Clean Energy and Entrepreneurship Development AREED Model
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Transcript of Clean Energy and Entrepreneurship Development AREED Model
Clean Energy and Clean Energy and Entrepreneurship DevelopmentEntrepreneurship Development
AREED ModelAREED Model
OutlineOutline
Clean energy barriersClean energy barriers
AREED concept and partnersAREED concept and partners
ResultsResults
Lessons learntLessons learnt
Clean energy general barriersClean energy general barriersLack of focussed policy to promote clean Lack of focussed policy to promote clean energy energy
Lack of awareness on clean energy Lack of awareness on clean energy investment opportunities on the part investment opportunities on the part ofof::– Public sector decision makers (partly blinded Public sector decision makers (partly blinded
by short-term political expediency)by short-term political expediency)– Private SME sector entrepreneursPrivate SME sector entrepreneurs– Programme managers in international Programme managers in international
financial, development and aid institutionsfinancial, development and aid institutions– Financial InstitutionsFinancial Institutions
Clean energy general barriersClean energy general barriers
Weakness of skills to develop business Weakness of skills to develop business proposalsproposals
Lack of appreciation of opportunities Lack of appreciation of opportunities to metigate/adapt climate change to metigate/adapt climate change such as CDM and adaptation funding such as CDM and adaptation funding facilitiesfacilities
Innovation capital Transaction financeOperating capital
Often secured
Occasionally secured
Supplier credit
Entrepreneur’s equity
Grants Consumer credit
Working capital loans
Finance + capacity gaps
Weak business planning
skills
Insufficient risk capital
(growth and start-
up)
Inadequate experience of Banks
Non-existent end-user finance options
Stage 1: 0-10 years Stage 2:10 - 20 years Stage 3:20+ years
Interventions
Enterprise development
servicesSeed and
Patient capital funds
Capacity-building and risk sharing with local
banks
User finance, micro-credit, lease/rentals, third party financing:
Target group = Productive users of
REPolicy support for SMEs
SME finance + capacity gapsSME finance + capacity gaps
The AREED modelThe AREED model
EntrepreneurEntrepreneurEntrepreneurEntrepreneur
NGOs / Dev.NGOs / Dev.organisationsorganisations
Financial Financial InstitutionsInstitutions- 2nd stage financing- 2nd stage financing
Start-upStart-upFinancingFinancing
EnterpriseEnterpriseDevelopmentDevelopmentServicesServices
Enabling Enabling Gov’tGov’t policies policies
Energy business: services and products
for rural and urban clients
PartnersPartners
UNEPUNEP: : Initiator and facilitator, fund Initiator and facilitator, fund mobilizationmobilization
E E & & CoCo : : Seed Fund ManagerSeed Fund Manager
Donors : Donors : UN Foundation, Sida, BMZ, UN Foundation, Sida, BMZ,
Dutch GovernmentDutch Government
5 African Partners5 African Partners
MFC, Mali
ENDA, Senegal
KITE, GhanaCEEEZ, Zambia
TaTEDO, Tanzania
Key factsKey facts
May 1999: UNEP and E+Co present a proposal to the UN May 1999: UNEP and E+Co present a proposal to the UN Foundation to adapt the “enterprise-centered” model in Foundation to adapt the “enterprise-centered” model in AfricaAfrica
Total AmountTotal Amount : : about US $ 7,5 mabout US $ 7,5 m
Seed fund sizeSeed fund size: : $1.4 m (2000) to $1.7m (today).$1.4 m (2000) to $1.7m (today).
Enterprise development costsEnterprise development costs: : $0.20 - $0.50 per $1 $0.20 - $0.50 per $1 investedinvested
ImpactsImpacts: : Slow to produce direct impacts (job creation, GDP Slow to produce direct impacts (job creation, GDP effects, GHG mitigation, etc) but can be significant over effects, GHG mitigation, etc) but can be significant over timetime..
AREED Investments 2000 - 2006
- 50,000 100,000 150,000 200,000
RCI
Energie R II
Ubw ato
Rasmas
Chavuma
VEV
BETL
Energie R
AME
Kalola Farms
Aprocer
M38
Anasset
Seeco
Lambark
Gladym
Eco'Home
En
terp
rises
Size (US$)
Type 1 Investment: Proof of Concept• e.g., Jatropha, crop drying, solar grinders. • Very low risk-adjusted returns.• High Innovation impact on sector dev.• Typical Loan Size: $25,000• Ave defaults: 30%• Ave returns: <3%
Type 3 REED Investment: Expansion• e.g., Urban LPG, efficient lighting• Moderate risk-adjusted returns• High direct impacts• Low Innovation impact• Ave Loan Size: $130,000• Ave defaults: 10% • Ave returns: 5% - 8%
Type 2 REED Investment: Commercialization• e.g., Waste to energy, rural LPG• Low risk-adjusted returns•Ave Loan Size: $70,000• Ave defaults: 15% • Ave returns: 3%-5%
AREED enterprise typesAREED enterprise types
Results (cont)Results (cont)
Enterprises supported:Enterprises supported: 3535
Customers served:Customers served: 331,000331,000
Qty C02 emissions avoided p.a:Qty C02 emissions avoided p.a: 422,000 tons422,000 tons
Qty charcoal/firewood displaced:Qty charcoal/firewood displaced: 263,000 tons263,000 tons
Lessons learntLessons learntEnterprise Centered Model is workable and Enterprise Centered Model is workable and can be replicatedcan be replicated
Innovative because it can be adapted with Innovative because it can be adapted with local context of entrepreneurshiplocal context of entrepreneurship
Removes barriers of financing of SMEs Removes barriers of financing of SMEs under traditional financing conditionsunder traditional financing conditions
Concept of partnership is crucial for successConcept of partnership is crucial for success
Lessons learntLessons learnt
To enhance market base of end To enhance market base of end users requires consumers credit users requires consumers credit facility facility
Need to provide post investment Need to provide post investment support and monitoringsupport and monitoring
Merci beaucoupMerci beaucoup