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Context
Energy is an indispensable means towards achievement of sustainable development in Kenya. Overreliance on the conventional biomass and carbon fuels as sources of energy in Kenya has continued to
cause over-exploitation of natural resources through deforestation. More than 70% of Kenyans use
biomass for cooking and kerosene for lighting1 and are unable to access clean and efficient energy
sources. This overdependence on non-renewable energy forms result to more poverty because they are
expensive and scarce, additionally, non-renewable energy sources are not clean and have been
attributed to health complications due to indoor pollution. Green energy technologies therefore have
potential to offer solutions to the existing sustainable energy related challenges. Thus, in order to reduce
poverty, attain the MDGs and improve the quality of life of the majority of Kenyans, there is a distinct
need to improve access to renewable energy technologies products and services. However, there are
many barriers to access renewable energy technology products and services for household and
productive use. These barriers include: lack of awareness of the existence of renewable energy
technologies; inefficient distribution channels, poor product and service quality; and lack of financing
mechanisms across the renewable energy technologies supply chain.
Clients and partners
SNV has partnered with the Visionary Empowerment Programme (VEP) in addressing some of these
barriers. VEP is a non-governmental organisation with its headquarters in Thika town, 50 km from
Kenyas capital, Nairobi. VEPs core business is micro lending in Kiambu, Muranga, Kirinyaga and Nairobi
counties. Their main clients are over 200 women groups with more than 7000 members. Informal and
small scale lending has existed especially in the rural areas taking the form of merry-go-round. They
enable rural populations to save money, provide a cushion against economic fluctuations, as well as
encourage a cooperative and community feeling. The micro lending follows the Grameen Principles
where groups save a standard amount of money every month which they then lend out to themselves at
an agreed interest rate. This approach targets the most poor and vulnerable members of society
women who live in households that own little or no assets.
The biogas baseline survey as well as other studies in the renewable energy sector sited finance as one
of the barriers to investment in renewable energy technologies. The conventional banks and
microfinance institutions are reluctant to lend to the poor largely because of the lack of collateral and
1
KIPPRA 2010: A Comprehensive Study and Analysis of Energy Consumption Patterns in Kenya
high transaction costs. Groups formed and managed by VEP provide joint collateral and serve as
instruments for spreading valuable information useful for economic and social progress. Since November
2011, through SNV support, VEP has expanded its portfolio to include promotion and distribution of
renewable energy technologies such as biogas, solar lanterns and solar home systems as well as
improved cooking stoves.
The organization has a micro lending arm as well as a renewable energy technologies department for
efficient and effective functioning. To ensure repayment of credit by the households, VEP is working to
enhance the capacities of farmers and women groups under them on entrepreneurship skills which are
geared towards income generation.
In responding to the needs of the sector, VEP has established a savings and credit society to enable
biogas enterprises and companies save and benefit from the credit scheme. The organisation has also
been able to link up with organizations such as Kiva www.kiva.org to expand the credit portfolio.
Impact
More than 7000 solar products have been sold (75% through credit) reaching more than 10,000 people
with clean lighting. As an implementing partner of the Kenya National Domestic Biogas Programme, VEP
had by end of November 2012 facilitated the construction of 812 bio digesters half of which were
financed through credit provided to women.
VEP being a women organisation has enabled it to reach to the real BoP using the social capital
approach. Some of the products require large upfront investments and the credit provided by VEP at
low interest rates of 1% per month on reducing balance makes it possible for low income households to
acquire the technologies.
Lessons learned
The identification and addressing of energy access barriers are key in increasing and sustaining access.
Renewable energy technologies mentioned above are available in Kenya, but there is limited awareness,
and the products are unaffordable to the Base of the Pyramid who do not have a regular source of
income. The identification and working with VEP is a proof that the people will demand and buy the
products if made available and credit is provided in more friendly terms.
It is also clear in this case that even if people are aware of the product they may not be able to discern
the advantages. The community outreach and social capital approach enables community members to
learn from each other and increase the adoption rate.
This case also demonstrates that communities have different levels of income and therefore providing an
assortment of renewable energy technologies enables them to make a choice depending on their needs
and purchasing power. Therefore combining the promotion of biogas with solar technology products will
be an approach to follow in the other areas where SNV will be introducing renewable energy
programmes.
The lessons derived from this case can be used for learning by other rural dealers in a separate solar
programme implemented by SNV and Energising Development (EnDev2). Linking up with a financial
partner will accelerate the sales and reach to the poor who need these products.
From SNV perspective, the case demonstrates that minimal investment can have a huge spin off, in this
case using the channel for various renewable energy technologies, reaching people, increasing our
visibility in an otherwise new sector and serving as a pilot for the bigger opportunities.
Sustainability
The market for renewable energy technologies at the BoP is very big as 80% of Kenyans do not have
access to electricity. In addition, many Kenyans belong to cooperatives of some sort ranging from
informal women groups to SACCOs. These channels can provide the market and can be used for mass
awareness creation around these products.
The case of VEP will be used as a selling point in introducing the products to other dealers in other
regions. The challenge will be for such organisations to raise enough capital to sustain the credit facility;
SNV is supporting them to identify the sources for such funds.
VEP will benefit from market development and technical support from the SNV/ EnDeV solar programme.
Since most products were acquired through credit, mechanisms have to be put in place to ensure that
they serve the intended duration as most solar lantern batteries have a life span of five years.
Energising Development (EnDev) is an impact-oriented initiative between the Netherlands, Germany and
since 2011 Norway. EnDev promotes the supply of modern energy technologies to households and small-scale
businesses. The Partnership cooperates with countries in Africa, Latin America and Asia. GiZ is acting as the
lead agency for implementing the Energising Development Programme. Wikipedia