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Occasional  Paper 18: Energy Services for Small-Scale Enterprises in Uganda

Edited By

Joan Kyokutamba


Executive Summary

The second Uganda National Energy Seminar was organised by the national focal point in collaboration with AFREPREN/FWD researchers in the country. The seminar brought together participants from government ministries, Makerere University, Private sector Foundation, Uganda National Chamber of Commerce, Uganda Small Scale Industries Association, Uganda Gatsbay Club, Uganda Bureau of Statistics, Embassy of Sweden, Uganda Institute of Professional Engineers, and Uganda Electricity Distribution Company. Regional participants included researchers and energy experts from Tanzania, Lesotho, Zimbabwe and staff of the AFREPREN/FWD Secretariat, Kenya.

Policy makers and energy suppliers have increasingly acknowledged that availability and reliable access to commercial energy services are major components for a developing economy. Small-scale enterprises produce about 80% of Uganda's manufactured products but operate within a framework of unreliable and expensive power and most of the workers in these enterprises are, at best, semi-skilled. Due to inadequate financing and difficulties in obtaining credit facilities, Small Scale Enterprises use poor and outdated machinery and equipment, which limit their productivity. Challenges that Small Scale Enterprises go through to access energy for production and the quality of energy they finally access were the central themes for the seminar.

Current energy policy regarding small-scale enterprises attempts to reflect the significant role that energy plays in infrastructure planning and development. However, heavily subsidised power tariffs, limited resources within the petroleum sub-sector, and undeveloped Renewable Energy Technology resources, have contributed to the general underdevelopment of the energy sector. The Ugandan Government has indicated its commitment to the development of energy needs of the population to promote social and economic development in an environmentally sustainable manner and to meet specific broad objectives of the policy. The Government is now in an advanced stage in the process of formulating a written policy on energy that comprehensively addresses the challenges facing the energy sector.

The participants based their deliberations on papers presented by invited speakers and research findings of the study "Energy services for the urban poor - the case of Uganda", which addressed commercial energy consumption among the urban poor in Uganda. The presentations pointed out that limited income levels of urban households are a major determinant of the type of energy consumed by these households or business enterprises. The cost of energy dictates the ability of consumers in urban areas to switch from dependency on biomass products (firewood and charcoal) to commercial energy. The progress of Government energy initiatives aimed at benefiting low-income households in the past ten years was reviewed. It was concluded that there was limited involvement of stakeholders in energy programmes; heavy subsidies on energy tariffs for household consumers; and, unaffordable tariffs on commercial energy for production. 

The participants called for a policy review to charge cost recovery tariffs while providing for demand side mechanisms that promote efficient utilisation of the limited energy resources. In addition, participants supported a tariff design that does not impact negatively on micro and small-scale businesses. Participants also urged the Government to employ desk officers who can respond to small-scale private sector energy issues as well as promote energy efficiency programmes. Participants recommended that the Government offer incentives for private sector support for the development of electrical energy systems (e.g. reduction of tax and duties on solar equipment).

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   AFREPREN/FWD 2007