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Ugandan Government Initiative to Subsidise Solar Power Equipment by 45% to be Implemented by Rural Microfinance Institutions (MFIs)
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| Guest post by: David Satterthwaite |
Article Overview: The Rural Electrification Agency (REA) of Uganda, a semi-autonomous public-private partnership created by the Ugandan Government, has announced a 45% subsidy, up from the current 14%, on all solar power equipment. The subsidy will be will be promoted through a network of rural microfinance institutions (MFIs), and non-government organisations (NGOs), who will be providing a cash payout to those who install the solar systems, or a loan or a loan-offset.
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Free Download - Ugandan Government to Set up Laws for Regulating its Microfinance Sector By David Satterthwaite |
Ugandan Government Initiative to Subsidise Solar Power Equipment by 45% to be Implemented by Rural Microfinance Institutions (MFIs)
The Rural Electrification Agency (REA) of Uganda, a semi-autonomous public-private partnership created by the Ugandan Government, has announced a 45% subsidy, up from the current 14%, on all solar power equipment. The subsidy will be will be promoted through a network of rural microfinance institutions (MFIs), and non-government organisations (NGOs), who will be providing a cash payout to those who install the solar systems, or a loan or a loan-offset.
The new policy is part of the solar power component of the Energy for Rural Transformation (ERT) programme, a 10 year plan that aims at increasing electricity access to rural areas. The programme is an initiative of the Ministry of Energy & Mineral Development and the Private Sector Foundation of Uganda (PSFU), an association of businesses, corporate bodies and major public sector agencies that support private sector growth, plus nine donor agencies. It is funded by the Rural Electrification Fund of Uganda, the World Bank (the international quasi-public bank), the United Nations Development Programme (the UN’s global development network), as well as MFIs.
Only 5% of Ugandan households have access to electricity, according to government figures and only 3% in rural areas, despite the formation of the REA in 2001. The target is to reach 10% by 2012.
So far solar power has made little headway in Uganda, as current devices are expensive, with the smallest solar lantern (5 watts) costing USD88-147 in a country where four out of 10 people live on less than a dollar a day.
Through the new scheme, private solar equipment suppliers will be encouraged to invest in rural areas, thereby meeting the ERT goal of achieving 80,000 new connections by 2010. In the past six years, the government has installed less than 10,000 solar systems.
Participating MFIs will receive credit lines from the REA, as well as direct subsidies for solar system customers (MFIs). There will also be grant advances for those wanting to enter the solar equipment market or to expand into it further. For customers there will be a one-stop application process for REA subsidies, public-private sector grants and credit from MFIs, using one consolidated application form.
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About the Author: David Satterthwaite RSS for David's articles - Visit David's website David brings 10 years of experience in microfinance management, social entrepreneurship, non-profit management/fund-raising and microfinance investment research. David is the Chairman and President of Prisma Microfinance, Inc., a retail “microbank” operating in Central America. He is also Chief Editor of MicroCapital.org, a news and information service for the microfinance community and its investors. Each month, MicroCapital.org publishes the MicroCapital Monitor, the leading industry newspaper. David writes and speaks frequently on microfinance. He has been a quest speaker at many events, including: Microcredit Summit 5+: Panel on Private Investment, Milken Institute Global Conference, United Nations Year of Microcredit Symposium for Wall Street, Chicago Conference on Microfinance, Harvard Social Enterprise Conference, Dartmouth’s Business Sustainability Conference, Wharton’s Conference on Social Entrepreneurship, Stanford’s Social Enterprise Club, Columbia’s Social Enterprise Program and the Net Impact Annual Conference. Through his work with Prisma and MicroCapital, he has been featured or quoted in The Wall Street Journal, the Boston Globe, “All Things Considered,” Reuters and SocialFunds.com. David has been recognized with the Compaq Computer Corporation Leadership Award, the City Year Inspiring Leader Award and the National Social Venture Business Plan Competition award for Best Social Impact Analysis. David has supported many non-profit and for-profit social enterprises in different capacities, including Access Technology Learning Center, Agora Partnerships, Bridges to Business, City Year, Fonkoze, Kiva and National Social Venture Competition. David holds a B.A. with Honors in Political Science from Haverford College. Click here to visit David's website Old Mutual and South Africas Department of Trade and Industry DTI Launch USD 129M Microfinance Initiative Isivande Womens Fund IWF Compassion International Invests USD 5 Million in Opportunity International to Develop Microfinance in Africa AfriCap Microfinance Fund Attracts Notable Investors Including Nordic MicroCap BlueOrchard and Gray Ghost Raises Capital to $50m Citi Foundation Creates $112m Program with SEEP Network to Strengthen Trade Associations Old Mutual OM Supports Expansion of Womens Development Bank WDB Microfinance into KwaZuluNatal South Africa with USD 710000 |
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