The Embassy of Sweden in Uganda and the UN Capital Development Fund signed a SEK 40 million contribution agreement to set up a Renewable Energy Challenge Fund (RECF) in Uganda. The goal of RECF is to increase access to renewable, efficient energy for domestic, productive and social uses among underserved poor households, especially in rural areas. By end of 2020, RECF aims to support 150,000 low-income customers transition to renewable energy.

RECF builds on the UNCDF CleanStart Programme’s Energy Access Challenge through which UNCDF is now co-investing US$2.8 million in ten early stage business ideas in Asia and Africa that can have a positive ripple effect in the way low-income customers buy and use modern energy.

“RECF is a highly welcomed initiative because it can demonstrate how public funds can catalyze innovations and capital from the market,” said Mr. James Baanabe, Commissioner for Energy Efficiency and Conservation at the Ministry of Energy and Mineral Development.

RECF aims to fill a “missing middle” in renewable energy SME financing by investing in early stage, high-risk ideas, and set energy SMEs on a pathway for larger, more commercial-oriented capital.

RECF will have challenge rounds in three groups of energy solutions: clean cooking, pico solar power, and large solar power or micro-grids.

As pointed out by Mr. Alhaji Jallow, UN Resident Coordinator ad interim, “with current improvements in price and performance of off-grid solar products, efficient appliances and fuels, rural households and businesses now have the chance to leapfrog to a more modern, energy efficient way of living.”

Central to RECF’s approach is encouraging women and youth’s active participation in the energy value chain as customers, employees and employers. RECF will look at how energy solutions can be integrated with different real economy value chains such as agriculture, intersections with business enablers such as digital financial services, and blending of public and private financial resources and instruments such as grants, loans and guarantees.

As noted by the Ambassador of Sweden Mr. Per Lindgärde, “RECF will contribute to the attainment of Uganda’s National Development Plan, the Sustainable Development Goals, especially Goal 7 on affordable and clean energy for all, and Sweden’s commitment to catalyze investments of one billion dollars to the Power Africa initiative.”