Enabling the financial sector in Senegal to get ready for green investment
22 March 2023 | Renewable energy has great market potential in Senegal, but project developers continue to face significant hurdles to obtain financing in general, and in particular in local currency. This has been identified as a major steppingstone for small- and medium-sized enterprises (SMEs) to launch and finance activities that bring clean energy to populations in rural areas.
In this context, GET.invest is supporting the German-Senegalese project “Access to Finance for Small and Medium Enterprises” (Accès), implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in collaboration with the Senegalese agency Agence de Développement et d’Encadrement des PME (ADEPME) to help Senegalese financial institutions offer products in order to increase the share of green financing. GET.invest’s support builds on a pilot initiative implemented by GET.invest in Mozambique and Rwanda throughout 2021 and 2022 aiming at strengthening the supply side of finance for renewable energy companies and project developers.
SMEs and micro enterprises represent 98% of businesses in Senegal and are the backbone of the country’s economy. However, they receive only 9% of all loans granted to companies. Studies show that the lack of access to finance is the main factor preventing SMEs from growing and investing in the sector, and therefore creating green jobs.
Many domestic financial institutions are still new to the topic of financing for renewable energy. Therefore, they may not have suitable financial products in place or the necessary experience in credit analysis from green investments. Banks often struggle dealing with requests as it is complicated and expensive but, on the other hand, the interest from companies is only increasing.
Accelerating local financing in the decentralised renewable sector is the shared objective of the capacity building in green finance activities for three financiers in Senegal: the Banque Agricole (LBA), Ecobank Sénégal and UM-PAMECAS. Initially, they will receive tailor-made training and support to broaden their scope of action in this area, specifically focusing on productive uses of energy in agriculture. One of the main elements of the activity is individual coaching on-demand, which allows financiers to work on real cases and develop tools to assess the potential for renewable energy financing in their client portfolio. The project was launched in October 2022 with the development of a market study, and includes training and coaching sessions over six months from March 2023 onwards.
This collaboration is part of GET.invest’s bigger goal to support the financial sector in partner countries to provide financing products in local currency to clean energy developers. Other activities include a successful initiative in Mozambique and Rwanda as well as work with partners on the topic, such as with RENAC in Burundi and Nigeria. For more information, read up on our Capacity Development for Domestic Financiers page or contact our Head of Finance Advisory, Sebastian von Wolff (firstname.lastname@example.org).