ReCCAWA: Capacity Building for Financial Institutions in Senegal

(M)SMEs are essential to achieving universal access to Clean Cooking, yet the clean cooking sector is relatively undeveloped in many West African markets, and therefore risk (perception) is high, leading to a lack of access to affordable, tailored financing. Traditional financial institutions typically prioritise larger clients due to high overheads, limited risk appetite, and capacity gaps, excluding (M)SMEs with irregular cash flows or limited collateral. Microfinance institutions (MFIs), though better positioned to serve smaller businesses, often face high transaction costs, short loan terms, and challenges in pricing risk, resulting in high interest rates for relatively small ticket sizes for entrepreneurs. Most local lenders also lack familiarity with the sector and the tools to assess business models like clean cooking. As a result, they rarely offer suitable financial products such as revenue-based repayment, equipment-backed loans, or flexible grace periods. This persistent financing gap is a key barrier to scaling Clean Cooking SMEs in ReCCAWA partner countries, limiting innovation, market growth, and progress toward universal energy access and climate resilience.