ARE member SNV Netherlands Development Organisation is among the first organizations world-wide piloting Results Based Financing (RBF) in the energy sector, aimed to overcome market failures constraining private sector delivery of modern energy services to isolated communities. The key feature of RBF is payment upon delivery, with the private sector expected to take the full risk until the moment of delivery of the contracted results.
In Tanzania, the RBF initiative was launched for pico-solar PV lighting applications in the Lake Zone, which is considered to be the first operational RBF fund functioning under the global Energising Development (EnDev) programme as managed by GIZ and funded by DFID. The RBF initiative is focused on the application of a temporary financial product in mainstream banking amounting to €1 Million that serves to assist the private sector in developing the market for pico-solar products in isolated rural areas. TIB Development Bank (TIB) has been selected to host the RBF incentive fund. After designing and setting up the RBF facility, SNV’s main role in this initiative is to broker relations amongst actors that ensure fair, transparent and verifiable financial transactions throughout management of the fund.