Dar es Salaam, 19th September, 2021
Tanzania’s immense renewable energy, especially solar power, needs concerted financing, especially for the end-users, so as to increase uptake across the country, according to TAMFI.
The Tanzania Association of Microfinance Institutions (TAMFI) CEO Winnie Terry noted that Tanzania has one of the greatest potentials for producing solar energy for electrification, which can help to mitigate energy problems.
“It’s paramount for microfinance institutions and other financiers to include energy financing for end-users in their business model to enhance access to renewables, including solar,” she said, addressing the media in her office at the weekend in Dar es Salaam.
According to TAMFI, renewable energies significantly contribute to environmental conservation and are feasible tools for fighting poverty, apart from being among products with a high return on investment.
The association is advocating for microfinance institutions in Tanzania to develop financial products and models to enhance access to renewable energy products and services. Access to energy among Tanzanians would play a pivotal role in accelerating the country’s economic development and the UN’s sustainable development goals.
A series of high-level workshops organised by TAMFI noted that solar power usage was among potential renewable energy products MFIs can include in their portfolio to create a series of benefits across various value chain actors. The actors include renewable energy services providers, micro-finance institutions and micro-finance clients in utilising renewable energy sources, particularly for productive uses across different sectors of the economy.
As a result of these workshops, Tamfi members have started undertaking market research to understand the subject, market size and discourses. TAMFI is hoping that financiers can shift from just renewable energy financing to financing renewable for productive use.
“Tanzania is blessed with multiple renewable energy sources, including biomass, solar, hydropower, geothermal, biogas, wind, tidal, and waves, among others,” noted Winnie.
Most participants in energy financing workshops for MFIs were of the view that solar energy for productive use was the best to give another look, which could make more return and impact,” she said.
She noted a shortage of renewable energy products and services financing in the country, thus, the need for research and advocacy to create an environment where financiers can make an informed decision before investing in the renewable energy sector to increase energy financing access.
TAMFI, in advocacy for energy financing, is working with the support of The Charles Stewart Mott Foundation and the SELCO Foundation.
In a series of workshops involving almost 100 MFI officials, more than 75 directors, credit officers, operation managers, and branch product teams have attended organised seminars. There was a consensus on the need for microfinance institutions to expand renewable energy to potential rural, peri-urban and urban areas.
“It is essential to undertake market and marketing research and, more importantly, understand the market better and contribute to creating an enabling environment for all these to happen – shareholders will increase investments if the environment permeates,” noted Mr Michael Onesimo, the convener of the workshops. Onesimo is an expert in business development services and market research for microfinance too.
According to Onesimo, low capital levels across MFIs pose a considerable barrier to scaling up renewable energy financing despite substantial renewable energy potential. “For instance, huge rips from solar could be realised if such potential is mainstreamed in economic activities like farming, fishery, and livestock keeping,” he said.
Participants in the workshops thought financing opening up depends on market research that will guide MFIs to understand the market, develop products in demand and generate more investments appetitive in renewable energy financing landscapes.
‘If we both understand the market needs and repackage such products to reflect productive use aspects of renewable energies, microfinance has such a huge opportunity to contribute to economic growth. Ahead of us is re-directing massive streams of finances in energy for productive use to our microfinance institutions, they will no doubt offer pivotal opportunities to fill up the financing, employment and environmental gaps,” noted Mr Michael Onesimo, the convener of the workshops noted. Michael is an expert in business development services and market research for microfinance too.
He said that investments in renewable energy, including solar, would contribute immensely to gainful socio-economic opportunities in agriculture, health, water energy, transportation sectors, trade and investment-related activities. Such investments can steer the country’s poverty reduction drive and realisation of social-economic development, he said.
“When a microfinance institution offers a group loan to horticulture farmers near a river to farm tomatoes across the year, it increases profits to microfinance institutions, as well as farmers. When the irrigation project uses renewable, it is more profitable for the whole value chain,” Onesimo said.
He noted that mainstreaming financial services across the microfinance industry demands the participation of various stakeholders. He called for greater involvement of private, public and development sectors is paramount in creating enabling environment and scaling up access to renewable energy for productive use.
“We have learnt that participation of regulatory agencies is crucial in ensuring quality and fair briskness practices,” he said. At the same time participation of other membership-based associations, industry associations and sectoral organisations would facilitate effective adoption and use of renewables for productive use. “Participation of renewable energy services providers and their association such as the Tanzania Renewable Energy Association is important.
In the next phase, TAMFI would seek to unlock participation and impact through strategic alliances with key stakeholders to increase access to financing and participation. It is a call to invite and engage products, services and business models that will scale up financing in the renewable energy sector, he said.
Tanzania Association of Microfinance Institutions is a National Network for Microfinance Institutions and Service providers providing services to the microfinance institutions and clients of microfinance services. TAMFI is a platform for all micro-finance institutions which allows microfinance stakeholders to meet, discuss, dialogue, present, argue, voice their concerns and interests, network and collaborate for the purpose of developing the microfinance sector in the country. TAMFI has a role of coordinating Microfinance Institutions with various stakeholders of Microfinance services in and outside the country and representing Tanzania Microfinance Institutions/industry in various forums. Among the major stakeholders of microfinance services include the Government, Central Bank, Donors, Development partners, financiers, investors and clients of microfinance services.