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.

The work conducted by MEC can be neatly divided into two segments. The first segment probably comes as no surprise. MEC provides the necessary services for MFIs to design and launch clean energy lending programs. It helps institutions establish a clean energy product unit, assess market demand, select a local energy product distributor, and conduct marketing campaigns. Product lines included solar lighting, clean and efficient cookstoves, water purification systems, and efficient housing adaptations.

The second segment of MEC’s work did surprise me. To help cover the cost of these clean energy lending programs, MEC forges a connection between clean energy products and carbon markets. The MEC website describes this scenario as the following:

For the carbon markets, MEC aggregates a previously untapped source of carbon offsets – emissions reductions created by enabling customers of Microfinance Institutions (MFIs) in developing countries to improve their daily lives by purchasing clean energy technologies.

You can find more information on carbon markets and how they relate to MEC’s work on their website.

Tapping into carbon markets using the carbon offsets of small projects, such as microfinance clean energy projects, is typically rare due to the current hurdles imposed by carbon markets. For small projects, the processes of tracking, certifying and purchasing carbon credits are often more expensive and resource-intensive than project-operators are able to justify. MEC combats these conditions by providing software to aggregate many small transactions and serving as an intermediary between MFIs and carbon purchasers. The proceeds from selling the carbon credits on carbon markets are then used to pay for MEC’s services and to provide additional support for scaling up the MFIs’ clean energy programs. MFI partners usually start receiving this funding from carbon markets within a year of starting their clean energy partnership project. MEC calculates the potential market size for microfinance-linked carbon financing for such clean energy products at over $8 billion per year.

If you’d like to support the MicroEnergy Credit network of microentrepreneurs, next time you take a plane trip, consider purchasing carbon offsets online from MEC’s carbon purchasers. Simply purchasing carbon offsets as a means to lower your personal carbon footprint is a good idea in any case.

Image Credit: MicroEnergy Credits

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Discovering Microfinance’s Other Green Side

Financial Inclusion According to Yertle the Turtle

Connecting Microfinance to Environmental Sustainability and the Triple Bottom Line

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.”

Microfinance and Energy Poverty reports that there is a good prospect for viable involvement of MFIs and savings group promoters in the field of micro-energy solutions. This opportunity comes in no small part due to the micro-energy industry’s capability to save customers money, work through savings and credit groups, and use mobile banking. Add to this the fact that use of solar lighting increases client well-being and reduces risks, and you end up with a product that microfinance providers can offer and that clients really want.

The Energy Links project indeed showcased this opportunity for MFIs and savings groups, as it facilitated access to energy for tens of thousands of rural families during its three years of operations. To make this happen, Energy Links staff acted as intermediaries to bring together suppliers, finance sources and distribution networks. The energy sources carefully chosen for the project were solar LED lamps, and cook stove briquettes made from readily accessible bio-matter. Though the project is now complete, its findings are available to guide the building of a massive, sustainable micro-energy industry.

In looking at this project, it’s logical to think that microfinance might also have a place in other environmentally-oriented industries—especially if they help customers save money. A few weeks ago the Accion Ambassadors blog featured such an example in the post The Necessity of Being Green (Part 1): A Microentrepreneur’s Perspective. The blog entry shares the story of Vincenta—a microentrepreneur who makes hats, bags and other goods through the use of recycled materials—and highlights new environmental advances in Fundación Paraguaya’s microfinance program. Vincenta participates in Comité de Mujeres Emprendedoras in Capiata, a program developed by Fundación Paraguaya to assist women entrepreneurs.

The Accion Ambassadors post is written by Laura Vincx, an Accion Ambassador at Fundación Paraguaya in Asunción, and it can be found in its entirety here.

Have you read?

The Real Changemakers in Microfinance

Does MPesa Cause Inflation? Let’s Ask our Woman in Nairobi

OPIC Supports MicroEnergy Credits in Building Clean Energy Microfinance

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.  

Another example is a report recently published by CFI, “Microfinance and Energy Poverty,” that discusses the role of MFIs and savings groups in bringing affordable, renewable energy devices to off-grid populations in Africa.  The NewEurope Post, a European newspaper, also recently put out an article that stresses the importance of microfinance in supporting cheaper and environmentally friendly energy solutions (e.g., solar hot water heaters, housing insulation, and small-scale solar panel systems).

In 1987, the UN commission put forth two concepts that further define sustainable development: 1) “the concept of ‘needs’, in particular the essential needs of the world’s poor, to which overriding priority should be given” and 2) “the idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs.”

I often return to this definition for motivation and inspiration. I love that the examples above clearly show efforts to address the needs of developing communities while also considering the environmental impacts of such initiatives.  I hope to hear from anyone who has more examples of this connection!

Image credit: Landlogics

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The Future is Green

Bloomberg Cites ‘Microfinance and Energy Poverty: Findings from the Energy Links Project’

Artisanal Solar Lamps

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.

I also know about trash pickers in India who maintain subsistence livelihoods recycling and trash, mainly out of necessity but still a green effort. I know many MFIs comply with the IFC’s exclusion list, educating their clients on the impacts of deforestation, and the harm that drift-net fishing and the use of explosives causes to the marine environment. And I know about the CFI’s Energy Links project, which 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.

But now I’m asking you, microfinance community, “What else could we do to be more green?” Let’s dust off those thinking caps and really let the innovative juices flow. Let’s start brainstorming. Let’s encourage our clients to increasingly think: How could I make or save money while also saving the planet?

Image credit: Sproutecourse.org

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Bloomberg Cites ‘Microfinance and Energy Poverty: Findings from the Energy Links Project’

“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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Report on Microfinance and Energy Poverty Charts Course for Leveraging Microfinance Infrastructure to Deliver Clean, Cheap Solar Lighting in Rural Africa

Three-year Energy Links pilot project highlights distribution challenges, finds traction through informal savings groups, NGOs and microfinance institutions

Washington, DC (Oct. 4, 2011) — The Center for Financial Inclusion at ACCION, USAID and FHI 360 have just released a Field Report on Microfinance and Energy Poverty, reporting 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.

As the UN’s International Year of Sustainable Energy for All (2012) approaches, the building of a sustainable supply chain and marketing channel for solar home lanterns stands as an important marker on the challenging path to building an industry from the ground up. The Energy Links project demonstrated that while building a market for sustainable energy products that improve lives and increase productivity requires patient capital and painstaking work, it can be done. The report provides a business case and how-to for microfinance institutions (MFIs) to forge distribution channels and financing mechanisms for clean home energy solutions.

Bypassing a slow-growing electricity grid

According to the report, “Just as mobile phones spread rapidly across the [African] continent, leapfrogging the need for landlines, the need and opportunity exist for off-grid energy.”

Expansion of electric grids in underdeveloped countries is slow work: Projections are that the 1.4 billion off-grid worldwide today will decrease by just 15 percent by 2030, while the population without access in sub-Saharan Africa will increase by another 20%. Today they have no choice but to rely on kerosene lanterns for lighting – an expensive, inefficient, unhealthful and dangerous source.

In recent years, great strides have been made in production of simple, cheap, efficient, easily-repaired solar lanterns and solar home systems. Energy Links worked primarily with Australia-based Barefoot Power, a young company rapidly building its capability to deliver in Africa. Relationships between NGOs and savings groups, and microfinance institutions (MFIs) and distributors, were central to the program.

Potential benefits include improved health, productivity, and quality of life, e.g., less respiratory illness, time savings, and use of lighting in business operation and schooling. In Mali, Energy Links found that the primary beneficiaries were children who gathered in the homes of test users to study.

The health benefits derived from replacing kerosene as an indoor lighting source are substantial. According to the UN, nearly 2 million women and children die prematurely every year from illnesses caused by indoor air pollution.

Another crucial benefit – one that shows signs of emerging as a killer app – is cell phone charging, an expensive and time-consuming service for rural cell phone subscribers, and one that solar lantern owners can themselves provide to neighbors on a fee basis.

While these products require significant up-front expense, in the $10-$100 range, families in the focus countries typically spend $60 per year on kerosene and $120 per year on wood.

Globally, replacing kerosene lighting with solar would have a major environmental impact. Kerosene lamps release an estimated 190 million tons of C02 into the atmosphere annually.

Since the global off-grid lighting market is larger than $50 billion annually, a substantial market exists for alternative energy sources.

Building a supply chain in Africa

To begin to build a market, the Energy Links project grappled with the formidable problems of finding or building reliable distribution networks, developing demand through education, and finding means by which customers can finance this significant purchase. “There is an industry to be built,” the report notes, “but it isn’t going to build itself.”

In its three countries of operation, Energy Links functioned as a catalyst, bringing together NGOs, distributors, microfinance institutions (MFIs) and government ministries. The report stresses that the challenge is to develop an industry, with critical input from NGOs and donors, and points to the development of the microfinance industry from “a few scattered experiments in the 1980s” as a model.

To date, the most rapid distribution progress has been through partnerships between NGOs and informal savings groups (SGs) – which, like cell phones, are spreading rapidly in many African countries. An estimated 4 million of these groups, typically of 15-20 self-selected individuals (mostly women) who meet to save, borrow and pool resources for basic insurance, are operating in Africa today. Because of their prevalence in rural areas and their close working relationships with NGOs, SGs are receptive to new information and function as influential early adopters.

The project had its most marked success in Mali, where it built a self-sustaining market from scratch, bringing together an incubated network of local distributors and SGs that have at present financed the import of over 40,000 lighting kits, which should all be sold this year, with an additional 100,000 planned for 2012. The Energy Links team also provided technical assistance to develop business models and financial products that are being implemented in Tanzania and Uganda by MFIs today.

The Energy Links project was conceived and executed by the Center for Financial Inclusion at ACCION International, financed by USAID’s Microenterprise Development Office (through Academy for Education Development’s FIELD Project, now managed by FHI 360) and the Wallace Global Fund. The report was prepared by CFI’s David Levaï, Paul Rippey, and Elisabeth Rhyne, with substantial input from April Allderdice of MicroEnergy Credits.

For more information and press inquiries:

Please contact Andy Sprung at asprung@accion.org

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From Waste to Energy

Tanzania, India, Mexico, and beyond – ACCION International’s Ambassadors are in the thick of it, jotting down notes about the industry as they observe events on the ground. We’re following these volunteers’ reports via their dedicated blog. We’ll be keeping you in the loop with occasional cross-posts.

While there are too many good posts already to showcase them all, Jason Loughnane‘s look at microfinance and access to electricity in Tanzania stands out to us. Perhaps that’ s because his post on Akiba’s new loans sheds light on a program that bears a passing resemblance to Energy Links.

Loughnane’s June 6 post introduces the story as follows:

Only 14 percent of Tanzanians have electricity in their homes. Akiba thinks that is unacceptable, and has designed a way to help.

On Friday I attended the official launch of Akiba’s Umeme (Electricity) Loan, which seeks to help expand the accessibility of power to Tanzania’s poor.

While electricity in Tanzania is generally inexpensive, the costly hardware needed to connect a household to the power grid is not provided by the electric companies. A new connection can run about 500,000 Tanzanian Shillings, or around $320, while monthly electric power costs only about $15 for a small house.

This initial upfront cost is prohibitively expensive for low-income customers. Many of them connect to the power grid illegally, climbing utility poles and stripping the cables bare to connect a wire and run it directly to their houses. It is not uncommon to see live wires dangling dangerously in the middle of crowded streets.

Read the rest of Loughnane’s post, and check out the other Ambassadors’ reports, by clicking here.

Image credit: bdesham

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Why Are Engineers Interested in Microfinance?

We are very proud to announce that Barefoot Power, the three-year partner and supplier of solar lanterns for Energy Links projects in Uganda and Mali, won multiple product awards this week at the Lighting Africa conference in Nairobi, an international conference on off-grid lighting organized by the International Finance Corporation (IFC).

Barefoot Power's solar-powered LED Firefly lamp (two lamps on left) won numerous awards in the recent Lighting Africa conference.

Twenty-four finalists were evaluated and judged in 4 different categories. Barefoot Power won three of the four first prizes for room lighting, best value, and top performance. They also took the second price in the fourth category: task lighting. The solar lantern that Energy Links helps commercialize, called the Firefly, specifically won in the best value category for products that cost under $40 and came second in the task-lighting category.

The Energy Links project first started collaborating with Barefoot Power after extensive market research; Barefoor Power was offering the best quality lighting products at the lowest cost for the customers. We are happy that an international competition confirmed that this socially-minded business was one of the most reliable energy suppliers for off-grid distributed systems.

According to its founders, Harry Andrews and Stewart Craine, the Australian firm is on track to reach its goal of providing modern lighting solution to 1 million poor people by 2010 and 5 million people by 2013. We hope to continue to play a part in helping them reach unprecedented scale in bringing clean and affordable light to low-income families across the continent.

What do these Barefoot Power and d.light design LED lamps have to do with African microfinance? Tune in to the next USAID Speakers Series to find out.

We at the Center’s Energy Links project would like to invite you to participate in the next USAID Speakers Corner on Microfinance and Energy: Scaling Up Energy Access through Enterprise-Based Approaches and Innovative Financing.

The three-day online forum will discuss energy and microfinance and explore how microfinance may help increase access to modern energy services. This event will be an opportunity to have an open dialogue about this burgeoning field, specifically…

• Day 1 Tuesday, May 11: Current Status and Successful Models
  Facilitators: Ellen Morris (Arc Finance), David Levai (Center for Financial Inclusion)
• Day 2 Wednesday, May 12: Opportunities and Challenges
  Facilitators: Phyllis Kariuki (GVEP International), Kavita Rai (GVEP International)
• Day 3 Thursday, May 13: The Path Forward: Scaling Up
  Facilitators: Jennye Greene (E+Co), Jacob Winiecki (Simpa Networks)

To learn more and to RSVP, please click here: Microfinance and Energy Speakers Corner Event >

In the latest Energy Links Podcast Paul Rippey interviews Dipal Barua. Dipal was the Founding Managing Director of Grameen Shakti and remains a leader in partnering with microfinance networks for the distribution of clean energy products. He was the recipient of the first Zayed Future Energy Prize, given in 2009, and has recently founded a new company, Bright Green Energy Foundation (www.greenenergybd.com). In this podcast, he shares his ideas on how Bangladesh can become a “solar nation”!

Listen to the podcast »