Electricity for rural Mozambique
Since electricity came to Inhasonha village in Mozambique in 2009, the welder and bicycle repairman Inacio Yemusee Dyaha is much better off financially. The electricity also means less work for the women, who no longer need to go to the market every day when they have a refrigerator at home.
The electricity is the result of a Sida-funded electrification project that has been running for several years. The expansion of the country’s electrical grid is slowly moving forward. During the last ten years, the number of households with access to electricity has almost doubled.
But why did Sida choose to finance this particular intervention, and what does the process look like, from the very first discussions until the light comes on in Inacio Yemusee Dyaha’s little workshop?
This is how the intervention came about:
1. COOPERATION STRATEGY*: Sweden’s cooperation strategy for Mozambique states the focus and guidelines for the areas or sectors that Sida should work within. The overall objective of the strategy is to reduce poverty in the country and one of the three prioritized areas is the energy sector. For more than 30 years, Sida has cooperated with Mozambique and its state-owned electricity company.
Sida’s counterpart in a cooperation country can vary, depending on who is considered to be most suitable to carry out a specific development intervention.
2. DIALOGUE: Sida’s staff in Maputo has constant discussions with the country’s electricity company – the only actor in the country that transmits and distributes electricity. Based on the company’s plans to expand the electrical grid, specific prioritized project proposals are identified and presented to Sida and other donors, who together decide who will finance what. In accordance with Sweden’s focus on enabling poor people to improve their lives, Sida prioritizes electrification of Mozambique’s countryside and its smaller communities where people are generally very poor with lower solvency.
3. PLAN APPRAISAL: Sida receives a proposal for a project from the cooperation partner and makes a first assessment of whether or not the intervention is relevant according to the cooperation strategy. Mozambique’s electricity company also performs a feasibility study, including all financial and technical aspects of the proposed project.
The entire electrification programme to increase access to sustainable energy for poor people in Mozambique runs for a long period of time and is divided into separate projects, which are all comprehensive and involve large investments. Sida’s intervention consequently contributes to the long-term goal for the electricity company’s electrification programme.
4. PROJECT DOCUMENT: Based on the feasibility study, the electricity company establishes a formal project document, including proposals for funding, which is sent to Sida along with an application for support. The entire process of developing a project or programme document can take several years. The cooperation country usually creates the document on their own, but should they lack the required technical expertise, Sida can provide consultancy support. This can better guarantee a successful result that meets Sida’s and internationally recognized requirements.
5. ASSESSMENT AND DECISION: Sida makes an assessment and risk analysis of the project proposal, based on the project document and in dialogue with the cooperation partner. Among the things we look at are the project’s potential to reach its objectives as well as the organisation’s capacity and internal steering and control functions. Moreover, the proposal is assessed against a rights and poverty perspective, and how it contributes to the three thematic priorities that should guide all Sida’s work: democracy and human rights, environment and climate change and gender equality and womens' role in development.
Sida’s head office in Stockholm takes the decision to support the project since the sum exceeds 50 million SEK**. For smaller sums, the decision is taken directly by Sida’s head of development cooperation at the embassy in the cooperation country.
6. CONTRIBUTION AGREEMENT: The agreement with Mozambique is signed by Sida and representatives from the cooperation partner. From now on, the electricity company is the project owner, whose role is to carry out the intervention and report to Sida.
7. PROCUREMENT: It takes time to launch an infrastructure project. With the agreement in place, the electricity company starts procuring a technical consultant who can lead the work, act as the electricity company’s extended arm and supervise the entrepreneurs. This service is procured internationally since the required competence does not exist within the country. To strengthen the electricity company’s capacity and negotiation skills, Sida can provide assistance through an independent consultant, made available to the company. This is an important role, contributing to procurement rules being followed and a transparent process.
The technical consultant, which consists of a team, then helps the electricity company to contract entrepreneurs to construct the electric cables. This is also done on an international level, but national entrepreneurs carrying out less complex construction work are now starting to establish themselves within the country.
8. IMPLEMENTATION AND MONITORING: Sida’s Programme officer continuously follows up the project in accordance with the intervention agreement. In addition to the regular reviews, a formal performance monitoring meeting is held every month with the electricity company, where reports are presented on e.g. budget, costs and progress in terms of results. An independent monitoring consultant is also contracted, who regularly visits and monitors all the partners implementing the project. The monitoring consultant’s reports are an important complement to the monitoring work carried out by Sida and the project owner, and possible issues that come up in the reviews are discussed during the performance meetings between Sida and the electricity company. This helps both Sida and its partner address any potential problem early. If, for instance, the entrepreneurs mismanage their assignment, the contract can be cancelled and new entrepreneurs be contracted.
Infrastructure projects often take long time to implement, partly due to the electricity company’s lack of know-how. But there are other factors that make it hard to work in many cooperation countries: difficulties in finding people and transportation, bad communication or customs regulations that could, for instance, keep a transformer in the port for half a year.
9. PAYMENT: Support for the intervention is disbursed over several years, but only after the interim reports on financial and performance monitoring have been approved. Infrastructure projects often have a lot of expenses initially, whereupon the size of the payments may gradually decrease. 10 per cent of the funding is withheld until the project is completed. This is common international practice for infrastructure projects even outside the development cooperation. The total cost of an infrastructure project often amounts to between 150 and 450 million SEK.
10. RESULTS AND EVALUATION: Upon termination of the project a completion report is produced. The completion of the project is often highlighted with the country’s president attending an inauguration of the electrical grid in a village. Sida often evaluates the work carried out, both during and after the project, to determine the long-term effects. A baseline study of people’s socio-economic situation was carried out at the start of the electricity project. New studies are then carried out five and ten years after completion of the project to measure the extent of which the electrification project has helped reduce poverty in the area. The surveys are carried out by local consultants.
About Sida's bilateal cooperation:
Sida’s bilateral cooperation is the largest part of the Swedish aid, funding projects and programmes in a total of 33 countries.
The choice of cooperation partner for a contribution varies depending on who is considered most suitable to carry out the specific intervention in the cooperation country. It can be the ministry, state-owned companies or other actors, such as civil society organisations, the private sector or multilateral organisations. The latter is the case in, for example Ethiopia, where Sida does not cooperate directly with the state.
In addition to direct support to cooperation partners in the countries, bilateral aid can be channeled through Swedish organisations that have a framework agreement with Sida, through government agencies or private companies.
To make better use of our resources and to improve results, Sida aims to work with fewer interventions, and rather increase the volume and/or duration of them. In general, interventions should focus more on larger programmes, but when it comes to infrastructure projects, which are major efforts that extend over a long period of time, Sida often supports interventions divided into individual projects. Sida also has a mission to work innovatively, as well as acting as a catalyst to promote further cooperation.
* The bilateral strategies will be replaced by so called results strategies during 2012-2014. These should more clearly link the interventions in a country to the specific results that Sweden has contributed to, during a certain period of time.
** Decisions to support a bilateral programme or project are taken on different levels: for interventions up to 50 million SEK, decisions are taken directly by the embassy in the cooperation country. Contributions of between 50 and 200 million SEK are approved by the relevant head of department at Sida’s head office in Stockholm. Interventions exceeding 200 million SEK are approved by Sida’s Director-General. Programmes or projects with a budget above 500 million SEK require a decision from Sida’s board.