Kampala — Government through the Uganda Energy Credit Capitalization Company (UECCC) has launched a $8.5million working capital facility to support solar companies in Uganda.
The working capital is aimed at supporting solar companies to access cheap credit to finance their solar businesses.
The Executive Director UECCC, Specioza Kimera Ndangire said there's , high demand for solar in the country but access to solar accessories by the final consumer in Uganda is a big challenge because the dealers cannot afford to maintain supply due to limited capital to enable them import solar energy equipment in bulk.
"Access to finance for solar companies has been a challenge. We are here as key stakeholders and partners to launch a facility that is expected to address this challenge. As UECCC, we challenge the solar companies to effectively utilize this chance to expand on their business," Ndagire said at the launch of the facility at Hotel Africana.
She said when dealers access cheap credit from government; this makes their products as well accessible to the final consumers at cheaper prices. The UECCC working Capital Facility is a joint venture between the government of Uganda and the World Bank.
The government came up with Solar Energy Working Capital as a response to government's recognition to several barriers preventing the steady growth of renewable energy resources development.
Among the challenges include limited financing mechanism to support Investments in renewable energy .This results in low uptake of renewable energy technologies thus the coming up with the Working Capital Facility to address those challenges.
According to Ndagire intended borrowers (solar companies) will apply for the facility from participating financial Institutions (commercial banks), which banks will write to UECCC to vet whether the applicants meet the conditions for the loans once the vetting is done and the project is bankable then UECCC will direct the financial institutions to release the funds to the solar company.
Ndagire told East African Business Week that their rates are friendly to the intended business group (Solar companies).
"Our Interest rates are good because the maximum rate which we shall be charging on our solar product loans is 15% and paying back grace period is also favorable to our clients. The intention of making our loans cheaper is to enable Ugandans access to solar energy at cheaper price" She explained.
James Byagaba Board Member of UECCC said for the societies to be transformed, there's need for the majority to have access to clean energy because of the advantages associated with it that is why government is coming up with projects that intend to address the challenges its citizens face in accessing clean energy such as solar.
Emmy Kimbowa the chairman of the Uganda Solar Energy Association, applauded government for coming up with solar energy working Capital. He said some of his members have been depending on expensive loans from commercial banks.
"This is great Initiative by government because there's high demand for renewable energy such as solar since majority of the citizens are not connected on the national grid but our challenge is to meet the supply because not all solar companies can afford to apply for expensive loans from Commercial Banks but with the coming on board of UECCC loans our challenges are going to be sorted out" He said