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> Posted by Jeffrey Riecke, Communications Associate, CFI

As if we needed more motivation to support the expansion of microinsurance, the increase in extreme weather is highlighting the ability of the financial service to spur climate change adaptation.

Farming in developing countries is responsible for 70 percent of the world’s food supply, and farmers in developing countries are vulnerable to the effects of climate change. What will happen to the world’s food and to those making a living from small-scale agriculture when the frequency and intensity of extreme weather arising from climate change take stronger hold?

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> Posted by Center Staff

This edition of top picks features posts that spotlight green loans reducing energy poverty, savings and loans to improve the vulnerability of microbusinesses, and factors driving uptake of mobile insurance services.

In celebration of Earth Day, the Kiva Blog took the opportunity to share their work on green loans. These loans to individuals and small business owners help with the high upfront costs of clean energy technology. Globally, 1.3 billion people live in energy poverty – without access to modern energy services. Green loans support healthy and environmentally friendly energy switches, like from kerosene to solar lighting. Kerosene lighting produces black carbon or soot which is harmful to breath and also a greenhouse gas. Kiva has facilitated the funding of 39,000 green loans.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

The 450 million smallholder farmers around the world, who comprise the majority of those living in absolute poverty, have an enormous unmet financing need. Such financing requirements include small loans for inputs like seeds and fertilizer. A few weeks ago, seven leading social lenders, who collectively disbursed $360 million in 2013 toward agriculture financing, joined forces to spur sustainable growth and instill responsible practices in this vital lending area: they formed the Council on Smallholder Agricultural Finance.

Launched at the Skoll World Forum in Oxford, the Council is made up of Alterfin, Oikocredit, Rabobank’s Rabo Rural Fund, responsAbility Investments AG, Root Capital, the Shared Interest Society, and Triodos Investment Management. The Council will meet regularly, share experiences and insights, and develop best practices and industry standards across three areas: market growth; responsible lending principles; social and environmental impact.

The Council particularly targets loans to “missing middle” agricultural businesses in low- and middle-income countries. The “missing middle” refers to businesses that require financing in the $25,000 to $2 million range, which are amounts often deemed too large for microfinance and too low for commercial banks. These businesses include producer organizations, companies that source from smallholder farmers, and companies that provide productive assets to smallholder farmers, often on credit. These companies can serve hundreds to thousands of farmers, offering an array of services including market access support, training, financial services, and accessible assets. Though millions of smallholder farmers are connected to these missing middle businesses, the vast majority are not.

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> Posted by Sebastian Groh, Project Manager, MicroEnergy International

The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

United Nations Secretary General Ban Ki-moon recently called upon the international community to commit to a new groundbreaking initiative seeking Sustainable Energy for All (SE4A) by the year 2030. At MicroEnergy International (MEI) we have been working towards this goal since 2002 by supporting microfinance institutions (MFIs) in the process of developing and providing “green microloans,” financial products that help clients finance a renewable or efficient energy system for their home or business. Our work is based on the fundamental belief that the relationship between energy inclusion and financial inclusion is a critical impact point that has positive effects on the poverty levels of low-income clients.

Perhaps the linkage isn’t immediately clear, so a few examples will help us explain.

Financial inclusion leads to energy inclusion. Access to finance can lead to energy inclusion simply in terms of affordability and financial means. People who have access to financial services are able to finance their basic energy needs and either pay for grid-supplied electricity or purchase a distributed energy generation system of their own. These systems have a prohibitive initial investment burden that usually cannot be covered by those at the base of the pyramid (BoP). Innovative green credit design allows clients to pay in monthly installments that correspond to their current expenditures on energy appliances and sources as well as potential savings and income generation opportunities. A scheme of that type has paid off for about two million Solar Home System users today in the country of Bangladesh, according to the World Bank’s IDCOL Solar Home Systems Project.

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>Posted by Jeffrey Riecke

A few weeks ago I wrote a post highlighting microfinance as a tool for achieving environmental sustainability and in it I looked at CFI’s now-completed Energy Links project. During its three years of operations, Energy Links explored, and ultimately demonstrated, how MFIs can help to significantly expand the micro-energy industry. With Energy Links finished, I wondered, what is the microfinance community doing now to support sustainable energy?

Not even a day after writing my Energy Links post a colleague introduced me to MicroEnergy Credits (MEC), an organization that is earning large-scale success in supporting MFI clean energy lending. Since it was founded in 2007, MEC estimates that it has helped provide clean energy to over 100,000 households across several countries.

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>Posted by Jeffrey Riecke

As a newcomer to CFI, I can remember my first impression of the name “Center for Financial Inclusion.” Coming from an environmental background, I didn’t think the work of an organization called the Center for Financial Inclusion would have pervasive environmental impacts. I settled with the notion that CFI simply worked to ensure that quality financial services were widely available. In learning more about CFI and microfinance, it hasn’t taken long to discover that environmental sustainability is an aspect of nearly every prong of CFI’s work.

For me, this relationship with the environment is nicely illustrated in the findings of CFI’s publication Microfinance and Energy Poverty: Findings from the Energy Links Project, which was released in September 2011. The publication summarizes the findings of the Energy Links project, a three-year pilot by CFI, financed by USAID’s Microenterprise Development Office and the Wallace Global Fund. In the words of the publication’s authors:

“Energy Links’ aim was to determine how the established microfinance sector in African countries can alleviate energy poverty by increasing access to small-scale clean energy solutions at the household level.”

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> Posted by Holly Padgett

After my latest blog post concerning microfinance and environmental sustainability, I was excited to read about the recent decision by the Overseas Private Investment Corporation (OPIC), a US government development finance institution, to support clean energy initiatives around the world.

OPIC’s support came in the form of a $10 million loan to MicroEnergy Credits (MEC).  With the loan, MEC will assist microfinance institutions in providing microloans to individuals for the purchase of clean energy products (e.g. solar lighting).

In a recent blog post, MEC described some of the positive aspects of these clean energy initiatives:

“Individuals who receive microloans to purchase clean energy not only benefit the planet; they benefit from improved health due to reduced indoor air pollution and increased savings from reduced expenditure on traditional fuels.”

MicroEnergy Credits primarily works to connect MFIs with carbon markets to offset initial costs of clean energy microloans.  However, the organization also has a widespread impact on the microfinance industry as a whole. MEC founder and CEO, April Allderdice, recently worked with CFI on the Energy Links project and ‘Microfinance and Energy Poverty’ publication, a report on alleviating energy poverty. Read the rest of this entry »

> Posted by Holly Padgett

As a former student of Environmental Science and a strong advocate for environmental (as well as economic and social) sustainability, I am constantly striving to align my work and experiences with the precepts of sustainable development, defined by the UN World Commission on Environment and Development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

While I, and probably many others, would argue that microfinance and financial inclusion are undeniably a part of sustainable development, it is often hard to see the direct connection.  For this reason, it is especially exciting when I run across an event or report that directly exemplifies the link.

For example, in the recent climate negotiations at the 2011 UN Climate Change Conference, in Durban, South Africa, several initiatives were agreed upon that support the triple bottom line (economy, society and environment) in developed and developing countries. One major decision that came out of the summit was the establishment of the Green Climate Fund, which will channel money from developed nations to developing and vulnerable communities to assist with clean energy programs and adaptations to climate change and extreme weather events.   Read the rest of this entry »

> Posted by Danielle Donza

Last night I saw a commercial advertising durable work boots that were lined with recycled plastic bottles. That is awesome, I thought, I love when green initiatives are also incredibly innovative.

Then, looking to get the creative, brainstorming juices flowing, I asked my boyfriend, “What else could we do to be more green?”

“You could take shorter showers,” he replied.

Whoa, hold on, that was not exactly the creativity I was hoping for, but a valid point nonetheless. Water is undoubtedly one of the most undervalued and (therefore?) wasted resources on the planet. Imagine how quick my showers would be if the price tag was ticking up like it does at the gas pump. And I applaud the efforts of Watercredit.org in working with microfinance institutions to meet the water and sanitation needs of clients in developing countries by offering WaterCredit loan products and lending models, and more.

Having recently returned from the Foromic in Costa Rica, I felt like there was a real buzz around green microfinance, perhaps influenced by Costa Rica’s goal to be the first carbon-neutral country by 2021. I was excited about a panel that provided more information on Mibanco’s PPP (people, planet, profit) Model in Peru, which emphasizes social, economic, and environmental performance. Read the rest of this entry »

> Posted by Center Staff

“Microfinance institutions may be able to help distribute and fund the purchase of low-cost sun-powered lamps, according to a report by the Washington-based Center for Financial Inclusion,” write reporters Simon Clark and Lananh Nguyen in a recent Bloomberg article.

“Microfinance and Energy Poverty: Findings from the Energy Links Project”  co-author David Levaï is quoted in the October 10 article, which places the report’s findings in the context of the International Energy Agency’s first-ever estimate of the cost to end energy poverty.

The Center for Financial Inclusion at ACCION, USAID and FHI 360 recently released  “Microfinance and Energy Poverty: Findings from the Energy Links Project” to disseminate the results of a three-year field project focused on leveraging microfinance institutions and savings groups in Africa to build a market and distribution channels for affordable solar lighting in rural villages on the continent.

The project, Energy Links, catalyzed and helped build distribution networks to get tens of thousands of low-cost solar-powered LED lanterns to rural populations in Mali, Uganda and Tanzania. In rural and remote areas of Africa, only 20 percent of the population is connected to electricity grids.

For more information, check out “Microfinance and Energy Poverty: Findings from the Energy Links Project” and the project page here.

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CFI Releases Report on Microfinance and Energy Poverty

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.
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