Putting capital to work for last-mile energy distributors in Uganda

June 27, 2019

Aneri Pradhan, founder of ENVenture, explains how innovative financing can accelerate the adoption of clean energy in off-grid communities

Selling an expensive technology to the poorest and most underserved people on the planet while doing it at a profit is the goal that Last Mile Distributors (LMDs) of green technology set themselves. Not only is this a herculean task, it’s also one under supported by investment.

ENVenture was created to address the lack of support for LMDs in Uganda, where 85% of the population lacks access to electricity.

LMDs are mostly local Ugandan clean energy entrepreneurs; they have the networks, trust, and community reputation to bring new technologies, such as solar, to rural villages.

What they don’t have access to is adequate financial services and networks to tap into for business knowledge and opportunity. Given that many clean energy suppliers are startups themselves, they also struggle to offer consignment to LMDs – unlike other consumer goods companies.
 

Based on the above factors and guided by the Sustainable Development Goal number 7 (ensure access to affordable, reliable, sustainable and modern energy for all), ENVenture developed a model to identify and support LMDs that can sustainably deliver much-needed energy solutions in Uganda’s rural communities.
 

We offer seed loans up to USD 2,000 and at interest rates between 10 and 16% per annum, far below the market rate of 25%.

Over the last four years we’ve tested this model and realized some success. We’re now receiving requests from LMDs who would like to grow their businesses, invest in new technologies like the solar pumps, or invest in logistics. These requests require working capital.

Thanks to Signify Foundation, we’re able to test our new ENVenture Growth Fund (EGF) to support our top LMDs to sell more clean energy profitably. The objectives include:

1. Providing access to longer term patient working capital
2. Reaching more customers in the communities they serve

Our call for applications within our existing network of close to 100 LMDs has gone out and we expect final lending decisions in June.

We look forward to accelerating the growth of LMDs in the Ugandan clean energy sector and at the same time, helping provide the most marginalized communities with access to clean and affordable energy.