Microcredits Facilitate the Purchase of Solar Systems

The challenge

Two out of three inhabitants in Uganda’s rural areas live in energy poverty. They possess neither access to the country’s electricity grid, nor the ability to use alternatives such as so-lar home systems, despite the offerings of numerous private providers. As a result, rural households are not able to conserve their agricultural products, prolonging their life to make them marketable. A major obstacle to access to modern energy technologies is that the ma-jority of small-scale farmers do not even receive loans from banks.

The objective

In order to take control of their own energy supply, small-scale farmers must be able to access appropriate financial services. This is the aim of the project of Fairtrade Africa (FTA), the Fairtrade Foundation (FTF) and Practical Action (PA) in Uganda. In their pilot project with three agricultural cooperatives (Small Producer Organisation – SPO) they plan to create the foundation for better credit conditions and to facilitate access to renewable energy systems. SPOs are a key element to this, as they possess the close, trust-based contacts with the target groups. As an organisation they are also a potential contractual and cooperation partner for providers of solar systems or microcredits. Furthermore, they can also serve as a potential provider of microcredits themselves as many already provide members with short-term credits and loans.

Our partners

The Fairtrade Foundation based in London, takes the lead among the three partner organisations. FTF develops value chains in the interests of small-scale farmers and agricultural workers. In Kampala, it cooperates with an expert on microcredit and the socio-economic conditions in rural Uganda. Fairtrade Africa cooperates with numerous SPOs in 33 African countries and represents over one million producers. FTA is currently implementing the GREAN programme with Ugandan coffee cooperatives, including two of the three selected SPOs. Finally, the British development organisation, Practical Action, has extensive knowledge about solar systems, mini-grids and how these can be operated economically.

The procedure

In order to enable more members of the cooperatives to access financial products and purchase solar energy systems, the project aims to develop microfinance products tailored to the target group. Once these finance products are available, members of the cooperatives will be able to purchase renewable energy systems and thus fuel the corresponding market. Through information campaigns, the project aims to inform the members of the cooperatives about technologies and financial products and to network all of the actors involved. Together, these these measures encourage more members to use solar systems.

Area
Western Uganda
Focus
Funding
Target group
Fair Trade certified coffee cooperatives and their members
Period
01/09/2020 – 31/08/2021