While the government is striving to attain energy security through promotion of the participation of the private sector in the energy sector, this effort is being hampered by various challenges, key among them being limited sources of local finance. This challenge has caught the attention of the government which launched the World Bank funded Off-Grid Credit Line (OGCL) in Lusaka on 25 January this year. Speaking at the launch which was organised by the Development Bank of Zambia (DBZ) and the Rural Electrification Authority (REA), Minister of Energy Peter Kapala acknowledged the success which the World Bank funded Electricity Services Access Project (ESAP) has scored in the country.
Mr Kapala said that owing to the ESAP project, government has met most of the electrification aspirations outlined in government policy documents such as the Rural Electrification Master Plan, Vision 2030 and the Eighth National Development Plan. He noted that lack of private sector participation in implementation of rural electrification has been one of the impediments in the electrification efforts.
Mr Kapala said that it is for this reason that REA has developed the OGCL facility programme in collaboration with DBZ and Zambia National Commercial Bank (ZANACO). “This programme is aimed at supporting private sector led rural electrification of communities through mini-grids and standalone systems,” he said. Mr Kapala said the programme will support the private sector in implementing rural electrification projects.
World Bank Senior Energy Specialist Christopher Saunders said that the OGCL will enhance private sector participation in rural electrification and therefore encouraged the sector to consider up taking the credit line. Mr Saunders added that the bank was considering creating similar initiatives and that it will depend on the private sector’s innovative ideas on business models to structure the initiatives.
Others who attended the event were ZANACO Managing Director Mukwandi Chibesakunda, DBZ Acting Managing Director Maybin Muyawala, REA Chief Executive Officer Linus Chanda and representatives of various local financial institutions and the energy sector companies.
Speaking during panel discussion at the same event, Solar Industry Association of Zambia (SIAZ) president Matanda Mwewa said that the solar industry needs initiatives like the OGCL facility to assist the growth of the off-grid energy market. And Africa Mini-Grid Developers Association Board Member Mukabanji Mutanuka highlighted the challenges of local mini-grid developers in accessing financing for their projects.
Off-Grid Taskforce Technical Support Team Member Izaiah Mulenga said ‘the Taskforce would like to get more information on how the private sector can access the OGCL. The OGCL facility is part of the US$ 26.5 million Financing Loan Agreement signed in 2018 between the government of Zambia and the International Development Association of the World Bank for the ESAP. OGCL specifically targets renewable off-grid energy project developers with its ultimate goal being to improve access to electricity in Zambia’s rural areas. The facility will be managed by one of the country’s leading commercial banks ZANACO.
Currently, most rural households are living without access to electricity and this has contributed to their low standards of living. Therefore, provision of electricity through involvement of the private sector will give such communities a lifeline. Currently, the country has no known locally based credit facility to support private sector investment and the OGCL is expected to boost private sector-led electrification within rural communities and improve access to electricity in Zambia’s rural areas. This will make it possible for such communities to improve their livelihoods and engage in various business such as welding, agro-processing, barbing and hairdressing. For those owning shops, they will have an opportunity to continue serving their rural customers even as the sun goes beyond the horizon.
Source: Off-Grid Energy Newsletter. Edition 5, April 2023 available here
