Energy SMEs in sub-Saharan Africa: Outcomes, barriers and prospects in Ghana, Senegal, Tanzania and Zambia. UNEP Risø Centre on Energy, Climate and Sustainable Development. Department of Management Engineering. Technical University of Denmark (DTU). 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EnergyEnergy SMEs SMEs in sub-Saharansub-Saharan Africa: Africa: Outcomes,Outcomes, barriers barriers and and prospects prospects in Ghana in , Ghana,Senegal Senegal,, Tanzania Tanzania and Zambiaand Zambia May 2013 James Haselip, Denis Desgain and Gordon Mackenzie UNEP Risø Centre, Denmark Authors James Haselip, Denis Desgain and Gordon Mackenzie UNEP Risø Centre, Denmark May 2013 UNEP Risø Centre on Energy, Climate and Sustainable Development Department of Management Engineering Technical University of Denmark (DTU) Building 142 DTU Risø Campus Frederiksborgvej 399 P.O. Box: 49 4000 Roskilde Denmark Phone +45 4677 5129 Fax +45 4632 1999 http://www.uneprisoe.org/ ISBN: 978-87-92706-11-9 Front and back cover photos of cook stove production at the Sustainable Energy and Environment Company (SEECO), Tanzania. Photos courtesy of Peter Fries, 2012. Design and production: Magnum Custom Publishing New Delhi, India [email protected] Disclaimer: The findings, opinions, interpretations and conclusions expressed in this research are entirely those of the authors and should not be attributed in any manner to the UNEP Risø Centre, the United Nations Environment Programme or the Technical University of Denmark Contents Acknowledgements vii Glossary ix Executive Summary xi 1. Research Background and Rationale 1 1.1 What is an outcome analysis? 2 2. International Donor Support for SMEs 3 2.1 Energy sector SMEs 3 2.1.1 The AREED project 4 3. Research Methodology 6 3.1 Outcome Harvesting by Consensus 6 3.2 Semi-structured interviews 7 4. Ghana 8 4.1 Energy background 8 4.2 Energy SMEs in Ghana 8 4.2.1 AREED supported energy SMEs 8 4.2.2 Ghana energy SMEs: outcomes and contributions 9 4.2.3 Have Ghanaian energy SMEs demonstrated commercial viability? 15 4.3 Analysis of outcomes, barriers and solutions 15 4.3.1 Policy and regulatory framework 16 4.3.2 Nationally available financing 20 4.3.3 Business Models and Institutional frameworks 21 iii 4.3.4 Human capacity 22 4.3.5 Social and cultural factors 23 4.3.6 Summary of workshop discussion on barriers in Ghana 24 4.3.7 Solutions 24 4.4 Conclusions 25 5. Senegal 26 5.1 Energy background 26 5.2 Energy SMEs in Senegal 27 5.2.1 AREED supported energy SMEs 28 5.2.2 Senegal energy SMEs: description of outcomes and contributions 28 5.2.3 Have Senegalese energy SMEs demonstrated commercial viability? 31 5.3 Analysis of outcomes, barriers and solutions 31 5.3.1 Policy and regulatory framework 32 5.3.2 Nationally available finance 34 5.3.3 Institutional framework 36 5.3.4 Human capacity and knowledge 37 5.3.5 Social and cultural factors 38 5.4 Conclusions 38 6. Tanzania 39 6.1 Energy background 39 6.2 Energy SMEs in Tanzania 39 6.2.1 AREED supported energy SMEs 39 6.2.2 Tanzanian energy SMEs: outcomes and contributions 40 6.2.3 Have Tanzanian energy SMEs demonstrated commercial viability? 44 6.3 Analysis of outcomes, barriers and solutions 45 6.3.1 Policy and regulatory framework 45 iv 6.3.2 Nationally available financing 47 6.3.3 Institutional frameworks 49 6.3.4 Human capacity 50 6.3.5 Social and cultural factors 51 6.3.6 Summary of workshop discussion on barriers in Tanzania 52 6.3.7 Solutions 54 6.4 Conclusions 54 7. Zambia 55 7.1 Energy background 55 7.2 Energy SMEs in Zambia 55 7.2.1 AREED supported energy SMEs 55 7.2.2 Zambian energy SMEs: description of outcomes and contributions 56 7.2.3 Have Zambian energy SMEs demonstrated commercial viability? 61 7.3 Analysis of outcomes, barriers and solutions 61 7.3.1 Government intervention and national macroeconomic conditions 62 7.3.2 Nationally available financing 63 7.3.3 Human and institutional capacity 65 7.3.4 Research institutions and technological capacity 67 7.3.5 Social and cultural factors 68 7.3.6 Summary of workshop discussion on barriers in Zambia 69 7.3.7 Solutions 71 7.4 Conclusions 71 8. Overall conclusions and ‘lessons learned’ 72 9. Reflections on the methodology and future research 75 10. References 76 v 11. Annexes 81 11.1 Workshop participants 81 11.1.1 Zambia workshop, Lusaka, 11th September 2012 81 11.1.2 Tanzania workshop, Dar es Salaam, 18th September 2012 82 11.1.3 Ghana workshop, 25th September 2012 82 11.1.4 Senegal workshop, 2nd October 2012 83 11.2 Interview questions for country stakeholder experts/entrepreneurs 83 11.3 Interviews conducted for this research (Sept-Oct 2012) 85 11.4 Small and Medium-sized Enterprises (SMEs) 87 11.4.1 Contribution of SMEs to economic growth 88 11.4.2 Financing SMEs in Africa 88 11.4.3 Government support and ‘enabling frameworks’ 92 11.4.4 Key Non-Financial Success Factors for African SMEs 93 11.5 World Bank Enterprise Surveys 95 11.6 Enabling frameworks for technology transfer 96 11.7 Solar dryers in Zambia 97 11.8 Energy SMEs that were awarded loans under AREED in Ghana 99 11.9 Electricity tariffs 2010 in Zambia, Tanzania, Ghana and Senegal 101 vi Acknowledgements The scope of this research was reviewed and approved by the heads of the African partner organisations that worked with URC in the implementation of the UN-funded African Rural Energy Enterprise Development (AREED) project (2000-2012), namely; Prof. Francis Yamba, director of the Centre for Energy, Environment and Engineering Zambia (CEEEZ), Mr. Estomih Sawe, director of Tanzania Traditional Energy Development and Environment (TaTEDO), Mr. Ishmael Edjekumhene, director of the Kumasi Institute for Technology and Environment (KITE, Ghana) and Mr. Secou Sarr, director of ENDA Energy, part of the international network of ENDA-TM (Senegal). Funding for the research was provided by the AREED programme. In addition to the generous support provided by the centre heads, the researchers are grateful for the valuable inputs and in-country logistical support provided by Nancy Serenje and Lilian Zulu at CEEEZ (Zambia); Editruda Daulinge and Lilian Njuu at TaTEDO (Tanzania); Charles Owusu Boateng at KITE (Ghana); Jean Pascal Corréa, Mamadou Cisse and Cecilie Larsen at ENDA (Senegal). The researchers are also grateful to Lawrence Agbemabiese (Centre for Energy and Environmental Policy, University of Delaware, formerly UNEP-DTIE) for providing his insights and analytical contributions during the research visits to Tanzania and Ghana and to Leslie Maroun from Macquarie University for gathering background material on SMEs in Africa. Content reviews were provided by the above-listed African partner centres, Eric Usher (UNEP) and Lawrence Agbemabiese. vii This study is dedicated to our dear colleague, Professor Abeeku Brew Hammond, founder of KITE and one of the originators of the AREED concept, who sadly passed away in March 2013. Glossary ADEPME Agency for the Development and Support of SMEs (Senegal) AREED African Rural Energy Enterprise Development ASER Senegalese Agency for Rural Electrification CEEEZ Centre for Energy, Environment and Engineering Zambia CERER Centre for Studies and Research into Renewable Energy (Senegal) ECG Electricity Company of Ghana EDS Enterprise Development Services ENDA TM Environment Development action in the third world EPA Environmental Protection Agency EUF End User Finance FESELEC Federation of Enterprises in the Electricity sector (Senegal) FIT Feed-in Tariff GEDAP Ghana Energy Development and Access Project GPSDF Ghana Private Sector Development Fund GVEP Global Village Energy Partnership IFC International Finance Corporation IPP Independent Power Producer KITE Kumasi Institute for Technology and Environment LPG Liquid Petroleum Gas MFI Micro-Finance Institutions NBSSI National Board for Small Scale Industries NTBC National Technology Business Centre RE Renewable Energy REP Rural Enterprises Programme RET Renewable Energy Technologies SACCOS Savings and Credit Cooperative Societies SME Small and Medium-sized Enterprises SHS Solar Home System SSA Sub-Saharan Africa TANESCO Tanzania Electric Supply Company TaTEDO Tanzania Traditional Energy Development and Environment UNEP United Nations Environment Programme ix “Generally, SMEs are confronted with unique problems… constraints include insufficient working premises and limited access to finance. In addition, Business Development Services, namely services related to entrepreneurship, business training, marketing, technology development and information are underdeveloped and not readily available. On the other hand, SME operators lack information as well as appreciation for such services and can hardly afford to pay for the services. As a result, operators of the sector have rather low skills.