Bridging Energies: Shaping Green Financing in Uganda's Development Landscape

My goal of spending the summer of 2023 working in the Global South came to fruition, courtesy of the Environment for Development - Makerere University Centre (EfD - MaK), the  Freeman Spogli Institute for International Studies (FSI), and the Stanford Sustainable Finance Initiative (SFI). Being on the ground in Uganda to work on green finance seemed the right call. I have spent four years in the Global North, primarily in the Netherlands and Luxembourg, working on European Union (EU) international economics issues, which included green finance. One of the biggest challenges I encountered was the conflict of interest between donors and the projects they prioritized and the beneficiaries and the projects they prioritized. In this aspect, disagreements about green financing were especially pronounced.

In my first year at Stanford, I participated in a series of learning, unlearning, and relearning experiences to understand better how to make economic decisions work well for both developed and developing countries. I was excited about a summer fellowship that would allow me to leverage my expertise from the Global North and newly acquired knowledge from Stanford to contribute toward addressing the economic development challenges of the Global South. Fortunately, the EfD - MaK Center in Uganda awarded me a fellowship opportunity, and with the funding of FSI and SFI, I was able to spend 12 weeks working in Uganda. Being in Uganda was not a novel experience for me. I was born and had previously worked there both as a development consultant and as a research assistant on different randomized controlled trial experiments.

Working in Uganda, however, and becoming immersed in the Global South perspective of green finance was new. My duties as a Visiting Fellow at EfD - MaK made the Fellowship an entirely unique and rewarding experience. I conducted policy analysis on green finance, collaborated with stakeholders from the public sector, civil society, private sector, and academia, contributed to high-level policy dialogues, and took part in some of the ongoing projects on energy financing. This work gave me an understanding of the distinctive nature of the energy and climate environment in Uganda. Accomplishing development objectives, such as eliminating poverty and promoting prosperity for all, requires energy sources to be available. Ensuring essential levels of energy supply is also of mutual interest to donors and country beneficiaries.

In Uganda, green finance is particularly important in addressing the energy poverty problem and allowing the country to meet Uganda’s Nationally Determined Contributions (NDCs). UBOS- Uganda Bureau of Statistics’ 2018 National Electrification Survey shows that 66% of Ugandans are multidimensional energy poor, measured by access, cooking solutions, and end-use technology. In its NDCs, Uganda has pledged to reduce its greenhouse gas emissions, most of which are from agriculture, forestry, and other land use (AFOLU), by 24.7% before 2030. These commitments call for green financing approaches that promote access to clean and affordable energy for most Ugandans who are currently either underserved or unserved. Climate finance is essential to help vulnerable communities deal with the prevalent consequences of climate change. Uganda now faces a $28.1 billion climate financing gap and has been able to mobilize only $4 billion. Boosting green financing from all players, local or international, public, private, for-profit or not-for-profit, will help the country build climate resilience and adaptability and meet its broader green growth objectives, as specified under the NDCs.

International donors have helped Uganda make some progress towards meeting the UN Sustainable Development Goal - SDG 7 - Ensure access to affordable, reliable, sustainable, and modern energy for all. The National Planning Authority reports that Uganda’s electricity access has increased from 24% in 2018/2019 to 57% in 2021/2022, and its grid reliability from 90% to 98%. However, a lot still needs to be done. Uganda’s biomass usage, primarily for household cooking, is still at 80% despite efforts to reduce it to 50%. Ugandan household emissions are estimated at 30 tons of carbon per year compared to five tons for the United Kingdom.

There are serious issues related to energy affordability. Uganda’s level of income inequality is high, with a Gini Index of 0.427.¹ The Borgen Project reports that Uganda’s richest 10% receive 35.7% of the national wealth. In comparison, the poorest 20% receive only 5.8%. This indicates that a larger share of the population cannot afford clean energy. Even though policy dialogues sponsored by government officials have resulted in progress in reducing electricity costs, electricity remains unaffordable for many economically disadvantaged individuals.

This summer experience taught me that conditions within Uganda are similar to those of many countries of the Global South, particularly sub-Saharan Africa (SSA), that experience energy poverty. International Energy Centre (IEC) research has shown that the COVID-19 pandemic worsened energy poverty. IEC also projects that about 560 million people from SSA will still have no electricity access in 2030. My experience at EfD-Mak taught me that addressing country technical gaps and prioritizing green projects in planning, programming, and budgetary processes could enable countries to bridge the energy gaps.

There is also a need to leverage the private sector, entrepreneurs, and financiers to invest in and contribute to Uganda’s green growth agenda. However, this necessitates that the government implement an enabling business climate to attract local and international players. Coordinated efforts are also essential to combat dependency on biomass, which increases greenhouse gas emissions and poses health risks to the populace. From the policy dialogues I participated in, ministries, departments, and agency officials emphasized the government’s commitment to reducing biomass usage. All players around the table, including the private sector, civil society, and communities themselves, must participate to accomplish biomass reduction.

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Spending the summer in Uganda met my expectations for an on the ground experience. It gave me a better understanding of the working environment in a developing country and elevated my grasp of several international development issues. I also acknowledge that countries are rarely the same, making it vital to gain direct exposure to the on the ground reality instead of relying on studies and external generalizations.

By and large, I am very thankful to the EfD Director, Professor Edward Bbaale, for allowing me to work on these issues and for his invaluable mentorship. I also enjoyed working with a team of experts, which included Dr. Peter Babyenda, Mr. Fred Kasalirwe, Mr. Gyavira Ssewankambo, and Ms. Jane Anyango, to mention just a few. Above all, I am thankful to FSI and SFI at Stanford University, whose collaboration with EfD-Mak Uganda made my summer fellowship both a priceless experience and a great opportunity to be home again.