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Green Microfinance:Opportunities and Lessons

LearnedChikako Fujita

M&E Specialist, Arc Finance

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1.2 billion people do not have access to electricity

Another 1 billion have access but only get unreliable service.

Source: Bloomberg New Energy Finance and Lighting Global Off-Grid Solar Market Trends Report 2016

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Availability of financing acceleratesthe uptake of clean energy solutions

Arc Finance works with financial institutions and energy companies to provide affordable clean energy solutions to BOP consumers

Our partners collectively provided access to clean energy to over 250,000 households across 4 countries (worth over US$9 million).

Asset Finance / Pay As You Go RemittancesMicrofinance

Photos: Souradeep Ghosh, Arc Finance

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Better living standards through reliable access to lighting and charging

Educational benefit for children Cost saving through reduced spending

on kerosene and other conventional fuels Income generation through

microenterprise

93% of clients use the product every day.

98% were satisfied with the product.

Source: Arc Finance, Annual client satisfaction survey 2015

Positive impact on clients

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Why microfinance for clean energy?

Benefits for MFIsPositive impacts on clientsClient satisfaction /Advantage over

competitorsAdditional revenue streamEmployee retention

MFIs are well positioned to provide clean energy solutions

Existing client base, backed with long-term relationship

Extensive presence in the fieldFirst-hand understanding of client

needsCapacity to assess the

creditworthiness of the low-income households

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Lessons Learned No single model: Diversity of business models that work, and

business models evolve over time

Management buy-in: Success linked to top management buy-in and ability of company to retain and develop the right team to implement the energy program

Partnership with good product supplier: Poor consumers do care about quality and value the protection offered by warranties and after sales service

Capacity building: Product sales is different from payment collection, and MFIs need to build the skills needed for sales

Diversify products over time: MFIs tend to start offering smaller scale products, but as their energy lending portfolios grow, they begin to offer larger products to meet customer demand