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Patrick Tonui

The real discussion on equity and energy access

I read with concern The elephant in the room – an expose on racial equity and energy access (5th September, Sun-Connect News) by Ms Aneri Pradhan. The article discusses the low share of local ownership in energy access businesses – which I agree is a genuine issue that requires discussion.

However, it then states that this reflects a racially motivated effort across the renewable energy sector to disadvantage local companies to the benefit of foreign companies. In my view, this is a plainly wrong assessment of what is happening. It is also a disservice to the local governments, development partners and industry who are committed to solving the energy access challenge, as well as to the author’s intention, as such inflammatory language distracts from a constructive discussion of the issues and their solutions.

Since 2012, as the voice of the off-grid solar industry, GOGLA has been working to help its members build sustainable markets, made up of successful companies, delivering quality, affordable off-grid electricity products and services to as many customers as possible across the developing world. We fully recognize that this industry is made up of small and large players, local and international players, and that we need all of them for the industry as a whole to be successful. An important element of our work is help attract funding to the industry and advise governments how to create a better policy and regulatory environment. In doing so, GOGLA is partnering with national renewable energy associations across the region to enhance their capacity and align activities here.

If we ignore the tone of her article, Ms. Pradhan does raise some important points that deserve to be addressed:

  1. “Level the playing field”: The local investment and finance ecosystem that is necessary to support new and existing companies in the off-grid sector is a challenge that needs to be addressed. We at GOGLA believe there is scope to get local banks and investors more interested in this sector then they are today, based on current sector performance. However, to strengthen the ability of local companies to access financing, rather than asking investors and financiers to lower their investment guidelines, more must be done to build their capacity and increase their readiness for investment and to help them compete in a competitive global economy.

    Putting this in a wider perspective: globally, entrepreneurship and startup activity have always been strongest where a supporting ecosystem exists. Also in our sector, business innovation is developing fastest where such ecosystems have developed furthest.  Organizations like Ms Prahdan’s own ENVenture are critically important to help local entrepreneurial talent develop and obtain the resources to flourish, but her clients will have a far better chance if they can build on the work of others paving the way, for example by activating customer demand, sensitizing governments to impacts of the sector, or getting interest from investors. In other words: these “foreign companies with their large-scale financing” are probably contributing to opportunities for local companies.

  2. “Community owned renewables”: Community participation in energy access services is primarily an economic equity and inclusivity issue. It is also about more than who owns the shares of companies. Today across much of Africa and other developing nations, poor rural communities continue to remain with the lowest levels of electricity access. Off-grid solar solutions are providing access to basic and higher tier energy services to the most far flung rural communities. Innovations in business models that enhance affordability for example through PayGo solutions are making a huge impact on inclusivity and reaching deep into the lowest strata of the income pyramid, creating thousands of direct and indirect jobs. This impact and contribution that the sector has in providing economic opportunities, enhancing social wellbeing and contributing towards a more inclusive social and economic society must be applauded and supported.

  3. “Partnerships are good, but joint ventures are great”: As countries seek to attract private sector involvement to address their energy access challenge and companies seek to enter markets, partnerships and joint ventures can be a viable market entry model. However, choosing the business set-up remains a strategic business decision with many implications, and not one that should be forced onto companies.  Recognition and respect for private sector property rights is a core international principle that has a key impact on the business decision making process of any business. Today we continue to see many interesting markets that see low levels of investment due to various challenges in this regard.

  4. “Diversity matters”: Who is to disagree? From where we stand, we see a sector in which most if not all business leaders recognize the importance of diversity and inclusivity. At the same time, we also hear plenty stories of local talent being in high demand and being hard to find and keep: many investors would be glad to find more local entrepreneurs to invest in; many companies would be glad to find more local talent able to take on management roles, or more successful local companies to partner with. Again, organizations such as ENVenture have a great role to play in improving the balance between ‘supply’ and ‘demand’ in this respect.

  5. “Reframing the problem: If you are from the developing world, ask yourself – how can I solve the problem of energy access in my country? If you are from the developed world, ask yourself – how can I help support people in developing countries to solve the energy access challenge?” We couldn’t put this better ourselves. However, as an industry association working in a field with significant public impact, we think this answer needs a broad, substantive and long-term view. We believe in private sector led solutions, delivered by a diverse industry and supported by a range of public actors, to reach the common goal of solving the electricity access deficit - quickly, effectively, efficiently and sustainably. We also believe that the way forward for true equality in energy access is for the industry to conduct itself professionally and respectfully, paving a way for constructive conversations that benefit all.

 

 

Patrick Tonui, East Africa Regional Representative, GOGLA