Enhancing Human Capital in Small and Medium Enterprises for Sustainable Impact

In sub-Saharan Africa, many countries are exploring ways to stimulate social and economic growth through the renewable energy sector. Investment in the sector can generate new growth opportunities, increase income, improve trade balance, and contribute to industrial development and job creation.

Since 2012, the off-grid solar sector has grown substantially over the years, with decentralised renewables making up 6% of new electricity access. The growth has been combined with significant market entry and private sector engagement from an increasingly diverse, global pool of manufacturers and distributors.

As the sector continues to grow to address this market, technology innovation will advance, sales volumes will continue to increase, business models and service delivery models will also evolve resulting in a change of scale and nature of the employment opportunities and technical capacity required. This calls for businesses to continue to innovate in their service offering, build their technical human capacity across the spectrum to remain competitive or risk becoming redundant and stagnant in making sales and impact. From AECF experience working with early and growth stage companies, technical skills gap is a common capacity challenge in the sector, a deliberate effort to build the appropriate skillset within businesses requires to be embeded in their overall growth and market penetration strategy.

Solving energy poverty is about human capital. Affordable, distributed renewable energy (DRE) solutions already exist to provide clean, reliable electricity to at least three-quarters of the 1 billion people who lack it. But there aren’t enough entrepreneurs or trained workers to deliver these solutions. According to a report by International Renewable Energy Agency (IRENA), renewable energy sector employed 9.8 million people worldwide in 2016, with Africa accounting for 62,000 jobs approximately 0.63%, while 62% of the jobs were in Asia.

Despite the growing demand for home solar, mini-grids and productive use appliances across sub-Saharan Africa, there is a widening shortage of job-ready workers who can develop, install, operate and service distributed solutions for homes and businesses. Closing this gap- with skills and jobs training at the center of global energy access effort – will determine our success or failure in deploying distributed solutions at the levels that are needed. We cannot achieve energy for all without a labor force to support it.

Through education and training, a new energy workforce – including engineers and technicians, utility staff, finance and banking professionals, manufacturers and entrepreneurs – will be able to remove a key barrier hindering “last mile” delivery of electricity and faster adoption of distributed power. This mobilisation will also kickstart job creation in energy-poor countries. The off-grid value chain alone, including sales, marketing, installation and services, could create at least 4.5 million jobs globally by 2030, according to IRENA, thus playing a significant role in achieving SDG4 (Quality Education) and SDG8 (Decent Work and Economic Growth).

Going forward, AECF will continue to invest in high risk, early stage business models targeting rural markets in sub-Saharan Africa. Growth and sustainability of such businesses is influenced by financial and technical investment, hence the need for continued funding for technical and business development support to Small and Medium Enterprises (SMEs) seeking to accelerate access to renewable energy products and services by low income customers in logistically challenging markets. To date, AECF has invested over US $ 1 million in technical assistance to SMEs.

By Chiedza Mazaiwana, Portfolio Officer