i

A solar PV project as the starting point for building energy

markets for the poor: lessons learned and strategy for the
way forward

A Project Review the Sida/MEM Solar PV Market Facilitation project
in Tanzania

Lennart Bngens


ii


Table of Contents
1.1 Background and rationale for evaluation ................................................................... 2
2. The Context and key features of the Solar PV project ....................................... 3
2.1 Introduction ........................................................................................................................... 3
2.2 The designed approach .................................................................................................... 4
2.3 Recapitulation of specific project goals and objectives:......................................... 7
2.4 The approach and objectives adopted and rolled out............................................. 7
3. Findings and Conclusions regarding the projects activities .......................... 9
3.1 Inception phase: .................................................................................................................... 9
3.2 Pre-mid term (early 2006 mid 2008): .....................................................................10
3.3 Mid-Term Review (MTR): ................................................................................................12
3.4 Post midterm and exit ......................................................................................................13
3.5 Issues surfacing during implementation ...................................................................16
4. Discussion and Analysis ............................................................................................ 20
5. Lessons learned and scope for replication ........................................................ 25
6. Way forward for a Sida renewable energy program: ideas for thought .. 28
List of references and interviews ............................................................................... 32
Appendix I LFA ..................................................................................................................... 1


iii
List of abbreviations
BDS Business Development Services
COSTECH Commission for Science & Technology
CRDB Cooperative and Rural Development Bank
ICB International Competitive Bidding
MEM Ministry of Energy and Minerals
PV Photovoltaic
RAR Results Analysis Report
REA Rural Energy Agency
SACCO Savings and Credit Co-operative
Sida Swedish International Development Agency
SIRG Solar Industrial Reference Group
TA Technical Assistance
TBS Tanzania Bureau of Standards
TANAPA Tanzania National Parks
TAREA Tanzania Renewable Energy Association
TRA Tanzania Revenue Authority
VETA Vocational Educational and Training Authority
Wp Watt peak

iv
Executive Summary:
Enhancing energy access in rural areas by supporting markets has been
demonstrated as a successful model though requiring specific project
management skills. The five-year Sida funded solar PV project in Tanzania,
implementation by MEM with TA by the contracted Consultant Camco of UK, was
completed in 2011 leaving a considerable imprint in the market. The more
quantifiable (measurable) indicators are the i) rapid growth of the market, far
beyond expectations, ii) the number of active dealers outside Dar es Salaam has
increased substantially, iii) the stock of trained technicians has as well expanded,
iv) the solar association (TAREA Tanzania Renewable Energy Association) has
become a capable institution to cater for the needs of corporate and individual
members, v) a process and organisation (SIRG Solar Industrial Reference
Group - a group comprising large PV wholesalers) has been established to
address quality issues in the sector, vi) awareness raising was required to
prepare the market and most efficiently done through on the ground
campaigning, vii) necessary distribution channels were promoted by linking
large town suppliers with upcountry dealers. A word of caution should however
be raised regarding the level of attribution for some of the indicators. For
example, the rapid growth of the PV market draws on a number of factors
several exogenous to the project which nevertheless operated in tandem and
synergistically lead to growth.
More intangible effect of the project is the consolidation of the key players in the
SHS (Solar Home System) market seen as their role in supplying quality goods,
level of competition and cooperation, the consensus that the counterfeit market
must be addressed jointly, the general public is progressively aware of the PV
sector reducing the search process for buyers. Further, the transition from
project to institutionalized technical training (VETA Vocational Educational
and Training Authority) was supported in a later stage and is not to date fully
operational but points to the crucial role of searching for sustainable solutions.
More importantly the project has proven that markets for the (relative) poor can
be developed without direct subsidies for equipment, in stark contrast to
prevailing project models at the time of launching. (Though Technical Assistance
(TA) was heavily subsidized).
The project was set up and implemented in cooperation with the existing
institutional framework. A key tenet apart from directly supporting market
actors - was to enhance the capacity of the institutions having a core as well as a
supporting function in the market. The Ministry of Energy and Minerals (MEM)
was the Client and project owner who has overall responsibility for policy. The
project worked closely with MEM. TAREAs capacity was directly supported to
promote the diffusion of renewable energy. (It is a national association that
brings all the key stakeholders together). VETAs involvement in the project will
play a major role in the continuing access to skilled PV technicians as the main
institution for vocational training in Tanzania. In order to control quality of
systems and products, both entering and being sold on the market, the project
v
has focused on TRA and TBS officers. However, the impact of VETA, TRA, and
TBS in the PV sector is not fully achieved depending largely on the commitment
to address relevant issues for market growth. E.g. the counterfeit market is an
escalating problem in Tanzania that could be blocked by TBS and TRA
operations. REA which was not established at the launch of the project has
participated in steering committee meetings and is aware of project impact.
The project was piloting a number of new ideas for market lead diffusion of
renewable energy. This meant among others that a degree of failure was built in
the design as the private sectors response to rolled out activities were not fully
known in advance. A number of valuable lessons learned have been identified by
analysing design, implementation and project management which are
summarized below:
a) The design and preparation process should be interactive comprising
teams from the donor (Sida) and the Client (MEM) to guarantee the
objectives of both parties are met and a platform for the Client taking
ownership is created.
b) Projects piloting or testing novel approaches require additional means of
educating the Consultant as a ToR is seldom sufficient for transferring
the necessary understanding to the project team for plannning and
executing implementation.
c) The need for flexible approach with monitoring and feed back to correct
any implementation issues is not easy to anticipate beforehand. Hence,
project management must include feedback loops of M&E back to project
implementation.
d) The market needs guidelines on rules of the game regulating obligations
such as between suppliers and dealers, and between retailers to
consumers.
e) The private sector should be consulted on major actions in the sector to
verify that activities rolled out will have the intended impact. This is in
particular important for capacity building programs that deliver services
demanded by the private sector.
f) Learning is closely linked to previous experience of the companies as few
PV dealers and technicians were new in business coming from other lines
of business. Hence, targeting start-ups may require a different set of
support packages.
g) System approach including multifaceted set of project activities has the
highest probability of supporting market growth. Hence, there is need to
address market bottlenecks from a variety of angles. (i.e. more than one
remedy is required)
h) Market supporting institutions should be involved early in project
implementation, preferable at the design stage, to ensure sustainability.
i) Project impact is not necessarily measured directly as market growth but
rather in the establishment of institutional and market conditions
(support functions, rules, policy, capability).
vi
j) The selection of participating MSMEs in any given program must be done
as close as possible to market principles. E.g. if dealers are approached,
selection criteria applied by the sector should be used rather than only
relying on project standards.
A possible way forward to support the use of renewable energy technologies:
Even though it has proven to be challenging, any future intervention in the
renewable sector should try to adopt a market development approach similar to
the original design of the PV project. A market development approach (by using
for instance the M4P concept, Making Markets Work for the Poor) or the B4D
(Business for Development), has a high potential to contribute to broad impact
and sustainability in the markets delivery of renewable energy services to people
in poverty. With a thorough understanding of each renewable energy market,
interventions can be designed in such a way that they bring about systemic
change in those markets systems that benefit people in poverty to a larger
extent. By applying a market development approach the interventions will focus
on underlying causes rather than just symptoms of malfunctioning markets. And
the role of a temporary project/programme is to facilitate change in those
market systems, not to become a part of the market itself. Given the challenges in
the Solar PV project, all future interventions should consider the lessons
learned/recommendations/guidelines summarised above.
In the case of renewables, the poor are found either as users/customers or in the
informal sector as MSMEs. The M4P approach is specifically designed to address
underlying causes rather than just focusing on symptoms in malfunctioning
markets. It draws on in-depth knowledge of the various players in the markets
and their respective function. The term market system defines a wider set of
actors that support or interfere with the market in question.
The starting point for any program is the existing mass of suppliers, retailers,
customers, whose daily activities will determine the impact of any program.
Hence, M4P literatures discussion on market system incorporates these actors
and other functions necessary for a healthy market development taking into
account the Poor.
It is recommended that a future intervention will consider the following
approaches:
1) Innovation system and renewable energy markets: Improvement and
upgrading is more than operational skills and long-term growth hinges on the
mobilization of the innovation system to supply knowledge and skills. An
intervention may appoint COSTECH (Commission for Science and Technology) to
act as the Client for an Innovation System Initiative that would map existing R&D
resources, set up criteria for academic research funding of COSTECH s existing
funds, set guidelines for diffusion of research funding, how to involve the sector
in question to advice on research topics, etc.
vii
2) Expansion through establishment of competitive value chains (VCs): Most
markets are characterized by their structure as regards the linkages between
companies in the distribution channel. A value chain perspective is useful for
understanding the development of technology across firms, the value added by
each step in supplying goods and services, the importance of interconnectedness
among companies to develop a sector (the whole chain has to be targeted). The
rationale for developing VCs is based on the premise that small enterprises can
grow and become competitive when they have clear and well-developed
strategies set by competent and demanding value chain members.
3) A Poor mans perspective: An M4P project may on the other hand focus on the
rural setting and how energy could support the inclusion of farmers in the
formal economy. Most poor people are constrained by lack of skills and
education, which means that inclusion will be a key component. Such a project
would need to emphasize the transformative role played by energy in
establishing new and competitive rural businesses based on productive use.
This may entail the development of rural communities applying a non-grid
paradigm that springs from a multitude of renewable energy sources such as
micro-grid, solar, biofuel. Starting from a PSD perspective rather than energy
would focus attention the role of business and income generation foremost.

1
1. Introduction and background
The Sida funded solar PV project was ended in December 2011 after five years of
implementation by MEM with TA supplied by the Consultant Camco of the UK.
The project supported the development of a rural photovoltaic (PV) market in
Tanzania. Markets are increasingly seen as the means to delivering services
rather than the state in developing countries. Basic services such as health,
education, infrastructure, and energy are supplied by the private sector either
through public procurement or directly through the market. The interest in the
market as a governance model draws from the inadequate basic service delivery
in a large number of sub-Saharan countries. Historically, public goods should be
provided free to all (or at least heavy subsidized by the state). The slow progress
by public institutions to advance the access to modern energy like electricity in
rural areas has sparked the search for alternative approaches.
The shift has likewise influenced development thinking on how to supply
fundamental services to poor people that would enable pro-poor growth. The
basic assumption is that inclusion in markets enables poor people to take part in
income earning activities not present in e.g. subsistence farming or barter trade.
N.B. the PV project did not directly addressed pro-poor growth and emphasized
general market growth to increase access for rural energy users.
The project was conceived a decade ago when markets were still young in the
development debate. Voices were however raised against traditional project
models that by default placed overly emphasis on the project as the
instrument for change. Projects were common in most areas of implementing
donor grants and loans, even in sectors that had a local private. Involvement of
local project implementers was customarily not guaranteed in international
procurement under ICB, QCBS conditions. Hence, the sustainability of such
projects was questioned citing the termination of projects as a simultaneous end
of services provided due to project funding, organisation and prevailing non-
market (commercial) conditions.
Further, the overarching approach adopted was in line with BDS (Business
Development Services) thinking a decade ago that emphasized the critical role of
services in building a competent SME sector. Thus, the projects development
objective was to increase the access to modern energy through a well functioning
market buying and selling goods rather than installing subsidized or free
products in a project manner. The BDS paradigm was complemented by a more
general market development approach that e.g. stressed the importance of
stimulating demand. The project was envisaged to test a market driven model
that would use the private sector as the main engine of growth by supporting
new and existing companies (i.e. enhancing supply capacity) but at the same
time create awareness and understanding of the technology (hence building
demand). (A more detailed description of the projects approach and methods
follows below in section 2).
2
Although the project was defined as an energy access project for rural
Tanzania, its methods bear important lessons for private sector programs in
developing countries. In a wider perspective it highlights the design and
preparation of sustainable models for development cooperation that aim to build
markets for the poor.
This review includes a thorough analysis of the projects main achievements
taking into account the intentions, approach and implementation arrangements.
The main goal is not to pinpoint particular shortcomings but to build a portfolio
of lessons learned for designing similar projects in the future. Where mistakes
and weaknesses are discussed it is merely to illustrate the donts and pitfalls of
working with the private sector. Therefore to establish a dos list for project
planners is the ultimate purpose.
1.1 Background and rationale for evaluation
The project was designed to test a fairly novel approach to supporting the
diffusion of renewable energy: market driven with the private sector taking the
lead role. The approach was new - both to Sida and the Client MEM (Ministry of
Energy and Minerals of Tanzania) and intended to test sustainable project
models that would work closer with key stakeholders and users of the energy
technologies and at the same time have a natural exit from the sector. Sidas
involvement will be referred to the Embassy of Sweden as the Embassy of
Sweden in Tanzania was mainly administering the project.
This reports central aim is to capture the main lessons learned from the five-
year project by primarily reviewing documentation and conducting analysis of
the project but partly complemented by experience and observation over the
course of the project implementation
1
. A secondary outcome is to draft the way
forward and how insights may be replicated to other subsectors in energy to
speed up diffusion through private sector led market growth. A third, as an
extension of the former objectives, the report will present a guideline for market
driven support.
The rationale for this report draws from the need to document the experience
gained. The report will complement earlier reviews of the project; the so-called
Results Analysis Reports. In order to evaluate and sum up the projects outcome
and impact, there were two Results Analysis Reports conducted at the end of the
project; one by the project Consultant Camco itself and one by an external
consultant contracted by MEM; Dr Byabato. It was deemed necessary to carry
out an additional independent review of project that would look beyond project
internal impact and focus on the way forward.

1
The Consultant for this undertaking was also hired as the M&E Consultant for the Sida MEM
PV project which enabled intermittent follow ups on the project.
3
2. The Context and key features of the Solar PV project

2.1 Introduction
The project was a collaborative effort between the governments of Sweden and
Tanzania. The planning process started in 2001 and in February 2003, the
Ministry of Energy and Minerals (MEM) and Sida (through the Embassy of
Sweden) agreed on financing a project for Facilitation of the Solar Photovoltaic
(PV) Market Development in Rural Tanzania. Market assessment
2
conducted for
planning purposes concluded that the market was ready for a proactive
intervention based on the number of wholesalers and dealers active, the status of
the solar association, the pro-urban focus of large suppliers, the untapped
demand in rural areas (only 1-2 % had access to electricity in 2001), etc. Most
large wholesalers based in Dar es Salaam fill various roles as importers and
suppliers to regional dealers. This means that wholesalers, suppliers, importers,
are applied interchangeably in the report. The goal was to direct the PV sectors
activities towards building demand in rural areas, strongly piggy-backing on the
projects support activities. The assessment report recommended an approach to
support the promotion of PV technology in rural areas
3
by working through
existing market actors, and by using currently available organisations and
institutions for the implementation of the support. The key rationale comprised
the expansion of the rural market by promoting the establishment of dealer
networks stretching beyond the three towns of Dar es Salaam, Mwanza, and
Arusha. See table 1 below for market size, before and after the project. (Source,
project reports, TAREA). The pre-project market was dominated by so-called
project sales by large institutions procurement such as ministries, TANAPA
4
,
donor projects, TTCL
5
, TAZARA
6
that represented around 80 per cent of sales
(Sida, 2002). Hence, most suppliers and dealers were located in the three
metropolitan areas as a result of vicinity to buyers.

2
See Sida (2002), The RES Market Report, Swedish Embassy
3
"Rural areas" have in this context been given a broader than usual definition to include also
smaller towns and the outskirts of cities/towns. "Rural areas" are characterised by a
comparatively low share of users who have access to modern energy services and that a
suppressed demand for such services is found in the area.
4
TANAPA (Tanzania National Parks)
5
TTCL (Tanzania Teleommunications Company Limited)
6
TAZARA (Tanzania Zambia Railway Association)
4

Table 1: Pre and post project market sales
One immediate effect of the market-driven approach was the substitution of
public utility efforts in the field of rural electrification with a free market driven
by exchange processes between buyers and sellers. That is, the goods provided
or rightly traded on the market should not be seen as a free good that purports
to provide a service to the community. That certain services are provided is an
indirect effect of the market meeting specific needs among users expressed as
demand in the market.
The impact on the project of the market-driven approach is the transition from
implementation to facilitation by creating an environment whereby the market
actors will provide the services needed. This is a cornerstone in the BDS
approach. It also leads to focusing attention to a different problem since the
project is not supposed to solve the actual energy problem experienced by rural
population, but rather to create conditions that help the expansion of rural
markets. That in turn will solve the problem.
The underlying assumption was that the markets problem-solving capacity must
be improved rather than the project specifying the problems to the market. The
interactive process between buyers and sellers is seen as one of the critical
means to targeting the right problems.
2.2 The designed approach
The designed approach refers to the approach presented in program documents
(see e.g. MEM, 2002) and in the bidding documents for floating the tender. The
rationale for presenting the initial design rather than the one rolled out during
implementation highlights the role of various factors affecting the actual
implementation. E.g. the model applied may differ because of the private sectors
2004 2005 2006 2007 2008 2009 2010 2011
yearly KWp 100 100 250 300 400 500 1500 2000
0
500
1000
1500
2000
2500
Y
e
a
r
l
y

s
a
l
e
s

k
W
p
Market growth Tanzania
project launch
5
response to project intervention, the Consultants interpretation in proposing a
solution as well as the impact of issues occurring during implementation.
There are a number of market models applicable but the one selected had been
successfully used in South Africa to enhance the diffusion of solar energy
technologies
7
. The model states that the growth of solar PV market draws on
four dimensions (the 4A model). These are: Awareness, Acceptance, Access, and
Affordability. If a potential customer is not aware of a product and how it can
meet his/her specific needs it is unlikely that he/she will buy it. Acceptance or
the desire to buy a certain product is linked to priority, which determines
his/her willingness to invest in a product. The issue of access is critical for
stimulating the demand for a specific product since time-consuming or
cumbersome search processes for a product tend to lower demand. The final
step in closing the purchase process is the issue of affordability. These
dimensions may be viewed as sequential in the buying process but are at the
same time closely interrelated. For example, even to be aware of a product that
probably is too costly is highly unlikely since the initial investment deters from
further inquiries and may not lead to acceptance. Since solar PV is only
affordable in a life cycle cost perspective few customers will undertake the
effort to calculate savings but rather be disappointed in the high initial price.
This fairly conceptual model was complemented by an actor dimension in order
to allocate project resources to address challenges within each A. As regards
the division of labour among the actors for affecting these dimensions it was
suggested that access and affordability are foremost the responsibility of PV
business and financial institutions. Awareness and acceptance naturally follow in
a growing market where prior sales work as a steppingstone by its
demonstrative effect. However, for approaching new rural customers,
substantial awareness creation and promotional activities were deemed
necessary. In the original design the following five categories were identified: i)
rural market, ii) PV industry, iii) solar network, iv) financial system and v)
institutional framework. These categories were selected due to their distinctive
role in improving the conditions for a rural PV market. That is, all categories
have an effect on the 4As which will drive the market.
The implementation arrangements included the recruitment of a consulting
company who would carry the overall responsibility for coordinating,
supervising, and administrating project activities. The key role attached to the
Project Office comprised the facilitation of the interventions required to address
the identified weaknesses in the market. Hence, the bulk of the projects budget
(SEK 27 million) would be channelled to external service providers. For project

7
Holm D., (2001), Renewable Energy Strategies in South Africa, in Renewable Energies for the
South, Science Park Gelsenkirchen
6
monitoring and follow up a Steering Committee
8
was established that would
meet annually to discuss implementation issues and advise on possible actions to
safeguard that project objectives were met.

The main features of the Institutional Framework:
The project was set up and implemented in cooperation with the existing
institutional framework. A key tenet apart from directly supporting market
actors - was to enhance the capacity of the institutions having a core as well as a
supporting function in the market. The project worked with the Ministry of
Energy and Minerals (MEM), TAREA, VETA, SIRG, TRA, TBS, REA.
MEM was the Client and project owner who has overall responsibility for policy.
The project worked closely with MEM. The ministry had the role of project
monitoring which in future project will be allocated to REA.
TAREAs capacity was directly supported to promote the diffusion of renewable
energy. (It is a national association that brings all the key stakeholders
together
9
). The association was established in 2001 and has more than 250
members (March, 2012). Over the years, TAREA has been implementing
promotional, capacity building activities, awareness creation, quality control and
advocating for sound environment through dissemination of renewable energy
technologies.
VETAs involvement in the project has the potential to play a major role in the
continuing access to skilled PV technicians as the main government institution
for vocational training in Tanzania.
SIRG (Solar Industry Reference Group), The Solar Industry Reference Group was
created not long after the Projects mid-term review. Five solar product
importers/wholesalers signed MOUs to become active members of the Group.
These companies include Sollatek, Ensol, Zara Solar, Umeme Jua and Aglex.
In order to control quality of systems and products, both entering and being sold
on the market, the project has focused on TRA and TBS officers. The counterfeit
market is an escalating problem in Tanzania.
The financial sector was approached in the project, initially lobbying with the
retail banks and consumer credit institutions, as accessing loans and credits for
purchasing PV systems was very limited. The project later focused on SACCOs

8
The steering committee initially comprised representatives from MEM, the Consultant, TAREA,
Sida, Office of the President, UNDP, UNDPs PV project, and private sector. Later both TAREA and
private sector were excluded for being beneficiaries of the project.
9
For more information on TAREA see www.tasea.org
7
(Savings and Credit Co-operative) because of the banks inadequate response to
establish PV credit lines. There are over 1,800 registered SACCOs throughout the
country ranging from community-based initiatives recruiting members who
work in the informal economy to workplace-based SACCOs.
REA (the Rural Energy Agency) which was not established at the launch of the
project it was operational in 2007 - but later participated in steering
committee meetings and has become aware of project design and impact. REA
does not implement projects as such but administers various funds for
development projects; in particular target the cooperation with the private
sector.

2.3 Recapitulation of specific project goals and objectives:
As stated in the project document (MEM, 2002): The long-term development
objective of the project is to improve living standards and community
development in rural areas by providing access to modern energy services
through an increased access to and demand for PV technology. Although it was
argued that access to modern energy services would improve standard of living,
the project has not explicitly been measuring the role of solar PV in economic
development in rural Tanzania as the project focused solely on its immediate
objectives. These were: The overall project objective is to establish market and
institutional conditions that enable development of the rural solar PV market
(op cit.). The project objective was supposed to be met by fulfilling the sub-
objectives specified in the 4A approach applied to the actual implementation.
The four As (Awareness, Acceptance, Access, and Affordability), in combination
with viewing the market in a wider context as the pillar for growth, was deemed
as the appropriate model. For a full list of sub-objectives and deliverables see the
projects LFA in appendix I.
2.4 The approach and objectives adopted and rolled out
The project opted to address the 4As indirectly by incorporating them into the
following project components: i) Business development support to existing and
potential PV companies, ii) Development of the Solar Network, iii) Policy and
Institutional Development, iv) Stimulation of end-user market through
awareness raising and v) Capacity building of MEM (Ministry of Energy and
Minerals)/REA (Rural Energy Agency) counterpart personnel. The first
component BDS was designed as traditional training activities though the
services were outsourced to local providers through a tender process. There
were three such tenders floated; one for technical training awarded to TASEA
10

(Tanzania Solar Energy Association), a second for Business Management

10
TASEA has lately (2010) changed name and focus into TAREA to include renewables in general.
8
Training and Consulting Services (WorldAhead) , and finally one for Marketing
and Awareness Campaigns (Mariands).
However, a number of activities remained the responsibility of the project;
market assessment in the regions, planning and launching in the specified
regions
11
, impact assessment, involving the financial sector (later more focus on
Savings and Credit Co-operatives (SACCOs), supporting the solar network (this
was mainly done as capacity building support to TASEA and supporting business
linkages between urban suppliers and regional dealers), policy development at
district level. The project also added quality assurance as a subcomponent based
on the Projects recommendation.
To further illustrate activities delivered by the project: i) Identification of
appropriate businesses in the regions and districts and bringing them into
business relationships with the solar PV product importers in Dar es Salaam. ii)
Regional marketing campaigns were later on transferred to the project, as the
subcontractors performance was not satisfactory. iii) The project also provided
grant financing to a small number of companies that were selected after
screening proposals. The grants were earmarked for company specific support in
areas such as marketing and training. This component was discontinued in
project year three as the project believed that that impact of the company
support was limited, not benefiting the PV sector in general to a great extent, but
also few high quality proposals were submitted by the sector. The selection
process was also viewed as slow and tedious in relation to expected output.
The project applied the following set of indicators
12
for measuring outcome:
Annual size of the PV market will have doubled from the 2005 baseline
of 100kWp;
$8,000,000 of revenue will be generated by solar PV companies;
16,000 solar system installations will be made;
An active association of solar PV stakeholders will provide regular and
quality information and services to its membership;
Quality standards for solar PV technology will be established, and a
system for monitoring and enforcing compliance will be operational.
Regarding the 4 As, the project initially did not stringently applied the indicators
to design impact surveys as proposed in the original LFA. This issue will be
discussed below in the section on Findings. For more details on the projects
methodology see below in section 3.1.

11
The project supported various actors in a region for three months before moving to next
region.
12
These were presented in the inception report (ESD, 2006) and comprise a mix of indicators
from the original LFA and suggestions by the Consultant.
9
3. Findings and Conclusions regarding the projects activities
The review of activities will be presented in a longitudinal perspective as well as
addressing certain key issues. The longitudinal follows the projects key
milestones, the projects inception period, pre-midterm activities, midterm
review, post-midterm and exit. The rationale is the shift in strategy at these
milestones.
3.1 Inception phase:
This phase had little actual implementation and the main output comprised the
Inception Report provided by the Consultant early 2006. The report comprised
the status of the Tanzanian Solar market, work plans, project management, and
budget estimates. Hence, the actual implementation was presented in this phase
as an Inception Report 6 months after project start based on project document
(MEM, 2002), ToR, and the Consultants market assessment.
In a nutshell, the project applied the following approach: i) recruiting and
training dealers and their technicians in rural areas they were not located in
rural areas per se but in district towns - to act as outlets for solar PV products.
ii) Theses dealers were introduced to major importers/wholesalers during the
official launch in each region but also later while in Dar es Salaam for training.
iii) Regional campaigns should be carried out for three months in each region
using various methods ranging from TV commercials, radio, road shows, etc. iv)
A grant scheme for large suppliers to address their marketing challenges in rural
areas. v) The network component would address the role and performance of
TASEA to support the PV sector. vi) To establish consumer credit for PV systems
through supporting the National Microfinance Bank and the CRDB to set up
specific credit lines for PV. These would have conditions specified to suit the
purchase of PV system by relatively poor people. vii) The policy component
should focus on TBS & TRA capacity building to among others establish standard
guidelines to facilitate importation of quality PV panels and BoS
13
components.
viii) M&E
14
would focus on the following: Sales statistics from suppliers and
dealers; Revenues generated from systems sold; Number of solar PV
installations; Average sizes of installations made; Method of payment; Level of
consumer awareness; Degree of client satisfaction.
Main output/impact: The Inception Report presented the capacity building
modality for developing market actors: The focus was on enhancing regional
dealers capability and their technicians. Dar es Salaam based and other large
suppliers were not targeted directly by the BDS component and would benefit
indirectly by the improved dealer network. The project contacted several large
(urban) based suppliers during this phase to consult and verify the number of
existing dealers in regions covered by the project. There was one workshop held

13
BoS (Balance of System) components comprise such as charge controller, batteries, inverters,
14
M&E (Monitoring and Evaluation)
10
in Dar es Salaam where most suppliers participated. However, the main venue
proposed for creating business relationships was the regional launches in which
Dar-based suppliers, local microfinance agents, local administrative authorities,
regional dealers and rural electricians were invited to a two-day workshop
15

presenting the market assessment findings.
Main concerns: The Inception report was reviewed by the Embassy of Sweden
(see Sida, 2006) that emphasised a few issues. A first concern was the issue of
methodology. The inception report portrayed an overall impression as project-
driven which manifested itself in the work plan presented for several key
activities. The degree of pro-activeness vs participatory approach at various
crossroads in the project was raised as a concern. A second and in similar lines
concerned the role of the project which had gradually shifted from a Facilitator
to rather act as a Doer which would affect the learning process among market
actors. Thirdly, how to create a demand for BDS services and at the same time
raise the competence of the sector in a market friendly way. It was not clear in
the Inception Report whether there would be cost-sharing arrangements
(subsidized training) or free training.
3.2 Pre-mid term (early 2006 mid 2008):
The project was rolled out initially in Iringa awaiting the approval of the
inception report. Iringa region was set up as a pilot using UNEP-GEF
16
funds.
The project faced additional delays in the hiring of subcontractors. The
procurement that was done through the Ministrys official processes took longer
than expected; the tender process was finalized in early 2007 after one year. The
capacity building of PV dealers and technicians was originally designed
according to the BDS approach whereby the project does not deliver services
directly but focuses on facilitation and creating a market for BDS services. This
approach meant among others that the project should find external service
providers for BDS.
After Iringa, Morogoro, Coast followed by Tanga, Kigoma, Rukwa and Mtwara.
The methodology applied was in principle the one put forward in the Inception
Report. To recapitulate, the roll out was started by a market survey conducted by
the project with the purpose of estimating the potential for solar PV in the
region. Initially the supplier of services for the market campaigns was supposed
to be in charge of these market assessments in cooperation with the project. The
project later on assumed the responsibility for these assessments because of the

15
The first day included local authorities only to discuss the market assessment whereas the
official launch was during day two with the participation of selected dealers, large suppliers,
government (regional) officials.
16
UNEP-GEF. United Nations Environment Programme runs a number of programs to encourage
a transition to a green economy. The Global Environment Facility also works to protect the
environment through the funding of incremental costs that leads to global environment benefits.
11
suppliers poor performance. Hence the estimate would not focus on the current
size of the market. These estimates would be presented and discussed during the
launch for each region over two days, starting with a workshop focusing on the
regional and local authorities followed by the official launch during day two.
Various stakeholders were invited to the official launch including: PV suppliers
(mostly based in Dar), regional dealers selected for training, TAREA, Embassy,
MEM staff and regional authorities. Presentations were mainly given by the
Consultant and regional authorities whereas local and Dar based businesses
were not among the presenters. The matchmaking between suppliers and
regional dealers mostly took place in coffee&lunch breaks in an informal fashion.
The projects approach was to let the potential buyers and sellers meet without
interfering in the matchmaking. This would later hopefully lead to a business
relationship in which the companies would find the proper forms of cooperating.
The projects role was to invite them to the same venue providing a platform for
discussions, networking, etc.
Due to procurement guidelines competitive bidding by floating tenders was used
to identify and select BDS providers. There were tenders for three types of
assignments: i) technical training, ii) marketing and organizational skills, iii)
market campaigns. Contracts were awarded to three local firms; WorldAhead,
MarieAnds and TASEA. The performance of the subcontractors was mainly
satisfactory although one project component faced a number of problems. The
project concluded this was due to a series of unforeseen events and decided to
internalize the activities by establishing a new project team for this activity.
The grant scheme was launched but attracted little attention by the PV sector.
Only two companies submitted proposal which led to a change of the application
process and use of more advertising.
Main outcome/impact: The project was successful in testing and rolling out the
activities in a pilot region in spite of being stricken by delays not anticipated.
Once the procurement of BDS providers was finalized the project rolled
according to plans in Tanga, Morogoro, Pwani, Kigoma, Rukwa, and Mtwara. Up
to the Mid Term review three regions had been subject to impact surveys: Tanga,
Morogoro, and Pwani (Coast). To summarize, the surveys point to the
importance of raising awareness which was most efficiently done through radio
ads and disseminating flyers and brochures. The regional campaigns would
normally have a direct effect on the number of enquiries the dealers had on price
quotations, etc. The regional dealers would source from more than one supplier
in Dar es Salaam that customarily was a result of the projects business linkage
component.
Main concerns: The project was delayed in almost all activities during this period.
This was not caused by poor project management but the result of unforeseen
external events. One of the key factors was the Ministrys procurement policies
and slow execution. The regional campaigns tended to exclude dealers in the
planning and overly focus on larger cities rather than small towns) (See the MTR
12
and various Impact Surveys. The financial lobbying efforts by the project to
convince commercial banks to offer a special credit line for PV systems failed to
materialize due to the banks stringent conditions for banks loans (permanent
employment, collateral, references, etc). The communication between the project
and other key stakeholders was, by and large, poor which delayed addressing
these concerns properly. This was partly a result of the delays in establishing the
proper M&E for the project such as the mandate and structure of the Steering
Committee.
3.3 Mid-Term Review (MTR):
The mid term review was commissioned by the Embassy in Fall 2008 as agreed
in the Specific Agreement. The Swedish company, SWECO, was awarded the
contract. The MTR highlighted the following major outcome/impact of the
project: 1) Sales growth has been impressive, 2) Match-making between regional
dealers and urban wholesalers was seen a major accomplishment, 3) The entry
of new dealers into PV has played a major role in expanding the market, 4)
Training for technicians has been successful per se, 5) The campaigns had a
positive effect on sales.
The MTR disclosed a number of issues regarding the implementation. The MTR
was structured around the 4As and boiled down to the following: Awareness:
The national awareness campaigns were viewed as less efficient as the regional
campaigns. The promotion of the project as such rather than the PV sector was
indeed an issue as observed by the MTR team. The regional campaigns were in
general effective but poorly planned in some regions, i.e. lack of coordination
with regional companies. The issue of actually using trained technicians for
installations was highlighted. The MTR team was of the view that both indicators
for affordability are considered useless as prices are dictated internationally and
therefore should be removed.
Additional concerns/issues in the MTR: a) The Provision of BDS: The MTR
observed that that there was a lack of commercial viability. It also noted that
there was not enough cost-sharing (in reality the only contribution by
participants was in kind by offering their time on the training), bookkeeping and
similar organizational skills
17
were not appreciated by the dealers, and that more
technicians should be trained. b) TBS & TRA should be equipped to enforce
quality but the efficiency was questioned by the MTR. The TRA in particular is
not addressing the needs of the PV sector. c) The Solar network; it was concluded
that the actors were not better connected as a result of project activities. d) The
impressive growth rates were discussed whether it was a result of the project or
other factors was not clear according to the MTR. Many dealers argue that sales
have increased after the project was launched but the market has grown in non-

17
Most dealers have weak organizational skills but do not see the need for enhancing their
capacity and consequently view such training as waste of time.
13
project regions as well. The data collected to verify sales is at a national level and
does not reveal actual sales by dealers trained in the project. e) New LFA
indicators were presented that had a better fit with the activities rolled out by
Project. f) Role of project vs. PV (as a technology) and other actors; the concern
was that the project was performing activities that should have been done by
market actors. It also created confusion in the market as it was not clear what
the project, Sida, and MEM actually did in the sector in relation to the private
sector. g) The selection of dealers
18
by the project was not adequate as many
turned out to be passive (at least more passive than those starting on their own
before the project) and not having the required resources to run a solar business
like liquidity to stock PV systems. h) Technical training as delivered in the
project will not be sustainable. The solution proposed by the MTR was to
transfer the technical training to VETA (Vocational Educational and Training
Authority). A stakeholders reference group should be established rather than
the steering committee already in place, which was deemed less efficient
19
.
3.4 Post midterm and exit
The project continued launching in additional regions, in total 14 of 20 regions
20
.
The basic approach for launching in new regions basically remained the same in
this period with the exception that the marketing campaigns were done by the
project
21
instead of a contracted provider. The new or slightly altered activities
in this period was: i) The Solar Industry Reference Group (SIRG) that was
created not long after the Projects mid-term review, partly as a result of MTR
feedback. ii) VETA fee based training, iii) SACCO workshops. iv) exit strategy.
SIRG: The group was formed to address to threat posed by the increasing
number of panels being imported not meeting quality standards. The SIRG was
established by five solar suppliers that include Sollatek, Ensol, Zara Solar,
Umeme Jua and Aglex
22
. The main mission formulated by the Group was
strategies for enforcing standards for high solar PV quality. The consensus in the
Group was that the systems sold by SIRG members should meet the
requirements as agree with TBS. The recent entry of opportunistic newcomers
selling counterfeit or substandard products was seen as the prime threat to a

18
As a result of the feedback, the project suggested using a checklist established by WorldAhead
to improve the selection process but there is no data verifying the actual implementation and
success of the checklist.
19
The Steering Committee did not have the mandate to enforce recommendations agreed upon
and functioned more as an advisory board rather than controlling the implementation of the
project.
20
The project started in Iringa as a pilot using alternative funds due to initial delays with
disbursing Sida funds. Hence, Sida funded roll out in 13 regions.
21
The decision to internalize was mainly due to time constraint as procuring a new
subcontractor would have been a lengthy process based on the experience of the tender process
for the initial BDS providers.
22
There were more companies originally but Rex Solar e.g. left early because of different views
on the mission of SIRG.
14
sustainable market. This has also been confirmed by TAREA that had visited a
number of shops in Dar es Salaam to learn about the poor technology falsely
marketed as cutting-edge products. It is not clear whether these substandard
systems were sold under the belief that they actually meet stated specifications
or the shops were intentionally misguiding customers.
VETA fee based training: The VETA training was an outcome of MTR feedback to
establish technical training on a sustainable basis that included charging a fee for
participants but also for transferring the training capacity from the project to an
existing institution. Capacity building of VETA comprised in principal ToT
(Training of Trainers) using a combination of standard training methods by the
TAREA consultants and learning by doing. The latter was accomplished by
involving the VETA instructors in the project training of technicians. The
objective was to enable VETA start offering fee-based solar PV courses. In the
course of the project, one VETA branch tried to advertise and run a course but
the initiative was terminated because of low demand. The details on the
advertising and recruiting have not been clarified so whether this is a classic
example of failing to create demand or there is simply no need for PV courses
was not evident.
SACCO: The SACCO workshops surfaced as an alternative to traditional retail
banks credit line, which despite lobbying by the project did not convince the
banking sector to offer earmarked PV loans. The banks did not view the PV
systems as an eligible collateral and recollecting loans from defaulters was seen
as a risky and time-consuming activity not worthwhile pursuing. Hence, the
outspread informal credit and savings organisations in Tanzania SACCOs -
were identified as a possible means to access credit for purchasing PV systems.
The purpose was to introduce PV technology as the appropriate way forward for
accessing modern energy services. The meetings invited District Cooperative
Officers (DCOs), SACCO leaders and PV dealers. Though marketed heavily by the
project the expected output never materialized in most regions; Tanga was one
of the few exceptions. Most SACCOs did not want to favour specific use of credit
lines for members that should freely choose the purpose of the loan. A part,
unintended, success of the workshops was that some dealers managed to use
them as sales events and secured a number of orders as a result.
Exit strategies: The need for exit strategies was brought to the project teams
attention during the last project year as there was a concern that the project
would pull out without securing an imprint in the sector. Discussions between
the key stakeholders, the Embassy of Sweden, MEM, and the project consultant,
led to the development of an exit strategy that addressed a possible post-project
scenario of the main activities.
Project phase out and sustainability: The exit should ideally be frictionless if the
BDS approach had been strictly applied to all activities. Hence, the project
displays a mixture of facilitation and doer but the main challenge of the activities
actively carried out by the project is the weak demand in the market. The RAR
15
(Results Analysis Report) presented by the Project lists a number of activities
and possible exit scenarios. The first activity, identifying and training new
dealers, was proactively done by the project with little involvement by the PV
sector. As pointed out in the report, few suppliers are actively doing this at the
moment. Since the Project was pursuing this as a project activity rather than
facilitating the function of entry for newcomers in the market, the handing over
of this activity is not straightforward. The methods and resources at hand cannot
be transferred to the private sector, which demonstrates the risk of providing
services without building demand simultaneously. The second activity, training
new solar technicians, started as an outsourced activity but was neither demand
nor market driven as the project both identified the participants and provided
the training for free. Later the project involved VETA to initiate a sustainable
model for training. Support to such training is in line with the BDS approach but
VETA is not yet capable and organized to offer PV courses demanded by the
sector. The third activity, conducting market campaigns and developing
marketing material, was taken over by the project after the MTR feedback. The
activity was done in cooperation with rural dealers. Any possible future
institution to shoulder this function in the future was however not involved
which makes the transition to a sustainable market doubtful. Either TAREA or
suppliers could have an interest in pursuing the function of marketing solar PV
but the lesson learned from this activity has not, and will not be transferred to
any existing institution.
Train local authorities, the training aimed at enhancing the awareness and skills
necessary for submitting project proposals to fund PV projects in rural areas.
This was project driven not having a local counterpart or institution in mind but
the Consultant suggests that REA could possible assume the role of educating
local authorities. It is stated that REA is aware but has not yet begun. There are
three main concerns regarding the sustainability of this activity: i) REAs
incentive to start such training, ii) available funding, and iii) is the activity in line
with REAs mandate and objectives.
TAREA and SIRG, though training and support was initiated by the project, this
component targeted the establishment and support to permanent institutions
that play a decisive role in building a market. Hence, the transition to a post
project situation is inherently easier, which is confirmed by the Consultants
evaluation of sustainability. Both SIRG and TAREA have their roles and means of
operating in a self-sufficient manner drawing on member contributions or
commercial revenues.
16
3.5 Issues surfacing during implementation
23

These issues have been mentioned briefly earlier in the longitudinal review but
have been identified as critical for implementation as well as impact. A review of
discussions and feedback boils down to the following: 1) discrepancy between
the original project methods vs projects implementation approach, 2)
sustainability of BDS, 3) performance of the participating dealers and
technicians, 4) Supply chain development 5) Building a functioning market.
1) The Sida-MEM project was designed to support the private sector taking the
sectors readiness and capacity in consideration. This meant among others that
commercial actors should be consulted and part of the implementation and that
the Project should primarily act as a facilitator. In theory, the approach adopted
and presented in the program document (see MEM, 2002) has a number of
advantages compared to traditional projects that are characterized by the
project as the key entity implementing and delivering services. However, it was
increasingly apparent that the project team was not very familiar to act as a
facilitator, as this requires a new mind-set regarding the role of the project
office. In reality, the facilitator role was interpreted by the project as contracting
out services to external providers. The approach applied by the project was
manifested in a number of ways: budgets were shifted from external provision
towards internal use of funds, but more importantly the private sector was, by
and large, not part of the process as active participants but rather as passive
recipients of support
24
. Though the regional campaigns became more
consultative in later stages of the project. Nevertheless, the large suppliers were
e.g. neither consulted on the design of technical training nor selection of
dealers
25
. Hence, adopting the role as facilitator will affect how the project would
work with the private sector. It should be observed that the project teams
approach was rational, i.e. following the work plan as presented and approved in
the inception report. A lesson learned is that the introduction of innovative
approaches to project implementation requires novel project management
approaches by the Client and the Embassy.

23
These issues surfaced from Annual review meetings, impact surveys, interviews carried out by
the Embassys M&E Consultant.
24
There were two exceptions to the rule; these suppliers are also heavily involved in TAREA.
Their involvement was a result of their proactive approach and not from formally being invited
and linked to the project.
25
The majority of the suppliers were concerned about selection process of dealers and
technicians. This seems as a rational standpoint since the involvement of suppliers in the
selection was very limited. The paradox is that although the suppliers were served dealers on
silver plate there was unduly poor appreciation for the projects effort to search and select
dealers on their behalf. In the light of suppliers passive approach to identify new dealers, the
common perception is that the few ones they had been working with for a few years would
suffice. The most qualified dealers had been in business at least 4-5 years. An additional
explanation is that direct intervention in the market requires substantial trust building to gain
the acceptance of incumbents.
17
2) Sustainability of BDS: The delivery of BDS (Business Development Services)
was viewed as a fundamental for long-term market growth while preparing the
project. The project was also expected to contribute to the growth of a BDS
market, not just delivery of such services (marketing skills, organizational
capacity, book-keeping, procurement, technology, etc). Reviewing the
implementation of BDS tells us that the services were both provided for free and
delivered by companies/organisations that normally do not engage in BDS
services to the PV sector. Further, the project was actively searching for
participants rather than the normal procedure where students and trainees look
for a training institute based on their needs. This was probably driven by the
projects target of having 12 dealers and technicians selected in each region and
the projects evaluation of the market as very passive regarding skills
development. The difference may seem semantic but had a major impact on the
participants attitudes towards the cost and the training itself. The proactive
stance by the project led to a reversed position taken by many trainees that
believed they were in fact doing the project a favour by participating, which is
inconsistent to project objectives. The justification for the proactive stance by
the project is the prevailing situation of almost a non-existing market for BDS
drawing on a passive attitude among companies and technicians to fund
upgrading of skills. This is an effect of not seeing the long-term return of
investment for skill development. An additional factor is the history of PV
training in Tanzania which had been provided free by a number of earlier donor
projects which has ruined the development of a commercial market.
These issues led to the projects free training approach explained by the project
team as that the BDS component was ill-conceived and that there is no demand
for such services.
26
The outspread praxis to receive training for free (if a donor
is funding a program) made it difficult to charge a fee for training according to
project team. The project would have faced the risk of receiving few participants
for the BDS in the case of charging a fee.
The role of developing a BDS market in supporting the dealers and technicians in
the long term has not been properly addressed in RARs and impact surveys. The
free training has surely contributed to the growth of the sector but can
unfortunately not be substantiated by empirical evidence apart from the fact that
a number of trained dealers are still in business. Further, whether the PV sector
is ready
27
for procuring BDS on commercial basis cannot be concluded from
project reviews as the project did not succeed to test the hypothesis. The
development to shift from direct delivery of BDS by TASEA towards building

26
See Camco RAR (2010)
27
The demand for training is generally low because most dealers dont understand the value of
training. This is not project specific but applies to training even offered by the suppliers. A
clarification provided by some suppliers was that many dealers are not specialized in solar and
often view PV as any other product. Hence, the outspread viewpoint is that selling PV does not
require any special skills.
18
VETA capacity was a step in the right direction. VETA is yet to prove that there is
a demand for technical training at a fee but also whether VETA has the capacity
to manage and deliver the appropriate courses. VETA has up to date only
managed to offer training in two centres in spite of the support whereas the
Mwanza centres, trained under the UNDP project, offers 6-month courses on
regular basis.
3) Performance of the participating dealers and technicians. A key anticipated
output of the project comprised increased rural access to PV systems in
Tanzania. The project trained almost 200 dealers over five years, the majority
new to the solar PV business in geographical areas with few or no presence of PV
dealers prior to the project. There is evidence that access has increased from a
pure quantitative point of view, whereas there is little data on the actual quality
or performance of the dealers
28
. For example, the projects collection of sales
statistics focused on large wholesalers and did not rely on sales by dealers across
Tanzania. The impact surveys carried out by the project provide fragmented
anecdotal data on the projects impact on dealers and technicians. Several Dar es
Salaam based PV suppliers (Cloride Exide, Sollatek, Ensol, etc) state that many
dealers that were introduced to solar and trained by project have less capacity
and interest in pursuing serious PV business. Some suppliers go as far to state
that the most successful dealers
29
are those they had even before the project was
started. One explanation is that the project facilitated the entry of many
newcomers but experienced dealers tend to perform better (source project
impact surveys). These surveys also verify that a number of trained technicians
(almost 200 trained) continue to do poorly in system sizing and installation
30
.
TAREA estimate that around 70 per cent of the technicians are still in business
after receiving training but there is no quantitative data on the quality of
performance. Whether technicians trained by the project do worse or better than
the average PV technician is however not known.
Marketing activities by dealers are a sign of a maturing PV sector. However, most
dealers are quite passive and do very little proactive marketing. A sit-and-wait
approach is prevalent stemming from a sellers market perspective. The few
active ones visit SACCO meetings, go to villages, run radio ads, put up poster,
distribute flyers, etc. Although the impact of these activities has not been
measured in a strict scientific way, data reveals that several of the more

28
TAREA (2009) conducted a follow up study on the level of activity of project dealers that
concluded that about 25% had stopped trading solar systems. The study did not analyse the
performance of the active dealers.
29
This viewpoint may also come from a NIH, i.e. Not Invented Here approach to solutions that the
companies were not consulted in the beginning.
30
This was observed in the projects impact surveys that were qualitative and based on testing a
hypothetical installation rather than evaluating actual installations in the field. Hence, there is no
general estimate of the situation in Tanzania.
19
successful dealers normally do more marketing than the rest. But there was only
one dealer in the sample that had developed his own customized material;
dealers tend to use the material provided by the suppliers.
4) The dealer-supplier relationships also change in an emerging market towards
more stable relationships. The surveys show that the business relationships are
thin and mostly based on the transaction itself. Hence, there is little loyalty to a
specific supplier in todays PV market. There are indications that some
suppliers
31
try building long-lasting relationships by being more involved in the
dealers business. E.g. supplying posters and pamphlets is common, whereas
providing training for dealer staff is rare. Credit which is a sign of trust
between the companies is not frequent as at the most 20-25 per cent have
some form of credit with the supplier. An unwritten rule is that credits are not
offered during the first 2-3 years of doing business and thus requires more
knowledge of the dealers capacity and attitude towards credit schemes
32
.
Dealers stated that the majority of suppliers are based in Dar es Salaam followed
by Nairobi
33
and South Africa. The selection of suppliers depends more on
availability and prices than loyalty to a certain brand. Suppliers that keep a
variety of products (BoS) are preferred. Quality is seldom mentioned as a key
factor.
Technicians-Users: Although most dealers selected and sent a technician for
training not more than 50 % use a project trained technician for installation. This
draws from three reasons; most technicians are freelance and not employed per
se by the dealer and used on-need basis, many customers prefer to use their own
technicians, and that many dealers do not stress the importance of hiring
qualified technicians for installations. The relations between technicians and
dealers seem to be weak in most cases as the technicians are more loyal to the
customers and keep changing dealers. Some customers complained about the
level of knowledge among the technicians and said they would probably look for
a more qualified technician next time. The use of poorly trained technicians is
driven by cost as most trained ones are based in district towns which means the
customers must pay for the technicians additional cost to install in the village.
The awareness among existing and potential users to properly design and install
systems is growing which will favour trained technicians in the future (TAREA,
2012).
Supply chain development. The supply chain is dominated by business
transactions and moving goods from A to B. The linkages between supplier and

31
The two most active suppliers have been Umeme Jua and Sollatek. Though Umeme Jua is no
longer a key actor in the market at the time of writing this report (Nov 2011).
32
Several Dar es Salaam based suppliers state that the turnover of dealers is partly because of
failing to pay back credits offered.
33
Dealers in northern Tanzania bordering Kenya (in particular Mwanza and Arusha) were
actively sourcing from Nairobi instead of Dar es Salaam. The number of dealers importing from
outside EAC are very few.
20
dealers, and between dealers and technician that finally interact with customers
are in general weak. That is, each stage in the chain is mostly concerned with its
own problems and opportunities as little cooperation goes across the layers.
Technical & quality issues are normally sorted out at each level and do
customarily not go upstream or down stream in the channel. Long-term
cooperation that goes beyond price is yet to find its way into the solar PV supply-
chains. E.g. prices as set by the suppliers are only recommended prices and the
dealers are free to set any price, which they do. The uninformed customer may
end up paying 50% more than a customer who has requested quotations from
several companies. Further, although most panels come with a 10-year warranty,
very few dealers and technicians inform their customers about this guarantee.
To summarize, supplier-dealer relationships have evolved showing signs of
maturity. Though stronger business relationships the supply chain is not
efficient at controlling quality. Further, the link between dealer technician is
not always solid.
5) Building a functioning market rests on the assumption that most market
actors follow the rules of the game. The rapid market growth attracted the
attention of opportunistic PV companies that recently entered the market. The
effect is that the market is increasingly being flooded by substandard systems
which quite fast have captured a substantial market share. It draws mostly on
unaware customers who dont know their rights and seldom ask for their rights
such as warranty. The problem is accentuated by the minor role played by
branding in the Tanzanian PV market which is not an issue as most customers
value low prices rather than quality
34
. The current efforts by TAREA&SIRG
address the issue but rural buyers, by and large, are not aware of their activities.
4. Discussion and Analysis
The Sida MEM solar PV project was designed to pilot a market-driven approach
for diffusing modern energy technologies to rural Tanzania. It was purposely
prepared to avoid the shortcomings of traditional result-oriented donor projects
that have tended to focus more on short-term output than sustainability. A key
assumption in the project design was that the need for energy services existed
but demand was not well articulated and therefore not known to suppliers and
dealers. Hence, there was mismatch between demand and supply blocking
market growth. Further, effective supply was seen as result of a system rather
than the act of individual actors stressing the importance of distribution
channels and networks among companies. The function of the system is
primarily for efficient delivery of services and products but in the long-term the

34
According to suppliers as well as dealers very few customers request a specific brand while
discussing a purchase. The only well-known panel was the 14Wp FEE sold Umeme Jua and
Chloride Exide, which has been discontinued since the FEE factory was closed.
21
basis for learning, innovation, and diffusing information. A more hands-on
model for matching demand and supply was selected, the so-called 4A model
that is demand driven in which supply is a function of improved access to the PV
technology. The model assumes that once demand is well articulated, the
existing mass of suppliers and dealers will seize the market opportunity.
However, the model was adjusted to the case of the Tanzanian PV market, which
meant that access has to be supported along with demand creation.
The project was a pilot in several respects that focused on testing a number of
methods (activities) for stimulating market development. Hence, there was no
detailed blueprint on how the project should work with the private sector but
rather a guideline provided in the terms of reference for the project. Therefore
problems and challenges were addressed along the way, mainly thru discussions
between the project team and other stakeholders. But as in real life business, not
everything can be anticipated and solved, as shortcomings should be expected.
In summary, the project had the following key accomplishment: Awareness and
acceptance were addressed through the same activities, as these concepts are
viewed as similar in the market. Market campaigns were carried out in all 14
project regions for three months in each region. These campaigns involved
regional dealers more after MTR feedback. Unfortunately, the impact of these
campaigns has not been measured applying rigorous data collection methods.
However, anecdotal interview responses by regional dealers corroborate the
positive effect on number of requests and sales (the projects impact surveys).
The access to PV systems has improved substantially in all 14 regions as 60 per
cent of the dealers, roughly 100, were introduced through the project. Supplier-
dealer linkages were supported by inviting suppliers to regional launches and
organizing visits for dealers to suppliers while in Dar es Salaam for training. The
caveat is that the survey data does not allow for an in-depth analysis of dealer
performance such as comparing new entrants with companies that have been in
business longer, the role of good relationships with suppliers, the use of trained
technicians. Affordability was addressed directly by working with financial
institutions and SACCOs to provide credit lines for PV systems. Indirectly, the
project contributed to new entrants leading to stiffer competition in the market
bringing down prices
35
. The establishment of credit lines never materialized
which had little to do with project activities but stems from the risk-averse
financial sector in Tanzania. The price per Wp installed has more or less been
stable over the course of the project.
The solar Network was tackled by supporting the national solar association,
TASEA. The strengthening of TASEA (nowadays TAREA) has been successful e.g.

35
The prices per Wp installed dropped slightly in early phases but have in the post-midterm
remained the same (i.e. around USD 12-13). Without competition prices would probably have
been even higher. International prices for panels have fallen considerable in 2010-2011 whereas
battery prices have gone up.
22
by supporting SunEnergy, the associations magazine which today is self-
sustaining through advertising revenues, developing a strategic plan,
establishing the SIRG, holding an annual Solar Day, upgrading the web site, etc.
TAREA is acknowledged in the sectors and members have grown from 60 to 280.
A functioning PV association is probably one of the key imprints accomplished
by the project.
Policy was addressed in two ways by the Project: i) controlling quality of
products entering into the market by educating TBS and TRA officials. This
comprises not policy setting per se but implementation of existing government
policy that so far has been poor at enforcing quality standards adopted in the
sector. The outcome of TBS&TRA training is to date not known as concerns are
raised whether trained officials will apply the knowledge gained. ii) Sensitizing
and training local governments to incorporate solar in development plans. This
component has been far more successful as a number of districts have installed
solar as a result of project activities. This is also not policy as such but
stimulating demand as the policy guidelines already allowed the local
governments to procure appropriate energy solutions for schools and health
centres.
The implementation of the project has been guided by several factors: the
original design, the Consultants capacity and interpretation of project outcome,
red-tape and procurement guidelines applied, the Clients (MEMs) capacity and
involvement, the M&E framework - project internal as well as external.
The original design of the project as presented in MEMs program document
(MEM, 2002) provided a detailed outline on how the 4A approach combined with
the creation of a BDS market would support market growth. The overall
approach is drawn from the role of commercial markets to deliver services and
goods. However, these markets should not be left to the vagaries of markets
forces only as supporting functions and rules play a critical role in achieving
sustainable growth. The design may have underestimated the time required and
need for stimulating BDS demand. Although there is plenty of evidence that
direct delivery of BDS is not sustainable, still the importance of BDS is not
acknowledged in the current market. Probably, the initial phases should have
confronted the existing need for BDS to evaluate whether BDS contributes to
success in the market or not. For instance, what are the underlying causes for
poor performance? An in-depth analysis might have revealed that poor and good
performers are not differentiated by the demand for BDS. That is, learning is not
characterized by accessing formal educational and training institutes.
Alternatively, project implementation should have been more flexible to respond
to market constraints.
The capacity and interpretation of the project team was integral in project roll
out due to the specific nature of the design. The role as a facilitator, only, was not
fully clear in hindsight. The interaction with various market actors could have
provided the project more insights into the business problems the project
23
intended to address. E.g. instead of proving free training over the full life of the
project as the project did not see any demand for the services should have
addressed the underlying problem in the BDS market: what is needed to
stimulate demand in BDS? The question may be rephrased as why companies do
not invest in upgrading their skill base? Reviewing the projects performance
using the dichotomy doer or facilitator, the project team undoubtedly felt more
comfortable delivering services directly rather than facilitating external
provision. This is based on how the private sector was involved, handling of
subcontractor relations, and the proactive stance taken. Further, more
worryingly was the approach to do things isolated from the market and
supporting institutions, as the exit of the project will not smoothly take place by
transfer of functions to the market. A lesson learned is that a project with a
novel approach or a method that differs from mainstream should include
discussions with the winning company to make sure that work plans and
methodologies proposed by the consultancy firm are in line with the original
intentions.
Procurement guidelines adopted for identifying and selecting service providers
may not have been conducive to sustainability. Supporting functions to markets
should ideally reside in permanent institutions in contrast to those specifically
developed for the project. Governmental tenders although in extensive use may
not comprise the proper channel for long-term support to markets. The project
basically attracted consulting firms only to supply services (TASEA provision of
services was in fact a consultancy carried out by two members). It would have
been more appropriate to single-source a few institutions or having the tender
documents specify eligibility for tendering the training such as having been
operating in the PV sector for a number of years. The subcontractors selected
may exit from the PV sector once the project is discontinued. An exception is the
case of TASEA consultants who were involved in solar before the project and will
most probably be engaged in solar energy in future as well. The solar sector may
indirectly gain from their experience in training technicians by applying lessons
learned in their permanent positions.
The Client is the Ministry of Energy and Mineral (MEM) that had the overall
responsibility to coordinate and overview implementation as project owner.
MEM assumed quite a passive role in the project
36
demonstrated in weak
interaction and control of the Projects implementation. The funds for
strengthening and building MEMs capacity were never used as intended and
diverted for other purposes. The effect was that the number of reviews of the
project and comments by MEM at AR and steering committee meetings were
indeed limited. MEMs participation was limited
37
to steering and annual review

36
MEMs performance was affected by the lack of a formal functioning PIU and turnover of staff.
37
Selected MEM staff was part of the field trip to Lushoto and Tanga initiated by Sida in
November 2010 which although close to the end of the project contributed to substantial
learning about the project.
24
meetings which provided a weak basis for learning about the project. The effect
of the low involvement has been the message to the Project to go ahead as
planned with little reflection on modifying the approach. This problem was also
highlighted by the timely arrival of the Paris declaration in 2005 that limited the
Embassys extent of hands-on interference with project implementation. E.g the
issues highlighted within the Sida M&E should be brought to the attention of
MEMs PIU and not directly the responsible project team, which complicated a
direct impact
38
on implementation. Further, MEM has not been active in the
projects exit strategy which currently is left to the private sector and TAREA to
address.
M&E framework and setup: The projects M&E was not formulated at any detail
in the terms of reference leaving considerable scope for interpretation by both
MEM and the Project. First, the inception report dealt cursory with impact
surveys disclosing no details on methods or link to the LFA. The inception report
even presented an LFA that had a number of deviations from the one provided in
the bidding documents. The most critical change was the step away from
establishing market and institutional conditions towards objectives that tended
to emphasize quantitative indicators
39
such as sales of panels, revenues, etc. The
support to the solar association and enforcing of standards were acknowledged
whereas indicators for supporting conditions essential to market growth were
lacking. From an M&E perspective measuring the symptom of market growth, i.e.
sales, is a very different undertaking than analysing the root cause for market
development. Secondly, this lead to a delay of the projects impact surveys that
started in September 2008. This may not have affected the outcome of the
surveys negatively as the delay benefited the studies to incorporate more
dimensions of impact. Thirdly, the overall division of labour as regards, M&E
among Sida, MEM, and the Project was neither spelled out explicitly in the
original program document nor in the contracts
40
. Fourthly, partly as a result of
the confusing roles and MEMs poor monitoring capacity, there was no explicit
and independent M&E carried by MEM manifested in less than adequate

38
The model may have worked if the Client, MEM, had been more involved, The feedback from
Sidas M&E had little impact as MEMs PIU did not follow up on the issues emphasised. MEMs PIU
was mainly concerned with screening invoices which although comprised an evaluation whether
activities were delivered as agreed did not include M&E of outcome and impact. Hence, MEMs
evaluation did only focus on what had been done at not on how and possible effects. The
observation that MEMs engagement was poor has not included an analysis of the cause for the
performance such as lack of resources, skilled and motivated staff.
39
The weaknesses of the projects M&E in particular missing links to the original LFA were
brought to the PCAs attention in early 2007, highlighted in the MTR, and brought up in
numerous discussions at ARs, etc but in the end very little changed in terms of the projects
reporting.
40
This was evident in e.g. the Consultants request to include Sidas M&E consultant in the impact
surveys.
25
feedback
41
to the Project. Fifthly, Sidas M&E was mainly performance
monitoring rather than impact monitoring based on Project reporting. Hence,
Sidas monitoring consultants experience of the Tanzanian PV market and
design of the project was instrumental in conducting a balanced evaluation
42
of
projects progress reports. Finally, the exit strategy should have been part of the
design. The institutions and organizations assuming the functions carried out by
the project should have been on board from the beginning. Ideally, these
institutions should have delivered the BDS from the onset instead of the Project
as in the original project design drafted in the program document. This is
verified in the projects exit strategy presented in the RAR and earlier progress
reports, which verifies the difficulties to transfer project functions and skills to
local institutions.
5. Lessons learned and scope for replication
Lessons learned stretch from design, implementation, sustainability, and impact.
The key to designing market-driven projects is actually to make the project less
visible favouring the growth of existing institutions and organizations. The BDS
approach is not a fad, which can be seen in off-springs like the M4P approach
that has come out of the extensive experience of BDS projects. As the approach
hinges on supporting existing functions in the market, including policy,
infrastructure, norms, etc., the preparation of the project design draws on
comprehensive insights of the market supported. This can only be acquired from
a consultative approach in which key stakeholders are involved.
The project was formulated under the aegis of BDS to spearhead the PV market.
The experience points to a few lessons. The project delivered the BDS in an
efficient manner but was less successful in creating a commercial market. This
partly draws on the design and unrealistic assumptions as the need for business
services was assumed rather than verified by extensive research. The guidelines
such as the projects ToR - should probably have stressed BDS market creation
rather than BDS delivery. That is, if the project had e.g. been given the sole task
of stimulating demand rather than provision of such services, implementation as
well as impact on the sectors sourcing of services would surely have resulted in
a different scenario than the one predicted in the exit strategy (see the projects
RAR). On the other hand, stimulation of demand - indirectly leading to capacity
development - is a slow process which probably had led to a low number of
dealers and technicians being trained. From a sustainability viewpoint this may

41
A brief analysis of MEM official reporting to the Consultant indicates that there were very few
concrete suggestions by the PIU that could redirect implementation. Most feedback from MEM
was in fact Sida comments that were accepted as credible and passed on to the Consultant.
42
Sidas M&E did not include any field visits until late in the implementation, which further
allowed the project to deviate from the design as the projects reporting tended to focus on pros
rather than cons during implementation.
26
have been a preferred model. The role of the project, to facilitate, has to be
envisaged in the type of activities delivered by the project team. Hence, the type
of activities proposed by the project consultant in the inception report should
have raised an alarm flag that the project was diverting from the BDS approach.
An additional lesson learned is to check whether the implementing organisation
has understood the pillars of market-driven support. A further challenge in a
country such as Tanzania, where most markets, institutions, policy-making have
historically been exposed to heavy donor influence, comprises the perception of
market-driven development. The influence of free money in the sector will
affect commercial actors decisions which is a remainder that any intervention is
in fact a subsidy that should be short term and catalytic. The presence of free
technical training for PV technicians has, by and large, become the norm in the
sector which will require substantial effort to break. A future intervention in the
PV sector should probably address the type of support needed to create
incentives for market actors to upgrade their skill base. Projects piloting or
testing novel approaches require additional means of educating the Consultant
as a ToR is seldom sufficient for transferring the necessary understanding to the
project team for planning and executing implementation
Although the design is predetermined, the implementation has to allow for
significant extent of flexibility to accommodate for the markets response to the
support activities. The implementation should be based on an interactive
approach in which M&E feeds into the design. An additional lesson learned is
that how to support markets without distortion is not what is being done (such
as training x number of technicians) but rather how it is being implemented
(such as the technicians demanding the training rather than being selected by
the project) that determines its sustainability. Correcting implementation
arrangements is to a great extent dependent on the establishment of a rigorous
M&E framework that provides the proper input to stakeholders. The feedback
will seldom originate from the market, particularly if services had been provided
free of charge
43
. Intermittent discussions between the Client, the Implementing
Agency, and the donor are necessary to avoid falling in the classic trap inherent
of projects sourcing implementers through tender procedures. The vulnerability
of the procurement procedures is that once a consultant is a selected and the
proposal is accepted there is not much the Client can change
44
. The dynamics of
markets highlight the need for a flexible approach, which was demonstrated in
the implementation of the Sida-MEM PV project. The project brought on new

43
The context for delivering appropriate services is fundamentally different if the service
provider is actually directly paid by the participants as opposed to third party reimbursement
and free participation. E.g. if the providers client had been the dealers instead of the project, the
training had been organized differently.
44
The norm in tender procurement is to either reject a proposal or accept as it is. To use the
proposal for negotiations between the client and the consultant is not common, as this would
give the winning bid an unfair advantage towards the ones that were rejected.
27
actors as a result of feedback, e.g. VETA, SIRG, etc, but was regrettably less
flexible in adapting the methodology.
Sustainability in market-driven projects applying a BDS or M4P approach
correlates not only to the exchange of goods between buyer and seller. The
exchange is the core function of a market but draws on a number of factors to
establish a sustainable market that leads to an optimal balance between demand
and supply. The implicit assumption in the BDS model is the role of upgrading
skills and knowledge to sustain growth. Hence, the explicit demand for capability
building through accessing services (external to company) comprises an
indicator of a maturing market. Nonetheless, developing markets are still
characterized by MSMEs operating informally mostly learning by doing in an
experience-based fashion. This focuses additional attention to the design and
implementation of projects supporting the skill base of such companies as few
formal resources are spent on learning. Further, long-term growth draws on the
existence of a number of functions to support the market exchange. The PV
project emphasized BDS, networking, and policy as the pillars of sustainability. A
key lesson learned is that the imprint by direct intervention in the market place
is most probably short-term whereas the institution building such as TAREA will
have more profound and far-reaching effect on the market. Hence, private sector
capacity should, as stressed earlier, take the detour through building institutions
and guidelines, although direct support may reap quick rewards. The market
needs guidelines on rules of the game regulating obligations such as between
suppliers and dealers, and between retailers to consumers. A corollary is that
project impact is not necessarily measured directly as (short-term) market
growth but rather in the establishment of institutional and market conditions to
sustain growth (support functions, rules, policy, capability).
Further, the private sector should be consulted on major actions in the sector to
verify that activities rolled out will have the intended impact. This is in particular
important for capacity building programs that deliver services demanded by the
private sector. It is also important that private sector and market supporting
institutions should be involved early in project implementation, preferable at the
design stage, to ensure sustainability. Closer consultations with the private
sector would as well mitigate potential market distortion activities such as the
selection of participating MSMEs which should be done as close as possible to
market principles. E.g. if dealers are approached, selection criteria applied by the
sector should be used rather than only relying on project standards.
Learning is closely linked to previous experience of the companies as few PV
dealers and technicians were new in business coming from other lines of
business. Hence, targeting start-ups may require a different set of support
packages as support to market hinges on the level of market maturity; e.g.
supporting variety in immature market by facilitating the entry is often effective
whereas consolidated markets with large actors need a different approach such
as supplier development programs for MSME suppliers.
28
The role and function of the institutional framework: Supporting market growth
and market actors is necessary but not sufficient as long-term development can
only be sustained if the proper institutions are in place. The key lesson is to focus
attention the function played by various institutions and not the institution per
se. The existence and function of a sector association is of outmost importance
for addressing general issues and creating joint programs. TAREA which recently
expanded into renewables in general will constitute a key partner for future
projects. The Project established and supported a number of functions but did
not address such as consumer advocacy, university-business cooperation,
warranty and guaranty issues, and certification of dealers and technicians.

6. Way forward for a Sida renewable energy program: ideas
for thought
Even though it has proven to be challenging, future interventions in the
renewable sector should try to adopt a market development approach similar to
the original design of the PV project. A market development approach (by using
for instance the M4P concept, Making Markets Work for the Poor) or the B4D
(Business for Development), has a high potential to contribute to broad impact
and sustainability in the markets delivering renewable energy services to people
in poverty.
The concept stems from Making Markets Work for the Poor, in short M4P,
which is designed for improving the understanding of market systems that
involves poor people, and how to bring about systemic change in those markets
systems to benefit the poor to a larger extent. In this case of renewables, the poor
are found either as users/customers or in the informal sector as MSMEs (Micro,
Small and Medium sized Enterprises). The poor found in the MSME sector
comprises, in a relative sense, not the poorest segments of the population, as
there is normally adequate liquidity and solidity to set up and run a micro or
small business establishment. The MSMEs are as well potential or existing
suppliers of renewable energy services and products.
The M4P approach is specifically designed to address underlying causes rather
than just focusing on symptoms in malfunctioning markets. It draws on in-depth
knowledge of the various players in the markets and their respective function.
The term market system defines a wider set of actors that support or interfere
with the market in question. The approach is indirect in the sense that support
should normally not be given directly to companies but to market supporting
functions by facilitating activities performed by existing institutions. However,
targeted support to specific companies in the market can be justified if it leads to
innovation, increased competition, piloting of a new market features. The
general rule is to establish and support institutions, regulations, praxis, and so
forth that affect the interplay among market actors, i.e. building a platform so the
market can learn how to sort out issues. A caveat may be that overly focus on
29
the P might block the formation of dynamic and growing markets which
normally comprise a mixture of small and large firms. The inclusion of micro or
small firms in the value chains that also include large companies is often crucial
for overcoming low-level equilibrium markets featured by little incentive and
opportunity to develop.
Below follows some suggestions on the way forward:
1) Innovation system and renewable energy markets: The M4P approach in a
wider sense could be applied in a programmatic manner to embrace
stakeholders not normally visualized in energy programs and projects. The
sustainability of any sector depends on the totality of resources available and
developed to drive the sector forward in a systemic fashion. Improvement and
upgrading is more than operational skills and long-term growth hinges on the
mobilization of the innovation system to supply knowledge and skills. Sida
SAREC has substantial experience of mapping and supporting such as systems,
particularly in Tanzania. COSTECH (Commission for Science and Technology) is
currently considering the support to an energy innovation system. Preliminary
meetings have been held with stakeholders. The advantages of including three
program areas; Research, PSD, and Energy in one cross-cutting project would
primarily fall in the facilitation to address the underlying causes for poor
economic development in rural areas. COSTECH could act as the Client for an
Innovation System Initiative that would map existing R&D resources, set up
criteria for academic research funding of COSTECH s existing funds, set
guidelines for diffusion of research funding, how to involve the sector in question
to advice on research topics, etc.
2) Expansion through establishment of competitive value chains (VCs): Most
markets are characterized by their structure as regards the linkages between
companies in the distribution channel. A value chain is in fact a
method/approach for analysing the chain of activities between e.g. a producer
and wholesaler up to the sales point. A value chain perspective is useful for
understanding the development of technology across firms, the value added by
each step in supplying goods and services, the importance of interconnectedness
among companies to develop a sector (the whole chain has to be targeted). The
rationale for developing VCs is based on the premise that small enterprises can
grow and become competitive when they have clear and well-developed
strategies set by competent and demanding value chain members. The
performance of downstream companies is often dictated by the norms set in the
channel (chain) set by larger upstream companies. This enables them to target
and access market opportunities for selling their outputs. Addressing issues in
the value chain may also focus on embedded services. The establishment and
growth of MSMEs are crucial in the long term to develop any given market.
Hence it is important to understand the formation of MSMEs and the drivers for
upgrading skills and capabilities. Barriers to enter must be assessed such as
bureaucracy, skills and capital required, type and level of technology, access to
information and search processes.
30
Some questions arise: are there certain types of value chains which imply more
learning opportunities for MSMEs in than others, or does the companys
experience determine whether a producer/trader succeeds in upgrading? What
type of relationships characterizes the value chain? How is information shared
and diffused in the VC? These and similar questions will form the basis for
preparing a VC Initiative. The initiative should probably be hosted by REA but
could also be set up under the Private Sector Foundation.
3) A Poor mans perspective: An M4P project may on the other hand focus on the
rural setting and how energy could support the inclusion of farmers in the
formal economy improving access to basic necessities such as financing,
education, and information. Most poor people are constrained by lack of skills
and education, which means that inclusion will be a key component. Such a
project would need to emphasize the transformative role played by energy in
establishing new and competitive rural businesses based on productive use.
This may entail the development of rural communities applying a non-grid
paradigm that springs from a multitude of renewable energy sources such as
micro-grid, solar, biofuel. Starting from a PSD perspective rather than energy
would focus attention the role of business and income generation foremost. The
benefits at the individual level will be downplayed unless these form the impetus
for demand. The challenge with community-based projects mainly resides in
reaching wider impact beyond targeted pilot communities. A possible approach
is to support the diffusion of generic technologies that could be adopted nation-
wide with the required M4P framework in place. A key question is whether
expansion of energy services should be pro-poor or neutral?

Issues to consider at the preparatory stage
The lessons learned from the PV market facilitation project highlight a number of
conditions that will affect the design of an intervention. i) The maturity or size of
the market will set the scene for the type of support needed. Very small markets
may need demand creation interventions whereas larger markets may lack
coordination, standards, low RoI, etc. ii) The existence of a driver for
development expressed by buyers, legislation/standards, competition. Markets
with no articulated drivers will seldom excel and on contrary reach a status quo
early. iii) A joint platform for lobbying, awareness, and addressing challenges
such as a sector association is paramount for sorting out general issues that
individual companies cannot lobby in a credible manner. iv) Cooperation among
key stakeholders requiring an understanding that they are all in the same boat
and joint efforts is the only solution. v) The local innovation system for a specific
technology sets the parameters for capability development in the long run. Local
academic and industry R&D are important to adaptation and acceptance of
technology. vi) Linking of small and large firms in value chains are a major
means for creating rural markets and upgrading the MSME segment. vii)
Institutions that support and guide the market to develop fair trade.
31
Is the government ultimately responsible to deliver energy services? If so, the
challenge is to see how the governmentin collaboration with the private sector,
communities, and outside partnerscan meet this fundamental responsibility.
The tradition has been that the access to electricity is a service that should be
provided by the government. The pendulum as swung to the extreme in some
countries leaving it to the market. Even if the government has failed to provide
energy to the poor it does not mean it should leave everything to the private
sector as the energy markets need guidance. REA has started to follow the PPP
paradigm.
Technology choice should be left to the private sector although there may be
guiding principles by government institutions to secure minimum standard of
products and services.







32
List of references and interviews
Interviews
Camco, Jeff Felten,
TAREA, Matthew Matimbi
Ensol, Hamisi Mikate
Sollatek
Davis&Shirtliff
Cloride and Exide
TaTEDO, E. Sawe
Aglex,
Rex Solar, Frances
Umeme Jua,
D.Light, Pepijn Steemers
Costech, Bakari Omari
University of Dar es Salaam (Pr. Kimambo, Pr. Kivaisi)
Solar Sasa

References:
MEM (2003), Facilitation of PV Market Development in Rural Tanzania, project
document, MEM
Sida (2002), The RES Market Report, Swedish Embassy Tanzania
Sida (2006), Comments on the ESD Inception report, the Sida/MEM project on
the Facilitation of PV Market Development in Rural Tanzania, Lennart Bangens
Camco (2011) , Sida/MEM Solar PV Project: Results Analysis Report, MEM
TAREA (2009), Report on Tanzania Solar PV market Tends study for 2008-2009,
Sida-MEM Solar PV project

Impact Surveys (Camco):
a) Dodoma-Survey 210610
b) Kigoma-Survey 090909
c) Pwani-Survey 151008
d) Lindi Survey_ 220311
e) Mtwara-Survey 070409
f) Singida_Tabora_Manyara_Ruvuma Surveys 280611
33
g) Tanga-Survey
h) Rukwa_Mbeya-Survey 220910
i) Morogoro
j) Where is the 14
th
region

Camco progress & WP reports
a) P&WP 2006
b) P&WP 2007
c) P&WP 2008
d) P&WP 2009
e) P&WP 2010/11









1
Appendix I LFA
Intervention Logic Measurable/
Verifiable Indicators
Means of
Verification
Important
Assumptions
Observed Impact
Development
Objective
Increased demand for
modern PV technology to
meet basic electricity
needs in rural areas as a
means to improve living
standards and community
development.
Increased uses of PV
systems in rural areas
such as households,
SMMEs, schools and
health clinics.
Statistics,
surveys,
reports,
evaluations,
REA data
The uptake of PV has increased
substantially though the effect on
development has not measured
Immediate
Objective
Market and institutional
conditions created to
enable a transformation of
the rural energy use
towards an increased
diffusion of solar PV
systems
The yearly market for PV
systems in rural areas has
doubled in 5 years. The
number of PV outlets in
regional capitals have
doubled in 5 years.
Statistics,
surveys,
evaluations,
REA data
A market can be
created for solar PV
systems in rural
areas.
The market has grown rapidly and
is at exit 10 times larger than at
pre-project.
Outputs

1. Awareness created
1a) PV market customers
have increased knowledge
of PV systems.
1b) There is access to
independent consumer
information
1c) Policy makers and
sector ministries have
incorporated PV options in
regular planning
procedures

2. Acceptance achieved
2a) End-users are actively
1. PV systems are
considered as a viable
option to traditional
energy sources.
Consumer information
centres established.
PV systems included in
government policies,
guidelines and planning
procedures.



2. Number of requests
and phone-calls. Number
1. Surveys in
rural areas,
site visits,
sector policies,
guidelines and
procedures






2. Market
survey

The presence of a
market economy in
the rural areas and
market potential are
not over-estimated.

Overall government
policies continue to
favour market-
oriented initiatives.

Financial actors are
willing to consider
credits for PV
systems.
a) The RAR states that awareness is
widespread though there is no
reference study to substantiate the
level of awareness. Consumer
information is provided by TAREA.
A number of local authorities have
started to plan for PV as a means to
electrify health centres. At this
stage any wider conclusions
regarding general awareness will
remain a mere conjecture, as the
data has not been collected.
b) The RAR provides data on the
number of firms and technicians
trained but little information on the
2
demanding PV systems
and PV information
2b) Marketing in and to
rural areas have increased
2c) Rural PV technicians
present

3. Access improved
3a) Sales outlets
established in a number of
regional capitals
3b) Distribution channels
and store-keeping of PV
systems in place
3c) Installation in rural
areas offered
3d) Increased availability
of credits for PV systems

4. Affordability improved
4a) The costs in the PV
industry are reduced by
40% in 5 years.
4b) Consumer prices have
been reduced by 25% in 5
years.

5. Increased demand for
PV systems increased by
20% annually.

6. The Solar Network has
expanded and includes
coordination, cooperation
and linkage activities.
of rural PV technicians
trained and in operation.







3. Number of PV outlets
in regional capitals,
availability of installation
services, availability of
credits for PV systems









4. Costs reduced by 40%,
and prices reduced by
25% in a 5-year period.





5. 4,500 systems (200
kWp) sold through the
private market in rural
areas in 5 years









3. Market
surveys, REA
statistics











4. Cost and
price statistics,
market
surveys




5. Market
surveys, sales
statistics


Market actors are
willing to cooperate.



New Energy Policy
approved


REA is established
status such as level of activity, fundi
linked to dealers, money spent.
There is additional information to
be found in the impact surveys that
reveal that most dealers are still
active (70%), and inquiries increase
considerable after market
campaigns (not quantified), a small
number of dealers have printed
brochures. Dealers and technicians
exist in almost all district towns in
Tanzania but how aggressively they
market in rural areas is not known.
c) The project has succeeded in
establishing outlets in almost all
district towns though the quality of
services has not been evaluated.
Around 60 % of the dealers trained
i.e. 100 started solar business as
a result of the project. Many dealers
identified suppliers through the
project but few stay loyal to a
specific supplier. The few that have
strong ties with the supplier may be
offered services and discounts not
available to new and unknown
dealers. Credit systems are not
available as 99% are cash sales.
d) The RAR discloses little
information on cost reductions
more than that profit margins
among dealers could be as high as
50%. Regarding price reductions:
retail prices falling from USD
15/Wp in 2005 to USD 12 in 2011.
3


7. Mini-ESCOs have been
established on a pilot-
basis.


6. More actors involved in
the Solar Network, and
regular coordination and
linkage activities
performed

7. At least 100 mini-
ESCOs offering portable
solar lanterns on a
renting-basis are in
operation.
6. Project
reports,
interviews,
documented
network
activities

7. Project
reports, site
visits
Whether the average rural buyer
can afford PV more in 2011 than in
2005 remains unanswered as
purchase power and cost of living
has not been addressed.
e) TAREA has grown its
membership base from 60 to 280
over the course of the project.
TAREA was reorganised, appointing
a new executive secretary, as well
as inviting renewable energy actors
outside solar. TAREAs expansion is
surely a result of the projects
continued support in combination
with the appointment of new
management. As regards linkages
and cooperation the project did not
explicitly address this in general
but focused on supplier-dealer
relationships. The formation of
SIRG may be viewed as an effort to
jointly solve problems facing the
sectors.
f) The pre-project annual market,
estimated in 2002, was a mere 100
kWp and largely project driven.
Rapid market growth coincided
with the launch of the project in
2006. The LFA specified that
demand for PV systems would
increase by 20% annually but this
was projected under a slow growth
scenario as pointed out by Camco
(2011a). The market rose to 450
kWp in 2008 and according to a
4
TAREA survey to 1.5 MWp in 2010.
The project has surely contributed
to the fast rise but there is no study
conducted on the drivers for
growth, in particular those external
to the project.
g) The mini-lantern component was
dropped from the project due to the
market situation.
h) SIRG is a sign that a number of
firms have realized the need for
cooperation to address joint issues.

Activities 1. Business
development
support to PV
companies;
2. Development of the
Solar Network;
3. Policy and institutional
development;
4. Stimulation of end-user
market
Activities are performed
as agreed in Annual Plans
of Operation.
Plans of
Operation,
monitoring
reports,
follow-up
reports,
annual review
reports
A) BDS successfully delivered
though the BDS market has not
been created. Transfer of activities
to VETA has been initiated but long-
term impact is not known.
B) The dealer networks have
expanded quantitatively whereas
the quality of supplier-dealer links
is not known.
C) Policy per se not addresses but
the local authorities sourcing of PV
has increased. Key institution
developed is TAREA.
D) Project activities successfully
built awareness and demand
though the handing over of the
function to e.g. PS, TAREA or REA is
not fully known.
Inputs

Sida funds for technical
Assistance (27 MSEK)


5