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5.0 Shell Foundation's experience on the ground: Enterprise solutions to poverty

Guest post by: Shell Foundation

Article Overview: Below we illustrate how the four elements of our approach – financial viability, scaleability, deployment of business DNA and harnessing of corporate value-creating assets – are present in and add value to what we do as a corporate foundation. We draw in detail in the main text on material from our Energise and Breathing Space programmes which address the energy and poverty challenge. We also refer extensively to other activities of ours in the footnotes and in Annex 2.

5.0 Shell Foundation's experience on the ground: Enterprise solutions to poverty

Below we illustrate how the four elements of our
approach – financial viability, scaleability,
deployment of business DNA and harnessing of
corporate value-creating assets – are present in and
add value to what we do as a corporate foundation.
We draw in detail in the main text on material
from our Energise and Breathing Space programmes
which address the energy and poverty challenge.
We also refer extensively to other activities of ours
in the footnotes and in Annex 2.

Fostering pro-poor energy markets

As already explained, the Shell Foundation has
elected to focus a significant portion of its efforts
on tackling the issue of ‘energy access’ in poor
countries. There is a robust poverty rationale for
tackling these issues.

Many hundreds of millions, perhaps billions, of
poor people in developing countries can’t go home
at night or into their workplace or out onto their
farms first thing in the morning and switch on the
lights or start up their sewing machines or
irrigation pumps. They lack easy, affordable access
to reliable, modern energy sources and the modern
energy ‘services’ of light, heat, motive and
mechanical power. This matters because increased
consumption of modern energy services is one of
the fundamental features of the economic
development of poor countries.

Thus pro-poor ‘energy access’ in poor countries has
a critical role to play not just by improving quality
of life but in dynamic development terms as power
of some form is required for all productive activities.

Moreover, allowing production to escape from the
constraints of muscle power is a key stepping-stone
to development. So the lack of energy access
seriously constrains economic development and
slams the door on billions of poor people trying to
get started on the journey out of poverty.

The attention given by the IDC to energy access
by the poor – especially the rural poor – has waxed,
waned and changed over the years and now has the
following features. First, there are new aid-funded,
multi-stakeholder but NGO dominated initiatives
underway, intended to help poor countries put in
place sensible strategies to tackle energy access.

Second, the size of the problem and limited public
funding for rural electrification means marketbased
solutions to rural energy access are
considered necessary – though there is also a view
that sufficient local capital is not available to
finance these solutions. Finally, concerns about the
global climate change impacts of billions of poor
people escaping poverty by using the same fossil
fuels as do rich people, means the IDC is heavily
biased towards the promotion of renewable energy
sources in tackling the energy access problem.

The Shell Foundation consulted widely with others
to understand this landscape.As a result, we
decided to pursue a strategy to tackle the pro-poor
rural energy access problem that complements and
builds on the IDC’s efforts but at the same time
differs from the dominant approaches in a variety
of ways.

Not surprisingly, market-based solutions to energy
access problems are at the heart of our strategy. But
we don’t think local capital or income availability is
the major challenge to be overcome in making the
market work. We see the core problem being the
lack of an SME sector (enterprises and supporting
entities) able to deliver affordable energy services to
poor people. The main contextual constraints to be
overcome are institutional risk, rules that don’t
work and lack of the right kinds of capacity.

We’re also concerned about the environmental
impacts of poor people using fossil fuels but don’t
believe that distorting the market via renewablesonly
rules is the most efficient and most equitable
way to make things happen. Finally, while
planning clearly needs to be done, our strategy for
catalysing action by others has been to build a
track record demonstrating there are financially
viable ways of ensuring greater and sustainable
access by poor people to modern energy services.

Our portfolio of energy access initiatives include a
fair number of social investments in individual
enterprises from which we have learned a great
deal. But we’ve found the greatest returns are
coming from our institutional pilots, some with
local financial sector partners, and involving
innovation in the delivery of finance and technical
assistance to our field partners and to pro-poor
energy SMEs and their customers. Wherever
possible the strategic exploitation of Shell Group
assets has been pursued to advance our charitable
objectives and those of our partners.

Related Articles
  2.0 Introduction: Enterprise solutions to poverty
  6.0 Propositions and conclusion: Enterprise solutions to poverty
  6.3 Come Together: Enterprise solutions to poverty
  1.19 Building trust: Working Out of Poverty
  1.9 Building local development through cooperatives: Working Out of Poverty

Article Tags: economic development, energy access, energy services, poor countries, poverty, renewable energy sources, Shell Foundation, Shell Foundation



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