Energizing Rwanda’s Development: Opportunities and Strategies for Catalyzing Productive Use of Energy

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Rwanda, one of Sub-Saharan Africa's fastest-growing economies, holds untapped potential to energize its development by leveraging productive use of energy (PUE). A recent World Bank report, Energizing Rwanda’s Development: Opportunities and Strategies for Catalyzing Productive Use of Energy, highlights how strategic adoption of modern energy technologies could drive exponential productivity and economic growth. ‘

This initiative aligns with the World Bank's Mission 300, which seeks to provide access to sustainable energy for 300 million people in  Africa by 2030, empowering communities and driving inclusive economic growth. However, affordability barriers and a nascent market hinder the widespread adoption of these technologies.

The adoption of PUE technologies could transform Rwanda’s economic landscape. By reducing time and resource inefficiencies, these technologies unlock income-generating opportunities and foster sustainable growth and social welfare. With initial funding and strategic policies in place, Rwanda can ignite a virtuous cycle of development, empowering communities and ensuring a brighter, more inclusive future.

Key messages from the report:

• Rwanda has significant opportunities to enhance development through PUE technologies.
• Holistic strategies, including financial support, capacity building, and policy interventions, can catalyze PUE adoption and stimulate economic growth.
• Four technologies in particular—solar water pumps, solar refrigerators, electric motorcycles, and electric pressure cookers—have high potential for market expansion.
• These technologies are pivotal to achieving sustainable energy access.

The four PUE technologies identified by the report, with high potential for immediate and long-term growth, are:

1. Solar Water Pumps (SWPs): Only 8.1% of small-scale farmers currently use irrigation, with 2% relying on machine-powered solutions.
2. Solar-Powered Refrigerators: Although 100,000 refrigerators are in use, adoption of solar-powered options remains low.
3. Electric Motorcycles: Offering sustainable alternatives for transport and logistics.
4. Electric Pressure Cookers (EPCs): Adoption is at a mere 0.19%, yet EPCs present immense potential for households and institutions.

Pilot testing demonstrated substantial economic benefits across all technologies, with internal rates of return ranging from 17% for solar pumps to 45% for EPCs. The estimated short-term market investment potential stands at $152 million, expanding to $243 million in the long term.

Table.1 Internal rate of return, by technology

To realize the full potential of PUE technologies, the report recommends a three-pronged approach:

1. Strengthening the Market:

Access to Finance: Affordable working capital is critical for suppliers to build strong retail networks and stock adequate inventory nationwide. Dedicated credit lines and guarantees can reduce financing costs, lowering product prices and enhancing accessibility.

Consumer Support: Flexible repayment terms and results-based financing models can help consumers overcome affordability barriers, fostering long-term market growth.

Awareness Campaigns and capacity strengthening: Promoting PUE technologies through targeted demonstrations, especially in rural areas. Building supplier capacity is equally critical for sustaining market growth. Training in areas such as business development, after-sales service, and quality assurance will equip suppliers for future commercial financing opportunities and enhance their ability to serve their markets effectively.

Holistic interventions to catalyze productive use opportunities

2. Enabling Policies and Collaboration:

Policy Reform: Reducing import taxes and adjusting electricity tariffs are critical to driving PUE adoption. Enforcing quality standards will ensure reliability and trust. While initial tax revenues may decrease, these changes will boost productivity and electricity consumption, creating long-term economic gains.

Cross-Sector Coordination: Effective collaboration between ministries and the private sector is essential to advancing PUE. Expanding the PUE Sectoral Working Group to include agriculture and trade ministries will strengthen policy design and implementation, ensuring a coordinated approach to Rwanda’s energy-driven development.

3. Dedicated Funding:

Creating a funding facility is key to breaking market entry barriers for high-potential PUE technologies. The World Bank’s ASCENT Program in Rwanda has established a PUE facility to kickstart adoption, scalability, and awareness. Starting with four key technologies, it offers credit lines, RBF subsidies, and technical support, using market insights to identify and scale future opportunities.

This study was funded by the World Bank’s Energy Sector Management Assistance Program (ESMAP)v, which collaborates with over 20 partners to promote sustainable energy solutions in low- and middle-income countries.