Brief Introduction AREED II

Raising Energy Levels in Rural Africa Energy poverty afflicts the majority of people living in rural areas of Africa. Per capita energy consumption in sub-Saharan Africa, especially in rural communities, is the lowest in the world: 0.3 to 0.6 toe/person, compared with 7.5 to 9 in North America. Moreover, Africa's energy balance continues to be dominated by biomass, which accounts for two-thirds of total rural household energy consumption. With over 75% of the population living in these areas, the situation is critical in terms of environment, health, as well as economic and social wellbeing. These shortcomings are compounded by extremely difficult initial conditions for energy sector development, including low levels of productivity, low per capita incomes, and poor access to credit facilities.

The African Rural Energy Enterprise Development Phase II (AREED II), a follow-up to UNEP’s initial AREED  program, seeks to expand energy access by helping people in rural Africa start income-generating ventures using modern, clean, and reliable energy technologies.

A central lesson from the initial AREED is that although the combination of enterprise development support and start up financing can be effective at expanding energy access, it is often not enough to get entrepreneurs focused on rural markets. Without end-user financing, a significant proportion of potential users who could not afford to pay upfront for the products and services offered by the AREED entrepreneurs could not be reached.

Drawing on lessons learned during AREED, this second phase addresses the need for user-end financing by reaching deeper into rural markets, providing enterprise development services and start up financing to local organizations and SME’s seeking to set up social enterprises, and engaging more with microfinance institutions and local banks to accelerate the flow of end-user financing to existing and potential customers of clean energy enterprises.

AREED II is implemented by UNEP and funded by the Swedish International Development Cooperation Agency, Sida (www.sida.se).