Kulera REDD+ Program to develop SME to manage “Beyond the Grid Solar” Revolving Fund

Terra Global Capital
February, 2016

Since June 2015, The Kulera REDD+ Program, initially funded under the USAID Kulera Biodiversity Program, has successfully sold verified emission reductions, proving that buyers see the value in results-based programs that deliver social, biodiversity and environmental benefits. The funding provided by these recent sales supports implementation of REDD+ activities by the two community associations (Nyika-Vwaza Association, Nkhotakota Wildlife Reserve Association) and the Department of National Parks and Wildlife. In addition, the funds allow for the Program to formally establish a local enterprise governed by the Government and the Community Associations, to manage REDD+ benefits as well as the fiscal and operational management of the Program.

Complementing the overall Program objectives, targeted funding was secured through the sale of emission reductions, to establish the Kulera Beyond the Grid revolving fund.  This fund is designed to bring electrification to the rural communities in the Program area. Beyond the Grid aims to give access to electrification in areas of the country where electrification is one of the lowest in all of Africa. The introduction of the solar energy solutions, including single lights and multi-light home solutions, extends student study hours or time for working on small businesses. Some systems can support village level small enterprise, such as cell phone charging stations. It is estimated that on average, each household will save about $5 USD (16% of their monthly income) per month from reduced purchases of non-renewable fuels such as kerosene, candles and disposable batteries for flashlights.

The Kulera Beyond the Grid fund, is designed to provide solar units on credit terms to households by leveraging the established network of Natural Resource Committees (NRC) that support village participation in the Program.  This achieves the dual benefit of providing income generating opportunities for the NRC members who participate as solar sales agents, as well as providing financing terms to households who will own the solar equipment within a 3-5 month period.

Malawi has the lowest electrification rate in Africa with only 9% of the population having access to electricity with rural rates that are less than 1%.  Over 90% of all household energy comes from wood biomass causing high levels of deforestation throughout the country. The use of kerosene for household lighting has negative health implications and flashlights with deposable batteries have negative environmental consequences. Both of these sources of light are also cost prohibitive to a rural communities where the average income is less than $30 per month. This opportunity directly aligns with the Program’s social and environmental mission of reducing deforestation and forest degradation in these protected areas while improving the neighboring community’s livelihoods.