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Government calls for collaborations to accelerate rural electrification

• Climate change poses a threat to hydro power generation.
• Energy is key towards driving the country’s economic growth.
• RUFEP wants financial services to reach rural areas

Government has called for more collaboration by Energy Sector regulators and Pay as You Go (PayGo) Insurance Companies to accelerate rural electrification through promotion of renewable sources of energy such as solar products.
Permanent Secretary in the Ministry of Green Economy and Environment John Msimuko said the power deficit experienced during the 2018/2019 drought as a result of over dependency on hydro power generation, was a wake-up call for the country to explore alternative energy sources.
Mr. Msimuko noted that energy is key towards driving the country’s economic growth in terms of Gross Domestic Product (GDP), therefore climate change poses a threat to hydro power generation because it is unsustainable.
He was speaking in a speech read for him by Ministry’s Human Resource Director Nicolyn Nyoni during the PayGo Insurance stakeholders’ workshop, organized to launch the Area Yield Index Insurance (AYII) for Solar PayGo Companies and implementing partners.
“In the 2018 farming season, Zambia experienced a drought which had a huge toll on smallholder farmers whose incomes are largely dependent on rain fed agriculture. This did not only affect their ability to meet their contractual obligations on repayment’s to PayGo Companies, but also increased their vulnerability to poverty and affected their food and nutrition security”.
“It is my hope that the Area Yield Index Insurance developed for Solar PayGo Companies and some of RUFEP’s implementing partners will provide an opportunity to sustain the market growth that we are registering in the renewable energy subsector,” Mr. Msimuko said.
Mr. Msimuko reaffirmed government’s resolve to partner with key players in the energy sector to explore the potential for clean and green renewable energies tin order to deal with effects of climate change.
“The government of the Republic of Zambia is cognizant of the fact that climate change is one of the greatest challenges currently facing the global world and unless concerted efforts are put in place, the global economy is under threat, further threatening the livelihoods of our people.”
“For this reason, the new dawn government created the New Ministry of Green Economy and Environment to address some of the imminent threats to the economy caused by climate change,” he stated.
He stressed the need for energy sector players like Energy Regulation Board (ERB), and Rural Electrification Authority (REA) to move from reliance on hydro power which is unsustainable to promotion of alternative renewable clean and green energy sources such as solar.
And Mr. Msimuko said a study and pilot program conducted by PULA, an agricultural insurance and technology company in the past two years revealed that rural smallholder farmers constitute 40 percent of the target market for PayGo solar products and are the highest risk group of customers in terms of repayments, mainly due to natural calamities resulting from climate change.
“The main objective of the pilot was to de-risk Vitalite’s loan portfolio, minimize costly repossessions that come with default post poor harvest season and ensure farmers are not disrupted.”
“The pilot was motivated by the challenge of default by customers faced by PayGo Solar Companies and investors in Zambia and the need to come up with an amicable solution to sustain growth in the renewable energy sub-sector.”
Meanwhile, Rural Finance Expansion Programme (RUFEP) Programs Coordinator Micheal Mbulo stated that the institution exists to support regulation and development of government policies and wants different financial services to reach rural areas so that smallholder farmers can benefit.
“We are looking at financial services and we also have insurance, payment, credit as well as savings and we operate at different levels either to support regulation or development of policies or to support the development of actual products.”
“Our bias is that we want these financial services to the rural areas so be it insurance, be it credit, or payment we want the rural areas to be able to benefit and that is the reason we have engaged with a number of partners around the table,” Mr. Mbulo said.
Pula has so far insured 500, 000 farmers under the Farmer Input Support Program (FISP).

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