Supplying modern energy to rural areas for reliable growth

IWMI photo

By

Abebe Wolde Giorgis

Ethiopia is one of the least urbanized countries in the world with only 17 percent of the population urbanized and the rest living in rural parts of the country engaged in subsistence farming. With regard to household energy, it leans on biomass, which in turn causes deforestation and the clearance of vegetation cover.

The utilization of biomass for household energy threatens the vegetation cover. In addition, the in-house pollution poses respirator health risk. Hence, promoting the utilization of traditional energy saving stoves and solar panels in rural parts of the country has been taken as an option. There are numerous traditional energy saving stoves producing enterprises and importers of solar panels.

The demand for traditional stoves is growing from time to time. But due to financial constraints meeting the demand could be impossible to producers engaged in a small scale level. Hence, to address their financial constraints donors, banks and micro finance institutions are trying their level best.

Kidanu Abera works in the United Nations Development Program as program analyst. According to Kidanu, her institution is working in collaboration with the Ministry of Water Irrigation and Electric, which is the major stakeholder of rural electrification. The supply of energy-saving stoves reduces the rate of the clearance of forest and vegetation cover so as to arrest carbon emission. It was in 2016 GC the program began.

UNDP provides financial support to rural energy technology creatives and enterprises. The source of the money is the Global Environment Initiative and other cooperation funds.

The technology supplied to users has to undergo fitness tests. Also, things are being checked regarding how the rate of the clearance of the vegetation coverage is and how to reduce the emission of gases. The outcome is then reported to pertinent institutions.

It is understood that the traditional cooking stoves consume more biomass than the needed energy to cook. Because of this, they are uneconomical. In addition to this, they emit more smoke which results in house pollution.

Hence, the new technology is better prepared and standardized to avoid the mentioned problems. It has to be evaluated whether or not they meet the objectives of the project.

On the other hand, solar panels which produce from 16 to 32 Bega watt are standardized based on the international criteria and those that produce from zero to 15 Bega watt standardized locally based on the World Bank criteria. Stakeholders such as banks, micro finance institutions and regional energy bureaus inspect the status and standard of the panels.

When a person invents new energy saving technology, first the technology is checked in the federal government laboratory with the cooperation of the regional bureaus. Also, before lending the money to the technology producer, financial institutions inspect and evaluate how far it is better than the old ones. By customers, they have to check whether it is simple, affordable and friendly to the environment or not. The best technology is selected and promoted as a model. After that, it will be supplied to the market.

The project also supports the producing enterprises through advertising and promoting their products to the public. During traditional and religious celebrations public shows will be organized. However, due to the high demand and shortage of supply, it is witnessed that substandard solar panels are supplied to the market. Controlling such a situation has been beyond the government’s capacity.

Substandard panels that come from neighboring countries illegally find their way onto the market. But, through time when the supply satisfies the demand such market irregularities might be tackled.

Currently, the producer and supplier enterprises are few in number. In addition, they have limited working capital. Therefore they need to employ more workers and expand their business, but they are unable to do so.

According to the Ethiopian financial law, a person to secure a loan from financial intuitions is required to put from 80 to 120 percent of its working capital as collateral but for the majority of the enterprises it has become impossible.

Therefore, to help enterprises access loans from financial institutions, the UNDP provides a 50 percent loan guarantee and the enterprises show only 50 percent of their capital as collateral. Such mechanism could enable enterprises to move their business forward.

Besides, the UNDP helps enterprises by providing incentives through technology and creativity competitions.

In the first round of the competition, the institution has provided a 5 thousand dollar grant to the winners. This year it has planned to provide up to 10 thousand dollar to the winners.

Furthermore, to encourage them, it provides various types of skill-upgrading training to their entrepreneurial skills and covers their transportation costs, while they supply their products to the market.

In addition to reducing emission and deforestation, the thriving of such type of businesses is expected to create job opportunities for hundreds of thousands and alleviate unemployment, which is rampant throughout the country.

Abebe Wolde Giorgis

Abebe Wolde Giorgis was born in Harar, Ethiopia. He has a B.A from Addis Ababa University in English Language and Literature, Minor History.

For 17 years he has been a Journalist in local and International Media, Amharic and also an English Newspaper.He wrote several articles on environment and economics.

Member of Environment journalist association, he was deputy editor in chief of an Amharic Newspaper and Senior Editor of the Ethiopian Herald.