Investment in Tanzania’s energy sector is growing, but how much attention is being given to decentralized energy solutions for people who still lack energy for their basic needs: to light their homes and power their farms and businesses?
Most of Tanzania’s population still lack access to modern and reliable energy services. Given the enormous challenges to achieving grid connection in rural areas, decentralised energy access using renewable energy sources that are abundant across Tanzania offers a cost-effective approach to achieving equitable and sustainable energy access to all. Renewable energy has the potential to reach all socioeconomic groups by powering homes, businesses and public services, creating jobs and generating higher incomes. It also offers the prospect of reducing environmental threats caused by biomass and fossil fuel use, and mitigating climate change.
One aspect to be worked upon is to Strengthen the role of development partners in financing the off-grid energy sector, particularly through grants to stimulate innovation and investment, and instruments such as risk guarantees and credit lines to enable commercial banks and other financial institutions to provide loans to local SMEs. By working with the government and private sector, development partners should consider flexible financial schemes that would help small domestic energy companies to grow. Support to provide access to working capital for start-ups is particularly important, given how difficult it is for them to obtain this from banks and other lending institutions.