The Covid-19 global pandemic is having a significant global economic impact. Restrictions on social interaction and mobility are negatively affecting the way companies interact with and serve their customers. At the same time, consumers - and especially low-income families - are being forced to rethink their domestic spending priorities and are no longer able to pay for certain services. These factors will consequently lead to a decline or even to the closure of commercial activities for a yet unknown period of time, and many companies are likely to go bankrupt.
The Energizing Development Programme (EnDev) Mozambique implemented by GIZ and funded by Germany, the Netherlands, Norway, Switzerland, and the United Kingdom, works with the private sector solar photovoltaic technology providers to provide access to clean and sustainable energy, especially in rural areas outside the network. These companies are venturing into a very risky market, providing essential energy and financing services (PAYGO) to a demographic group of low-income customers.
To ensure that customers of off-grid energy suppliers continue to have access to energy and to avoid the breakdown of PAYGO photovoltaic solar energy suppliers in Mozambique during the Covid-19 pandemic, as a result of the macroeconomic recession, the EnDev Program introduced a Support Mechanism for companies vulnerable to the increase in non-compliance with the payment of installments, COVID-PAY, which will allow companies to offer their customers special promotions that, in turn, will significantly reduce the overall electricity costs of end users during this period.
COVID-PAY is providing funds to PAYGO suppliers of solar photovoltaic technology to enable them to launch special and limited promotional programmes designed to ensure that customers can maintain their energy service during the Covid-19 pandemic and have a lower cost on their energy consumption.
As each company has a unique business model, each company was invited to present a concept for a promotional program that adapts to its business and satisfies the predefined requirements.
Companies must provide verifiable evidence that benefits equivalent to the total value of funds received have been transferred to their customers. The requisition and disbursement of funds will be based on the results, after verification.
The fund is implemented through a specific window integrated in the already operational results-based financing fund "Fund for Sustainable Access to Renewable Energy" (FASER), which currently consists of three results-based financing windows.
The COVID-PAY fund was initially designed to be active for a period of 6 months. The purpose of this instrument is to ensure that economically vulnerable populations can maintain access to energy and ensure business continuity for companies during the pandemic during the Covid-19 pandemic. The scheme will help to maintain the business relationship in the critical circumstances created by the pandemic.
When implementing funds through a promotional program - an instrument normally used by the private sector to promote sales - the risk of having a negative influence on customers' payment habits is reduced.
The call for proposals was launched on 1 June 2020. The proposals were evaluated, the contracts were signed and the companies have already launched the first promotions.
Source and Image © FASER