“Grid extension is not the best way to reach communities in the rural areas, and the government is continually developing strategies and policies to support private sector investment and ensure a smooth process to facilitate energy access”. Eng. Steve Dihwa, the Principal Director of the Zimbabwe Ministry of Energy and Power Development kicked off a recent finance workshop in Harare by expressing his strong support for the decentralized renewable energy sector, and its key role in ending energy poverty for the 9 million Zimbabweans who currently lack energy access.
The workshop--arranged by the Zimbabwe Energy Regulatory Authority (ZERA), Ministry of Energy and Power Development, Africa Exchange, the Renewable Energy Association of Zimbabwe (REAZ) and Power for All--was held to discuss funding solutions to accelerate growth of the DRE market and increase energy access. While work has started that will help to unlock finance in Zimbabwe, implementation of key investment catalysts is now needed.
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Topics explored included:
The Role of Policy and Regulation in Attracting Investors
Dr. Gloria Magombo, Chief Executive Officer of ZERA noted the need for “adaptive policies in order to be able to attract foreign investment for the development of renewable energy in Zimbabwe,” before sharing details of work being taken to reduce regulatory costs. Members of REAZ highlighted the role that incentives and tax holidays have had on rapid market growth in other countries and called for their consideration in Zimbabwe.
Capacity Building to ‘Demystify’ the Market with Local Banks
The need to build capacity within local banks was raised by Samson Mutamuko, a representative from commercial bank, ZB Financial Holdings. The DRE sector is relatively new, and a lack of awareness and knowledge about the technology and business models puts a limitation on local bank’s ability to invest. Practical steps to share DRE knowledge and engage with local banks will be discussed in subsequent meetings.
Creative Financing Solutions to Unlock Barriers to Growth
A number of different financing solutions were raised during the session and will be further explored. These included:
- A Green Fund--accessible to private enterprise--which is pulled together from a variety of different funding sources
- The potential to encourage interest in the sector by pension providers and institutional investors through better industry data, and clarity around the regulatory environment
- Support for Micro-finance Institutions so that they can provide consumer finance to overcome the affordability barrier for low-income families
- The ability of Development Finance Institutions to leverage private sector investment, and reduce the risk of investment in early stage markets such as Zimbabwe
The Role of the Private Sector
While financing solutions are critical for catalyzing the market, so too is a pipeline of robust, bankable projects from the private sector. Companies were encouraged to do their part by building credible partnerships, developing clear revenue streams and finding ways to ‘translate’ their work so it can be better understood by local banks and financiers.
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The workshop highlighted the clear efforts that the Zimbabwean government has made in developing policy and strategy, and enabled cross-learning, not only by local civil society organizations, private sector and government, but also through insights from Videre Global who shared lessons from their work in Botswana. Yet it was also a great opportunity to begin discussions on how to turn strategic plans into targeted action. By working together to support the implementation of policy, build practical finance solutions and support business innovation, we have an unprecedented opportunity to bring clean, affordable energy to millions--fast.