Pico hydro under construction As well as providing technical assistance and support to energy businesses, GVEP also provides assistance with accessing capital for developing and constructing projects, and for starting and growing businesses. In the developing world, the lack of access to capital is a key issue holding back the progress of small businesses –including in the energy sector. At GVEP we believe that private capital is fundamentally the right solution, although there will frequently be an important role for public funding to catalyse and underpin private investment. In various ways GVEP can help to design and implement the right private or public/private capital solution. These include: advice from our Enterprise Support Team on capital structures, sources of capital and and how to approach them; provision of loan guarantees for lenders to small businesses; introductions to equity capital and debt capital providers known to us in our network; capital grants, where justified, to underpin the economics for private capital; training of financial institutions to improve their knowledge of, and appetite for the small business energy sector. Our training programmes have so far served around 50 local financial institutions in East Africa. Loan Guarantee Fund GVEP operates a small loan guarantee programme to support lending by local financial institutions to small businesses. Under the scheme, GVEP takes some of the default risk on loans to small energy businesses that we believe are worthwhile, in order to increase availability of loans at improved rates. So far, the scheme has been used mainly for very small businesses, to help with the financing of equipment purchases, inventories or end-user consumer credit. Funding from USAID and support from the Garfield Weston Foundation, Jump Up and Barclays Bank allowed GVEP to set up the fund and to work with microfinance institutions to develop loan products for energy enterprises. It was pioneered in Kenya, Tanzania and Uganda, and sought to establish a methodology that could be applied elsewhere in the developing world. So far around 135 businesses have benefitted from these arrangements and further funding to support expansion of the schemehas beed provided by the Vitol Foundation. A further development of the scheme, to allow it to support larger loans to md-sized businesses and projects, is currently in the design phase as part of our CARE2 programme.
Posted on: Wed, 03 Jul 2013 11:27:51 +0000
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