On Friday 29 March Patrick Mongella the acting managing director of TIB Development Bank, and SNV Deputy Country Director, Lucy Fulgence Silas signed the Memorandum of Understanding which has the objective of developing a market for solar products using Results-Based Financing (RBF) in Tanzania's rural lake and central zones.
The goal of the RBF is “to overcome market failures constraining private sector delivery of distributed renewable energy systems providing modern energy services to the poor”. RBF funding is intended to reduce or mitigate commercial market failures, however not in the sense of large scale capacity building or policy support, but by providing financial incentives to the private sector to overcome typical, but temporary, market development risks.
Inga Brill, SNV Energy Sector Lead for Tanzania SNV said that SNV is grateful to EnDev and DfID for providing these funds and to TIB for their partnership in supporting the acceleration of off-grid energy access to the most remote areas of the country. 'This is another example of the excellent work Tanzania is doing to be a part of the clean energy transition”.
EnDev Tanzania’s successful RBF Stage 1 fund for domestic solar in the Lake and Central Zones rewarded EUR 1.9M in financial incentives to 11 firms who have extended energy access on pace to reach 390,000 persons. During RBF Fund operations in 2013-18, firms have increasingly extended consumer financing via Pay-As-You-Go (PAYGO) business models supporting user demands for larger solar systems capable of powering small domestic appliances (radios, TVs, charging stations, etc).
For the period of 2019-2020, the RBF Fund will re-open with €1.5 million EUR in RBF incentives available to the private sector. This second stage of the RBF Fund (RBF Stage 2) will be based on the foundational principles and structures as successfully developed and adapted during RBF Stage 1 programme with a strategic redesign of key financing elements to ensure RBF incentives are more sensitively tuned to sustained market development in vulnerable and remote Lake and Central Zone markets.
The RBF initiative for solar in Tanzania is financed through the Energising Development (EnDev) initiative with the support of the UK’s Department for International Development (DfID).