The Nordic Environment Finance Corporation (Nefco) and Sweden (through the Swedish International Development Agency, Sida, and the Swedish Embassy in Zambia) have undertaken an initiative, the Scaling of Clean Cooking Solutions Programme.
A detailed scoping exercise was carried out by Open Capital Advisors (OCA) in Zambia, Zimbabwe, Kenya, Mozambique, DRC and Tanzania looking into ways to test the use of results-based financing and associated finance to incentivise the rollout of innovative, clean cooking solutions at scale.
Here are a few excerpts from the article written by Ash Sharma, Head of the Beyond the Grid Fund for Africa, and Duda Slawek, Principal at Open Capital – for the full summary of the findings and lessons learnt from the research, please visit the BGFA website.
The journey to cleaner fuels requires funders to shift their focus
There is low access to high quality, Tier 4-5 cookstoves and Tier 3+ briquette/pellet stoves (higher tier cookstoves) across Sub-Saharan Africa (SSA). Existing results-based financing (RBFs) facilities have focused on transitioning customers from Tier 0-1 to Tier 2-3 cookstoves, but funders may need to shift their focus to incentivise access to Tier 4-5 clean technologies. These higher tier technologies have the most potential to reduce carbon emissions, improve biodiversity, avoid adverse health effects, reduce drudgery of women and girls, and improve livelihoods.
Existing finance is limited and little of it flows to higher tier stoves
Although investment in the clean cooking sector has gradually increased, it still languishes below the levels required to achieve universal access to clean cooking. Sustainable Development Goal 7 targets both clean cooking and electrification, yet funding for clean cooking is dwarfed when compared to electrification.
Results-based finance can play a key role in the clean cooking sector
While historically, RBFs have focused on efficient traditional fuel usage, donors may need to focus more on access to modern cooking technologies as these have the most impact potential.
RBFs have provided varying levels of support to participants, considering local contexts to better support project developers in achieving clean cooking objectives. Most programmes such as the Higher Tier Cookstove Market Acceleration RBF Project have only disbursed funds upon verification of pre-agreed milestones, as is the intention of a ‘pure RBF’. In contrast, programmes such as the Beyond the Grid Fund for Zambia, a pilot programme to the Beyond the Grid Fund for Africa (BGFA), have adopted a ‘softer’, more customised RBF approach, adapting to the realities of the local market.
Lessons learnt from RBF Programmes
OCA’s research identified six lessons learned from existing RBFs:
- RBF programmes should evaluate market attractiveness and consider complementarity with existing market initiatives in different country contexts.
- An in-depth understanding of the clean cooking solutions target market ensures that the programme is tailored in terms of technologies incentivised and market actors targeted.
- RBF programmes should be designed to overcome systemic challenges. Access to finance is a common challenge facing cooking service providers across most countries in SSA
- RBF programmes need to incorporate additional support for smaller companies in the form of technical assistance, upfront subsidies and/or bridge financing.
- RBFs need to encourage and drive innovations that allow remote monitoring to automate data collection and monitor usage.
RBFs can be used to promote the availability and usage of clean cooking solutions products that meet international quality standards.
Source: Beyond the Grid Fund for Africa