Shell to Contribute to Energy Funds in Developing Countries

The Shell Foundation will announce a new investment of $10 million to establish energy funds in developing countries at a workshop 'Sustainable Investment in Developing Countries: Pipedream or Possibility?' hosted by the Shell Foundation and The Forum for the Future. The funds will provide business development support and finance to local small and medium sized enterprises (SMEs) – assisting them to overcome the technical and financial barriers to setting up a sustainable business and thereby bringing vital energy supplies to poor communities.

The workshop also coincides with the inaugural meeting of UK Prime Minister, Tony Blair's Commission For Africa.

Jonathon Porritt, Program Director of The Forum for the Future, said: "We welcome this new investment from the Shell Foundation, and call on the banking community to match their commitment dollar for dollar.

"Until recently, investing in SMEs in developing countries, and especially Africa, was left almost exclusively to development finance organizations and charities. For commercially driven private financial institutions, there were easier ways to make money. Slowly, this situation is changing but private financial institutions must do more.

"There are numerous innovative ways to invest – from micro-finance to project finance – and return rates are very good. Supporting smaller enterprises in the developing world is the best way to boost local economies."

The Shell Foundation's new commitment is in addition to the $5 million already invested in existing funds in Uganda and South Africa. The Empowerment Through Energy Fund, launched in South Africa in 2003, is a partnership between the Shell Foundation, Absa Bank, Industrial Development Corporation and RAPS Finance. It provides both business development services and risk capital to SMEs in the pro-poor energy sector.

The Uganda Energy Fund, launched in 2003 in partnership with the local bank DFCU, has supported over 100 beneficiaries since launch, demonstrating the vibrancy of the SME energy market.

Chris West, Deputy Director of the Shell Foundation, said: "As a continent, Africa has abundant energy resources, but the majority of poorer households still lack access to clean and affordable energy services. There is simply not enough public finance or development funding to meet energy needs and thereby improve the lives of the poor.

"So the active involvement of the private sector is required. Yet many SMEs are unable to enter the energy market and provide the services needed because they lack essential business skills, do not have bankable business plans and cannot raise capital from local financial institutions. We hope our new funds will help to overcome these issues and, in turn, advance local economies."

The new $10 million commitment will be invested over the next three years, primarily in Africa and the Asian subcontinent. The Shell Foundation is currently seeking partners from the commercial finance sector to match the funding.