Boost for rural electrification, as private sector players to access $2.5m credit facility

About US$2.5 million has been dedicated to the newly launched Electricity Services Access Project (ESAP) off-grid credit facility.

This programme is aimed at supporting private sector-led electrification of rural communities through rural electrification mini-grids and stand-alone solar systems.

It has been developed by the Rural Electrification Authority, in collaboration with the Development Bank of Zambia and the Zambia National Commercial Bank (ZANACO).

This is part of the $26.5 million loan financing agreement government signed in 2018 with the International Development Association of the World Bank for the ESAP.

This is according to the Energy Minister, Peter Kapala at the launch of the facility in Lusaka on Wednesday.

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Kapala said this credit line would provide the necessary financing for private sector entities to implement rural energy access initiatives.

This, he said, was a significant step towards addressing one of the key barriers to increasing access to electricity in rural areas.

“In the past, obtaining financing for electricity projects has been a challenge, especially on the local financial market. This credit facility, offers access to essential financing and will transform the off grid electricity space.

“Accordingly, I urge the private sector to utilise this credit facility, which has been set up to address the challenge of access to financing in the electricity sector. In the initial phase, about US$2.5 million has been dedicated to this facility,” Kapala said.

He encouraged the private sector to continue working together to ensure successful implementation of the programme and achieving the goal of providing access to electricity to the rural population and improving their livelihoods.

Speaking earlier, ZANACO Chief Executive Officer Mukwandi Chibesakunda reiterated the institution’s support to productive sectors through financing various projects.

Chibesakunda expressed ZANACO’s commitment to supporting Government’s target to electrify 1,217 rural growth centres by 2030.

Energy Minister Peter Kapala with Zanaco Bank Managing Director Mukwandi Chibesakunda during the official Launch of the electricity services access Project (ESAP) off-Grid Credit facility at Radisson Blu HOtel in Lusaka on JAnuary 25,2023-Picture by THOMAS NSAMA/ZANIS

“We are ready to support the many other projects that will benefit from interventions such as the financing mechanisms we are launching today.

“With access to electricity in rural areas being currently only 8.1%, this has potential to undermine economic growth in our rural communities. Therefore, this launch of the ESAP will assist in unlocking opportunities for our communities,” she said.

And Development Bank of Zambia acting Managing Director Maybin Muyawala, said the role of the Bank would be to manage a US$ 2.5 million line of credit for off-grid renewable energy projects to private sector which will be accessed through ZANACO.

Muyawala said the ESAP facility was the Bank’s first credit facility specifically targeted for renewable energy projects.

“This his is a pilot project which will see the Bank working closely with the private sector and the Government to increase energy access in Zambia and develop a robust and bankable pipeline that will subsequently unlock further investment in the renewable energy sector,” he said.