Shell:
South African ‘Empowerment Through Energy Fund’
Posted: 4June 2003
The Shell Foundation, (the UK registered charity funded by the
Royal Dutch/Shell Group of Companies) in partnership with Absa,
the European Union and RAPS Finance, launched a R51 million ($6.3
million) ‘Empowerment Through Energy Fund’ to help small
and medium sized enterprises (SMEs) in the energy sector provide
affordable modern energy services to poorer communities in South
Africa.
All the SMEs supported by the Fund will be consistent with Government
policies on Black Economic Empowerment. Shell Southern Africa is
acting as a special adviser to the partnership, sharing freely its
energy sector expertise with both the fund manager and the SMEs.
Despite progress in extending electricity supply, more than two
million poorer households in South Africa still lack access to affordable
modern energy services. Provision of such services is vital - both
for improving the livelihoods of the poor and for boosting production
by local businesses.
Many small energy companies in South Africa, particularly those
run by people disenfranchised under the previous apartheid regime,
face difficulties associated with the lack of business skills, the
absence of collateral, and the perception among local banks that
lending to these companies is a high risk activity.
The partnership between major South African financial institutions
and energy companies provides a significant opportunity to overcome
these barriers.
The Fund will provide pre-investment business skills training to
SMEs, seed capital in the form most suited to the needs of the individual
business, as well as post-investment mentoring support.
Chris West, Deputy Director of the Shell Foundation, welcoming
the inauguration of the Fund, said: “This is a really exciting
initiative and I am delighted that we have been able to join forces
with such prestigious partners. Not only will the Fund demonstrate
that modern energy services can be provided to the poor on a financially
viable basis, but it will also contribute to two other key development
challenges in South Africa - the growth of the SME sector and Black
Economic Empowerment. We recently launched a similar Fund in Uganda
that has performed exceptionally well to date. I am confident that
the ‘Empowerment through Energy Fund’ will prove equally
successful.”
Posted by Richard Price,
Editor Pipeline Magazine
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