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Africa is going through a defining moment. While the Covid-19 pandemic hit China, and parts of
Europe and America hard, so far, the continent has not been affected much. It is a crucial moment for
the continent, and we need to make good use of this opportunity especially in terms of increasing
electricity access for rural communities and those living in remote areas. The pandemic has revealed
how vital it is for every person in the world to have access to electricity ¹ . In these unprecedented
times, priority has been electricity access for health facilities. But we also need to think about
electricity access so that citizens can have direct access to preventive information from recognised
authorities (governments and WHO), through mobile phones and radio ² . When more people know
what preventative measures they ought to take and follow them, there will be less people contracting
Covid-19, and a reduction in the number of people seeking treatment. Yet, an estimated 575 million
people do not have access to electricity in sub-Saharan Africa. There are several reasons for this, but
key among them is access to finance, and more specifically appropriate financing mechanisms for
technologies that are easy to deploy in rural and remote areas like solar home systems (SHS).

This is an opportune time for governments, development partners, investors and private sector to
work together to accelerate electrification through SHS. These can be considered tier 1 electricity
access ³ providing lighting, mobile phone charging and radio to rural communities. With time,
consumers can move on to larger systems. The good thing is we do not have to develop the
appropriate financing mechanism to deliver SHS from scratch. The Infrastructure Development
Company Limited (IDCOL) in Bangladesh already did it. Between 2003 – 2004, the IDCOL SHS
program in Bangladesh delivered 50,000 systems to consumers in rural areas, three years ahead of
schedule and USD 2 million below the estimated cost. By January 2019, 4.13 million SHS had been
installed, reaching 12% of the entire population in Bangladesh4. Now let us have a look at IDCOL and
how they were able to achieve this.

In an interview, Dr Fouzul Khan, the Founder CEO of IDCOL and professor of finance and economics
for over 12 years, answered two questions on what we need to know when starting such a
programme.

What do we need to know when starting?
  • Establish or identify a pivot institution: IDCOL is a public-private partnership financial
    institution that was created by the government of Bangladesh. It is a special purpose vehicle
    set up to finance large infrastructure projects. IDCOL is funded by the Government and other
    multi-lateral agencies like the World Bank, Asia Development Bank, DFID, JICA, KfW, Global
    Environmental Facility, USAID and GPOBA. The company is managed by a Board of
    Directors drawn from senior government officials, prominent entrepreneurs and/or
    professionals from the private sector. To achieve the kind of results seen in Bangladesh, this
    institution needs a high degree of autonomy so that management and the Board of Directors
    can make decisions and implement them.
  • Build a respectable institution: For the SHS progamme, IDCOL initially received funding from
    the World Bank and would on-lead the money to qualifying microfinance institutions. Since
    this is an institution that is handling large sums of money, it must be credible and be of good
    standing in society. To be of good standing, the institution must demonstrate competence, be
    flexible – learn and listen to others, be respectful to other stakeholders and be above
    reproach on corruption.
  • Get a leader with good negotiation skills: because not every proposal or idea presented to the
    financing institution will work in the local/national context even though it has worked
    elsewhere. Being able to evaluate the idea, how it will affect the SHS programme and making
    the right decision is a key ingredient of success. The leader of the institution should be
    prepared to say no to ideas that will not work. Communicating the ‘no’ decision and continue
    to attract funding for the programme requires tact. The leader of the institution should also
    have a good understanding of how bureaucracy in the specific country can affect the
    operations of the institution and take measures accordingly.
  • There will be roadblocks: so the leader needs to stay updated on other things that are
    happening that could affect the SHS program either positively or negatively. Again, here,
    negotiation is key. When the roadblocks arise, how do you keep the financing program on
    track?

Can the IDCOL model be replicated in Africa?

No, the model cannot be replicated, but is can be adapted. We borrowed the model from Sri Lanka. If
we had not tweaked some things to suit our context, we would not have achieved what we did. The
key word here is to adapt the model to the unique context in each country on the continent.

Currently, there is significant goodwill from ecosystem players conducting surveys 5 , 6 to find out how
off-grid companies (such as those distributing SHS) have been affected by the Covid-19 pandemic. In
response, investors and development finance institutions have set up relief funds to address the
immediate financial needs of companies 7 , 8 . While many governments have not prioritised off-grid
electricity access 9 , there is a huge opportunity to leverage the efforts of ecosystem players to
accelerate progress towards the attainment of SDG 7 in rural areas. Adapting the IDCOL model to
finance the delivery of SHS will enable governments to reduce the electricity access gap and the
impact will remain even after the pandemic has gone or the world has found ways of coping with it.

In this blog, we shared what I needed to start off. In the next blog, we shall share on how the IDCOL
model was executed. Stay tuned.

References:
  1. Ogunbiyi, D. (2020) Power in a pandemic – why energy access matters during coronavirus
  2. ACE TAF (2020) How governments can minimize the impact of Covid-19 on rural off-grid communities
  3. Multi-Tier Framework by Energy Sector Management Assistance Program (ESMAP)
  4. IDCOL Solar Hone System Program
  5. SE4All – Identifying options for supporting the off-grid sector during Covid-19 crisis
  6. GOGLA – Impact of Covid-19 0n off-grid businesses
  7. Energy access relief
  8. Get-invest: Covid-19 window
  9. ACE TAF (2020) – Energy ministries and the off-grid sector
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