Private sector-lead projects geared at boosting access to power will now find it easier to secure funding, thanks to a new deal signed between Development Bank of Rwanda (BRD) and commercial banks.
The multimillion dollar funding agreement seeks to enable the banks to finance off-grid power initiatives by individuals and private energy developers, according to Eric Rutabana, the BRD chief executive officer. The deal is part of the Renewable Energy Fund (REF) project, worth $48.94 million (Rwf4.3 billion), financed by the Scaling-Up Renewable Energy Programme (SREP), a multi-donor trust fund managed by the World Bank and implemented by BRD.
“The funding is aimed at boosting private sector investment in off-grid electrification to help achieve government’s power access targets,” Rutabana told The New Times.
About 445,000 households are expected to be connected to renewable energy solutions during the project period over the next seven years, from 2017 to 2024, he said after signing the financing agreements with officials from four commercial banks – Bank of Kigali, KCB Bank Rwanda, Access Bank and I&M Bank. According to the agreement, BRD will extend funds to commercial banks for on-lending to private sector lead projects geared at enhancing access to power. It is also expected to increase access to electricity by more than 19 per cent.
Under the renewable energy fund project, Savings and Credit Cooperative Organisations (SACCOs), commercial banks and microfinance institutions, will access funding so that they can provide clients who want to buy solar power equipment affordable loans. It is in line with Rwanda’s Vision 2020.
According to Dr Livingstone Byamungu, the BRD chief investment officer, the main objective of the fund is to ensure affordability and reduce challenges facing rural communities in securing funding. “This way, they will be able to get small loans to acquire off-grid power solutions, including solar systems,” said Byamungu. “The fund will thus allow the SACCOs, commercial banks and microfinance institutions to provide their customers, including households, micro-enterprises, and small-and-medium enterprises, affordable loans to acquire certified solar systems,” he said. “We have so far identified 50 SACCOs in rural areas that we will be working with to increase access to the funds so that households can acquire certified solar systems,” he said. He called for closer cooperation between financial institutions and private sector to ensure quality provision of off-grid services.
Under the project, BRD and participating financial institutions will get the “necessary technical assistance and capacity building to ensure smooth implementation”.
“The whole idea is to facilitate the deployment of 445,000 off-grid power equipment to benefit 1.8 million people, 52 per cent of whom are women,” Byamungu added.
The BRD official said the move will also help reduce carbon emissions, especially in rural areas.
Experts say the initiative will help scale up deployment of standalone solar home systems and renewable energy mini-grids in Rwanda.
According to Robin Bairstow, the I&M Bank chief, access to renewable energy has significant positive implications for socio-economic development and productivity growth for people and businesses in peri-urban and rural areas. It is estimated that the cost of on-grid is higher, at about $700 per connection, while that of off-grid is only $65, making it more reasonable for low power users to embrace off-grid solutions.
The Rwanda Energy Group (REG) says that ensuring universal access to reliable and affordable electricity will not only support business production and profitability, but also help make them more competitive. It targets universal access to power in the next seven years, by 2024, with all productive users expected to access electricity by 2022 and Kigali city in the next two years.
Presently, about 42 per cent of Rwanda’s population has access to power, both on-grid and off-grid solutions.