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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.