Mapping current incentives and investment in Uganda's energy sector: lessons for private climate finance

Research reports and studies
March 2014
Shelagh Whitley and Godber Tumushabe
There is consensus within the discourse on climate finance that there is a key role for the public sector (and donor funds more specifically) in mobilising private investment in CCD. However, there has been limited analysis about what specific role the public sector and public resources should play, particularly in light of recent findings on the importance of domestic private investment, and the current domination of public investment in international finance for CCD.

This paper describes the findings from the very first application of a new methodology – in Uganda’s energy sector - to support governments and development partners that wish to mobilise private finance for climate-compatible development (CCD). Applying this methodology involves completing three frameworks for any given country and sector (and sub-sectors) on: 1) relevant incentives, 2) sources of capital (current), and 3) investment trends (historic). (See Whitley, 2014)

Piloting this methodology in Uganda’s energy sector allowed us to make two distinct sets of findings that are useful for actors seeking to mobilise private climate finance.

The first set of findings emerges from the available data and information, through which we can we can identify opportunities for the Ugandan government and development partners to develop additional market level incentives that can support scaled up climate compatible investment, and where there are gaps in sources of capital that might be filled by both public and private investment. The second set of findings is around data gaps. As unfortunately, due to the absence of granular information on investment in the energy sector, and discrepancies in the definitions and categories in international and national data sets, we found that it was not possible to map historic investment.

We aim to apply this methodology in a number of additional countries and sectors, with the goal of identifying additional opportunities to mobilise private climate finance, including through improved transparency of private investment data in climate relevant sectors.