Discussion » E-Discussion #6 - Innovative Consumer Finance Mechanisms for Small Scale Off-Grid Energy / Part II: Microfinance and Remittances
E-Discussion #6 - Innovative Consumer Finance Mechanisms for Small Scale Off-Grid Energy / Part II: Microfinance and Remittances
DESCRIPTION
Efforts to provide energy access on a commercial basis to rural populations in developing countries face a range of challenges, including access to finance. Off-grid customers from lower income communities currently pay a high price for purchasing kerosene for basic lighting services and switching to renewable energy based systems would not only save them fuel-costs but also improve their overall quality of life. However, the high upfront cost of the renewable energy based systems (handheld devices and stand-alone systems) restricts them from making this switch. This is identified as a major barrier by all stakeholders committed to the delivery of energy access solutions in a commercially viable manner and at scale. Over the past decade, microfinance institutions, supported by the international development community, have played an important role in providing direct consumer finance for purchase of handheld devices and single home solutions. In addition to microfinance, a number of other innovative end-user finance schemes have emerged in recent years. Building on the findings from [USAID's Renewable Energy Microfinance and Microenterprise Program (REMMP) | http://www.arcfinance.org/remmp.html, and specifically the experience of Arc Finance, this 3 weeks long e-discussion will feature and discuss a number of mechanisms for downstream end-user finance and their integration into innovative energy access business models:
Week 1 (Feb. 18 - Feb. 25): Asset finance
Week 2 (Feb. 25 - Mar. 4): Microfinance and remittances
Week 3 (Mar. 4 - Mar. 11): Other innovative end-user financing models
Nicola Armacost is the Managing Director of Arc Finance; formed in the spring of 2008 to expand access to finance for clean energy and water. Niki has over 19 years experience in development with a focus on financing solutions for the poor; from 1993 to 2008, she worked at Women’s World Banking, a global microfinance network where she held a number of senior management roles. Niki is an advisor to a number of finance and energy organizations globally and is the Co-Chair of the SE4all Investment and Finance Working Group of the Practitioner Network. She also serves on the Board of MISFA (the donor consortium for microfinance in Afghanistan). She has provided tailored technical assistance, presented papers, given lectures and run conferences and exchanges on financing mechanisms for clean energy all over the world. Niki holds a Bachelor of Arts degree in International Relations from the University of Toronto, Canada, an LLB from Queen's University, Canada and an LLM from the Osgoode Hall Law School, Canada.
Pamela Baldinger – Energy Advisor, USAID (USA)
Pamela Baldinger currently serves as Energy Edvisor in the Energy Division of the Bureau of Economic Growth, Education and Environment at USAID. She specializes in clean energy programs, designing and managing programs in such areas as renewable energy, clean cookstoves, and cross-sectoral programs involving health, humanitarian assistance, and economic growth. She is the USAID manager of the Renewable Energy Microfinance and Microenterprise Program (REMMP) implemented by Arc Finance, and helped create two Development Credit Authority guarantees supporting small-scale renewable energy devices.
Ms. Yara Akkari is leading the implementation of a business model to promote the use of remittances as a means to purchase clean energy in Haiti. Yara has spent her career in the development sector in a range of different capacities including governance, social development, microfinance, renewable energy and culture. Most recently, she worked at Eko Green, a company based in Nigeria, as a consultant. Her research and work at Eko Green contributed to the implementation of innovative organic farming and low cost ecological housing in Africa. Before joining Eko Green, Yara served as a project management and research consultant for various UN agencies. She worked for the UNDP in strategy development and institutional building for the Lebanese Ministry of Finance and the Investment Development Authority of Lebanon (IDAL) and in the promotion of cultural diversity in least advanced countries through management of projects at the International Fund for Cultural Diversity (IFCD) at UNESCO Headquarters in Paris. She also consulted for Women’s World Banking (WWB), a network of microfinance institutions, contributing to their research and communication initiatives. Yara began her career at Ashoka, an NGO that supports social entrepreneurship worldwide, where she managed fundraising, developed a newsletter on innovative solutions for social change, and supported Ashoka’s fellows in their efforts. Yara received an MS in Development Studies from the London School of Economics and a BA in International Economics from ASSAS University in Paris.
Mr. José Manuel González, Director de Negocios, Te Creemos (Mexico)
Mr. José Manuel González, is a founder, a partner and the COO of Te Creemos, a regulated MFI based in Mexico. Created in 2005, Te Creemos provides financial services to more than 100,000 low income people. Te Creemos has 87 branch offices and 1,500 collaborators spread across the Mexican territory with US$60,000,000 in assets and a US$45,000,000 loan portfolio. Te Creemos was one of the first recipients of an ECOMICRO prize for MFIs in Latin American to support the development of a clean energy program. ECOMICRO, which was launched in 2012, was developed by the MIF-IDB/Nordic Development Fund. From 2000 to 2004, José Manuel served as Commercial Director of BANSEFI (a National Popular Savings Bank owned by the Government). From 1985 to 1993, José Manuel was a Fund Manager at Operadora de Bolsa, a Mexican brokerage firm. José Manuel is Industrial Engineer with a degree from Universidad Iberoamericana, Mexico City.
Mr. Saiful Islam, Microfinance Operations Specialist, Arc Finance (USA)
Mr. Saiful Islam is Arc’s Microfinance Operations Specialist, and brings over 20 years of experience in the microfinance industry. Prior to joining Arc, Saiful was at Women’s World Banking (WWB) where he spent over 15 years working closely with some of the largest MFIs in Asia and Africa, providing strategic advice and technical assistance. His prior experience includes several years with the Shakti Foundation, a retail MFI in Bangladesh that he co-founded as well as at UNICEF Bangladesh where he served as a consultant in the Field Operations section. Saiful has spent his career supporting MFIs to improve and expand their operations, refining existing products and introduce new ones. Saiful is recognized as an expert on the group lending methodology and has successfully introduced individual lending to traditional group lending MFIs. He has also assisted several MFIs—CARD Bank (Philippines), ADOPEM (Dominican Republic), U-Trust (Uganda), KMB (Pakistan) and KWFT (Kenya)—to introduce voluntary savings. Saiful has authored several publications on savings and portfolio quality management, including a book called Introducing Voluntary Savings – A WWB How-To Guide. Saiful holds Bachelor’s and Master’s degrees in Finance from Dhaka University.www.arcfinance.org
Mr. Suresh K. Krishna has been at the helm of activities at Grameen Financial Services Pvt. Ltd. since its inception in 1999; he has over 15 years of experience in microfinance and entered the field of development in 1997. Under Suresh’s leadership, GFSPL has developed a focus on the double bottom line, ensuring high social impact and financial sustainability, and provides low income households with many non financial services along with financial services. GFSPL was the first MFI to introduce automation using the open-source technology, MIFOS. Under Suresh’s guidance GFSPL has received many awards and recognitions including 17th Best MFI in the world by Forbes in 2007, Pioneer award in 2006 from Grameen Foundation. GFSPL is amongst the first 3 MFIs in India to get certified by the Smart Campaign for meeting global client protection standards and the 2nd MFI to be certified by Truelift as “Achiever – Pro-poor MFI”. GFSPL has been rated mfr2 by CRISIL and alpha minus for social performance by Mcril. Suresh was instrumental in initiating the setting up of The Association of Karnataka Microfinance Institutions (AKMI) and was also part of the founding team which started microfinance industry associations including MFIN (Microfinance Institutions Network). He has served on the boards of Sa-dhan (the national body of MFIs) and FKCCI (Federation of Karnataka Chamber of Commerce & Industry). Suresh currently serves on the Board of Micro Finance Institutions Network India (MFIN) and AKMI, the Microfinance Industry Associations in India, and is also the Chairman of Microfinance Focus, and Managing Trustee of Navya Disha and GK Development Trust. He serves on the Boards of Buzz India Trust, Community for Open Source Microfinance (COSM), USA and Financial INclusion Improves Sanitation and Health (FINISH), Netherlands. Previously, Suresh worked for an NGO that focused on micro enterprise development, non-formal education and also on the promotion of women self-help groups. Suresh has also founded and run small business enterprises in computer education, industrial safety products and consultation in local area networks in companies. He has a Masters in Sociology and MPEFB from IIMB.www.gfspl.in
Mr. Sateesh Kumar, Managing Director - Global Consumer Finance, d.light Design (India/Global)
Mr. Sateesh Kumar has 25 years of experience in varied industries including microfinance, insurance and retail in South Asia and the Asia Pacific region. Sateesh’s focus has been building sustainable and progressive businesses through a strong combination of sales, operations and strategic orientation. During last three years as Executive VP, Operations at SKS Microfinance Ltd, one of the largest MFIs in India, Sateesh served as a senior manager and was responsible for the microfinance operations. Prior to this, he served as CEO of Royal Sporting House, where he developed a retail distribution business of sports goods and served as Regional Director of Aviva Life Insurance, where he increased the Bancassurance and business partnerships business multi-fold. Sateesh has international experience with and eight year-stint in Singapore in retail and international trading.www.dlightdesign.com
Ms. Radhika Thakkar, VP Global Business Development, Greenlight Planet (Kenya/Global)
Ms. Radhika Thakkar is currently based in Nairobi, Kenya where she oversees global business development at Greenlight Planet, a company that provides high quality, affordable energy solutions for developing markets. She joined Greenlight Planet's flagship office in Mumbai in 2009 to expand the company's presence in African and other Asian markets. Greenlight's Sun King solar lanterns are now available in more than 30 countries and have reached over a million off-grid households around the world. Prior to joining Greenlight Planet, Radhika built a career in business development and consulting in the healthcare sector in the US. She also served as an Americorps VISTA volunteer focusing on public education reform in NYC. Radhika holds a Bachelor of Arts in International Relations from Tufts University.www.greenlightplanet.com
Mr. Raymond Serios – Special Project Manager, NWFT (Philippines)
Mr. Raymond Serios is the Special Project Manager at Negros Women for Tomorrow Foundation, an MFI based in Central Philippines. He handles new products, services and projects from the pilot to roll-out stages. He is currently in charge of NWTF’s energy loans, student loans and is also involved in NWTF’s association/community loans while also overseeing the back-office business process redesign, alternative financing and a few other social benefits that NWTF provides to its clients. Raymond is also involved in several technology-led projects at NWTF-among them mobile banking and ATMs. NWTF started providing energy loans, particularly solar lamps and energy efficient cookstoves in 2009. These products were initially offered to clients only, but as more and more people in the local communities became interested in these products, NWTF developed a special product that allows its microfinance clients to become agents that sell these products. Through this program, NWTF has substantially increased its volume of energy loans and the over-all energy loans program has become a sustainable project.
We hope you’ve been enjoying Part I of this discussion series on Innovative Consumer Finance Mechanisms for Small Scale Off-Grid Energy. Week one was on “Asset Finance”, and based on the high level of engagement by all of you, The World Bank Institute team has decided to continue that debate throughout the three weeks of the e-discussion – please continue to post your questions, ideas and examples. Part II of the discussion series will focus on remittances and microfinance. To get things rolling, I have a few questions for all of you:
Remittances:
In your country context, would it be viable to use remittances as a way to finance clean energy? Please explain …
Is there a specific business model (see Briefing Note for a description of three possible business models or describe your own) that would be more successful in your country?
What do think would be some of biggest challenges in replicating the Haiti model described in the Briefing Note in other countries?
Microfinance:
Before starting an energy-lending program, what are the main risks that an MFI needs to address and mitigate?
Most MFI-based delivery models for clean energy financing require a partnership between an MFI and an energy company, what are the keys to success in building a strong partnership?
What are some of the operational challenges MFIs face in providing clean energy loans, and are there solutions for those challenges?
Looking forward to another stimulating discussion!
I'd like the opinions of any of the experts, my colleagues at Arc, as well as any of the participants:
1) whether the bigger opportunity for renewable energy finance via remittances is in domestic or international corridors; and
2) which are the markets, in both categories, most ripe for targeting: that is, which countries or corridors have the regulatory environment, demand, network, and all the other ingredients for successful energy remittances?
I'd also like the throw the following out there: which products, after Solar Portable Lighting, are most appropriate for this affordability mechanism and why?
Thanks,
Sam Mendelson
Arc Finance
0
| 2
Hi Guys, a couple of thoughts from our experience in the Philippines:
1. There are a couple of risk factors for the MFI to look at when going into energy lending such as the product quality, after-sales servicing, logistics and distribution.
Most of these can be mitigated by either doing proper due diligence on the supplier, checking for adherence to standards/ accreditation or testing out the product itself. Proper planning and spelling out the roles of the partner groups (MFI, Supplier, Distributor. etc) is also important that way most potential issues have planned solutions already.
2. Partnerships really start with understanding the over-all direction and goals of the project. Again, defining the roles & expected service levels of each one is important as well as regular monitoring and communication between partners.
3. Within MFIs the biggest challenge in implementing clean energy loans is really opening up the minds of the credit staff/ loan officers to offer the products to the clients. Initially, people hesitate knowing this is additional work for them while there are other things they cannot control such as the quality of the product and necessary technical after-sales, however proper education on the product and the benefits it can bring to both clients and the credit staff, strong commitment & support from management and enough incentives has proven that it this hesitation can be solved.
One of the things we incorporate in our education modules for the staff is the opportunity cost of using the alternative vs the solar lamp/ systems. This has proven to be effective for them as they are able to quantify, in credit people terms, some of the benefits of the product/s. With this, we also add the benefits it gives the credit staff such as a higher portfolio without adding new clients, a better possibility of client retention - more contact with client and others.
I guess moving the loan officer from the traditional concept of one recruiting clients, assessing the loans, releasing and collecting it to one that really builds and maintains the relationship of the MFI to the client is one of the first things the MFI must make when deciding to go to clean energy finance.
I find the thoughts and experiences shared by all of the Expert contributors really useful. I am from India and remittances and MFIs have been major tools for financing of renewable devices, initially in a unorganized manner but later quite streamlined.
Currently I am working on exploration of innovative finance for renewable energy devices in Nepal. The RE devices we have considered are small ones (Improved cook stoves, Pico PV systems and community electrification systems) catering to poor households located in hilly remote villages. Their paying capacity is very limited. Remittances from diaspora located abroad, mostly in India but also in the Middle East are definitely important means of finance. However, it is not an organized practice and this is not well recognized by vendors and financial institutions. There are MFIs in Nepal but most are small and in nascent stage of development. Most of them are not involved in financing rural energy products. We found that there is not much awareness in rural population about MFIs. Many of them are Savings and Credit Cooperatives. Also, the MFI’s capacity in financing RE products is quite low and there needs to be a major capacity building initiative. In this, I agree with opinions of the Experts that MFIs cannot be considered as “sales force”. It is very much essential to have a separate group working with MFIs whose members know the technical features, operation and other factors of the RE and the needs of the users.
I would welcome the thoughts of the experts in the situation prevailing in Nepal.
Discussion » E-Discussion #6 - Innovative Consumer Finance Mechanisms for Small Scale Off-Grid Energy / Part II: Microfinance and Remittances
E-Discussion #6 - Innovative Consumer Finance Mechanisms for Small Scale Off-Grid Energy / Part II: Microfinance and Remittances
DESCRIPTION
Efforts to provide energy access on a commercial basis to rural populations in developing countries face a range of challenges, including access to finance. Off-grid customers from lower income communities currently pay a high price for purchasing kerosene for basic lighting services and switching to renewable energy based systems would not only save them fuel-costs but also improve their overall quality of life. However, the high upfront cost of the renewable energy based systems (handheld devices and stand-alone systems) restricts them from making this switch. This is identified as a major barrier by all stakeholders committed to the delivery of energy access solutions in a commercially viable manner and at scale. Over the past decade, microfinance institutions, supported by the international development community, have played an important role in providing direct consumer finance for purchase of handheld devices and single home solutions. In addition to microfinance, a number of other innovative end-user finance schemes have emerged in recent years. Building on the findings from [USAID's Renewable Energy Microfinance and Microenterprise Program (REMMP) | http://www.arcfinance.org/remmp.html, and specifically the experience of Arc Finance, this 3 weeks long e-discussion will feature and discuss a number of mechanisms for downstream end-user finance and their integration into innovative energy access business models:
Week 1 (Feb. 18 - Feb. 25): Asset finance
Week 2 (Feb. 25 - Mar. 4): Microfinance and remittances
Week 3 (Mar. 4 - Mar. 11): Other innovative end-user financing models
Expert Moderators
Nicola Armacost – Managing Director, Arc Finance (USA)
Nicola Armacost is the Managing Director of Arc Finance; formed in the spring of 2008 to expand access to finance for clean energy and water. Niki has over 19 years experience in development with a focus on financing solutions for the poor; from 1993 to 2008, she worked at Women’s World Banking, a global microfinance network where she held a number of senior management roles. Niki is an advisor to a number of finance and energy organizations globally and is the Co-Chair of the SE4all Investment and Finance Working Group of the Practitioner Network. She also serves on the Board of MISFA (the donor consortium for microfinance in Afghanistan). She has provided tailored technical assistance, presented papers, given lectures and run conferences and exchanges on financing mechanisms for clean energy all over the world. Niki holds a Bachelor of Arts degree in International Relations from the University of Toronto, Canada, an LLB from Queen's University, Canada and an LLM from the Osgoode Hall Law School, Canada.
Pamela Baldinger – Energy Advisor, USAID (USA)
Pamela Baldinger currently serves as Energy Edvisor in the Energy Division of the Bureau of Economic Growth, Education and Environment at USAID. She specializes in clean energy programs, designing and managing programs in such areas as renewable energy, clean cookstoves, and cross-sectoral programs involving health, humanitarian assistance, and economic growth. She is the USAID manager of the Renewable Energy Microfinance and Microenterprise Program (REMMP) implemented by Arc Finance, and helped create two Development Credit Authority guarantees supporting small-scale renewable energy devices.
Supporting Material
Watch the introductory webinar: Consumer Finance for Small Scale Off-Grid Energy Webinar - Feb. 18, 2014
Download the webinar presentation: N. Armacost - P. Baldinger / Webinar Presentation - Feb. 18, 2014
_____________________________________________________________________
PART II: Microfinance and Remittences
Expert Contributors
Ms. Yara Akkari, Remittances Specialist, Arc Finance (USA)
Ms. Yara Akkari is leading the implementation of a business model to promote the use of remittances as a means to purchase clean energy in Haiti. Yara has spent her career in the development sector in a range of different capacities including governance, social development, microfinance, renewable energy and culture. Most recently, she worked at Eko Green, a company based in Nigeria, as a consultant. Her research and work at Eko Green contributed to the implementation of innovative organic farming and low cost ecological housing in Africa. Before joining Eko Green, Yara served as a project management and research consultant for various UN agencies. She worked for the UNDP in strategy development and institutional building for the Lebanese Ministry of Finance and the Investment Development Authority of Lebanon (IDAL) and in the promotion of cultural diversity in least advanced countries through management of projects at the International Fund for Cultural Diversity (IFCD) at UNESCO Headquarters in Paris. She also consulted for Women’s World Banking (WWB), a network of microfinance institutions, contributing to their research and communication initiatives. Yara began her career at Ashoka, an NGO that supports social entrepreneurship worldwide, where she managed fundraising, developed a newsletter on innovative solutions for social change, and supported Ashoka’s fellows in their efforts. Yara received an MS in Development Studies from the London School of Economics and a BA in International Economics from ASSAS University in Paris.
www.arcfinance.org
Mr. José Manuel González, Director de Negocios, Te Creemos (Mexico)
Mr. José Manuel González, is a founder, a partner and the COO of Te Creemos, a regulated MFI based in Mexico. Created in 2005, Te Creemos provides financial services to more than 100,000 low income people. Te Creemos has 87 branch offices and 1,500 collaborators spread across the Mexican territory with US$60,000,000 in assets and a US$45,000,000 loan portfolio. Te Creemos was one of the first recipients of an ECOMICRO prize for MFIs in Latin American to support the development of a clean energy program. ECOMICRO, which was launched in 2012, was developed by the MIF-IDB/Nordic Development Fund. From 2000 to 2004, José Manuel served as Commercial Director of BANSEFI (a National Popular Savings Bank owned by the Government). From 1985 to 1993, José Manuel was a Fund Manager at Operadora de Bolsa, a Mexican brokerage firm. José Manuel is Industrial Engineer with a degree from Universidad Iberoamericana, Mexico City.
www.tecreemos.com
Mr. Saiful Islam, Microfinance Operations Specialist, Arc Finance (USA)
Mr. Saiful Islam is Arc’s Microfinance Operations Specialist, and brings over 20 years of experience in the microfinance industry. Prior to joining Arc, Saiful was at Women’s World Banking (WWB) where he spent over 15 years working closely with some of the largest MFIs in Asia and Africa, providing strategic advice and technical assistance. His prior experience includes several years with the Shakti Foundation, a retail MFI in Bangladesh that he co-founded as well as at UNICEF Bangladesh where he served as a consultant in the Field Operations section. Saiful has spent his career supporting MFIs to improve and expand their operations, refining existing products and introduce new ones. Saiful is recognized as an expert on the group lending methodology and has successfully introduced individual lending to traditional group lending MFIs. He has also assisted several MFIs—CARD Bank (Philippines), ADOPEM (Dominican Republic), U-Trust (Uganda), KMB (Pakistan) and KWFT (Kenya)—to introduce voluntary savings. Saiful has authored several publications on savings and portfolio quality management, including a book called Introducing Voluntary Savings – A WWB How-To Guide. Saiful holds Bachelor’s and Master’s degrees in Finance from Dhaka University. www.arcfinance.org
Mr. Suresh Krishna, Managing Director, Grameen Financial Services Pvt. Ltd. (India)
Mr. Suresh K. Krishna has been at the helm of activities at Grameen Financial Services Pvt. Ltd. since its inception in 1999; he has over 15 years of experience in microfinance and entered the field of development in 1997. Under Suresh’s leadership, GFSPL has developed a focus on the double bottom line, ensuring high social impact and financial sustainability, and provides low income households with many non financial services along with financial services. GFSPL was the first MFI to introduce automation using the open-source technology, MIFOS. Under Suresh’s guidance GFSPL has received many awards and recognitions including 17th Best MFI in the world by Forbes in 2007, Pioneer award in 2006 from Grameen Foundation. GFSPL is amongst the first 3 MFIs in India to get certified by the Smart Campaign for meeting global client protection standards and the 2nd MFI to be certified by Truelift as “Achiever – Pro-poor MFI”. GFSPL has been rated mfr2 by CRISIL and alpha minus for social performance by Mcril. Suresh was instrumental in initiating the setting up of The Association of Karnataka Microfinance Institutions (AKMI) and was also part of the founding team which started microfinance industry associations including MFIN (Microfinance Institutions Network). He has served on the boards of Sa-dhan (the national body of MFIs) and FKCCI (Federation of Karnataka Chamber of Commerce & Industry). Suresh currently serves on the Board of Micro Finance Institutions Network India (MFIN) and AKMI, the Microfinance Industry Associations in India, and is also the Chairman of Microfinance Focus, and Managing Trustee of Navya Disha and GK Development Trust. He serves on the Boards of Buzz India Trust, Community for Open Source Microfinance (COSM), USA and Financial INclusion Improves Sanitation and Health (FINISH), Netherlands. Previously, Suresh worked for an NGO that focused on micro enterprise development, non-formal education and also on the promotion of women self-help groups. Suresh has also founded and run small business enterprises in computer education, industrial safety products and consultation in local area networks in companies. He has a Masters in Sociology and MPEFB from IIMB. www.gfspl.in
Mr. Sateesh Kumar, Managing Director - Global Consumer Finance, d.light Design (India/Global)
Mr. Sateesh Kumar has 25 years of experience in varied industries including microfinance, insurance and retail in South Asia and the Asia Pacific region. Sateesh’s focus has been building sustainable and progressive businesses through a strong combination of sales, operations and strategic orientation. During last three years as Executive VP, Operations at SKS Microfinance Ltd, one of the largest MFIs in India, Sateesh served as a senior manager and was responsible for the microfinance operations. Prior to this, he served as CEO of Royal Sporting House, where he developed a retail distribution business of sports goods and served as Regional Director of Aviva Life Insurance, where he increased the Bancassurance and business partnerships business multi-fold. Sateesh has international experience with and eight year-stint in Singapore in retail and international trading. www.dlightdesign.com
Ms. Radhika Thakkar is currently based in Nairobi, Kenya where she oversees global business development at Greenlight Planet, a company that provides high quality, affordable energy solutions for developing markets. She joined Greenlight Planet's flagship office in Mumbai in 2009 to expand the company's presence in African and other Asian markets. Greenlight's Sun King solar lanterns are now available in more than 30 countries and have reached over a million off-grid households around the world. Prior to joining Greenlight Planet, Radhika built a career in business development and consulting in the healthcare sector in the US. She also served as an Americorps VISTA volunteer focusing on public education reform in NYC. Radhika holds a Bachelor of Arts in International Relations from Tufts University. www.greenlightplanet.com
Mr. Raymond Serios – Special Project Manager, NWFT (Philippines)
Mr. Raymond Serios is the Special Project Manager at Negros Women for Tomorrow Foundation, an MFI based in Central Philippines. He handles new products, services and projects from the pilot to roll-out stages. He is currently in charge of NWTF’s energy loans, student loans and is also involved in NWTF’s association/community loans while also overseeing the back-office business process redesign, alternative financing and a few other social benefits that NWTF provides to its clients. Raymond is also involved in several technology-led projects at NWTF-among them mobile banking and ATMs. NWTF started providing energy loans, particularly solar lamps and energy efficient cookstoves in 2009. These products were initially offered to clients only, but as more and more people in the local communities became interested in these products, NWTF developed a special product that allows its microfinance clients to become agents that sell these products. Through this program, NWTF has substantially increased its volume of energy loans and the over-all energy loans program has become a sustainable project.
www.nwtf.org.ph
...
Please click on the following link to download the corresponding briefing notes:
Hi everyone,
We hope you’ve been enjoying Part I of this discussion series on Innovative Consumer Finance Mechanisms for Small Scale Off-Grid Energy. Week one was on “Asset Finance”, and based on the high level of engagement by all of you, The World Bank Institute team has decided to continue that debate throughout the three weeks of the e-discussion – please continue to post your questions, ideas and examples. Part II of the discussion series will focus on remittances and microfinance. To get things rolling, I have a few questions for all of you:
Remittances:
Microfinance:
Looking forward to another stimulating discussion!
Best,
Niki
Nicola Armacost
Managing Director, Arc Finance | www.arcfinance.org
I'd like the opinions of any of the experts, my colleagues at Arc, as well as any of the participants:
1) whether the bigger opportunity for renewable energy finance via remittances is in domestic or international corridors; and
2) which are the markets, in both categories, most ripe for targeting: that is, which countries or corridors have the regulatory environment, demand, network, and all the other ingredients for successful energy remittances?
I'd also like the throw the following out there: which products, after Solar Portable Lighting, are most appropriate for this affordability mechanism and why?
Thanks,
Sam Mendelson
Arc Finance
Hi Guys, a couple of thoughts from our experience in the Philippines:
1. There are a couple of risk factors for the MFI to look at when going into energy lending such as the product quality, after-sales servicing, logistics and distribution.
Most of these can be mitigated by either doing proper due diligence on the supplier, checking for adherence to standards/ accreditation or testing out the product itself. Proper planning and spelling out the roles of the partner groups (MFI, Supplier, Distributor. etc) is also important that way most potential issues have planned solutions already.
2. Partnerships really start with understanding the over-all direction and goals of the project. Again, defining the roles & expected service levels of each one is important as well as regular monitoring and communication between partners.
3. Within MFIs the biggest challenge in implementing clean energy loans is really opening up the minds of the credit staff/ loan officers to offer the products to the clients. Initially, people hesitate knowing this is additional work for them while there are other things they cannot control such as the quality of the product and necessary technical after-sales, however proper education on the product and the benefits it can bring to both clients and the credit staff, strong commitment & support from management and enough incentives has proven that it this hesitation can be solved.
One of the things we incorporate in our education modules for the staff is the opportunity cost of using the alternative vs the solar lamp/ systems. This has proven to be effective for them as they are able to quantify, in credit people terms, some of the benefits of the product/s. With this, we also add the benefits it gives the credit staff such as a higher portfolio without adding new clients, a better possibility of client retention - more contact with client and others.
I guess moving the loan officer from the traditional concept of one recruiting clients, assessing the loans, releasing and collecting it to one that really builds and maintains the relationship of the MFI to the client is one of the first things the MFI must make when deciding to go to clean energy finance.
Dear all,
I find the thoughts and experiences shared by all of the Expert contributors really useful. I am from India and remittances and MFIs have been major tools for financing of renewable devices, initially in a unorganized manner but later quite streamlined.
Currently I am working on exploration of innovative finance for renewable energy devices in Nepal. The RE devices we have considered are small ones (Improved cook stoves, Pico PV systems and community electrification systems) catering to poor households located in hilly remote villages. Their paying capacity is very limited. Remittances from diaspora located abroad, mostly in India but also in the Middle East are definitely important means of finance. However, it is not an organized practice and this is not well recognized by vendors and financial institutions. There are MFIs in Nepal but most are small and in nascent stage of development. Most of them are not involved in financing rural energy products. We found that there is not much awareness in rural population about MFIs. Many of them are Savings and Credit Cooperatives. Also, the MFI’s capacity in financing RE products is quite low and there needs to be a major capacity building initiative. In this, I agree with opinions of the Experts that MFIs cannot be considered as “sales force”. It is very much essential to have a separate group working with MFIs whose members know the technical features, operation and other factors of the RE and the needs of the users.
I would welcome the thoughts of the experts in the situation prevailing in Nepal.
Thanks,
Vinay Deodhar