MFIs and Energy Lending (1/2)
Profiles and drivers
Marion Allet
mallet@ulb.ac.be
Université Libre de Bruxelles, CERMi
Université Paris 1 Panthéon-Sorbonne, IEDES-UMR 201
contact@e-mfp.eu
www.e-mfp.eu
1. PROFILES OF MFIs OFFERING ENERGY LOANS
Microfinance Environmental Performance Index (MEPI)
Environmental
policy
Non-financial
services
3
1
Ecological
footprint
0
0
Green
4
microcredits
Environmental
risk assessment
Source: Allet, M. (2011) ‘Measuring the environmental performance of microfinance’
contact@e-mfp.eu
www.e-mfp.eu
1. PROFILES OF MFIs OFFERING ENERGY LOANS
Quantitative study: sample of 160 MFIs worlwide (in 2011)

24% already offer Energy Loans (38 MFIs)

14% are in the process of developing Energy Loans (23 MFIs)
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1. PROFILES OF MFIs OFFERING ENERGY LOANS
Equipments promoted by MFIs offering Energy Loans
21 MFIs
Solar lanterns
Efficient cook stoves
13 MFIs
Photovoltaic systems
12 MFIs
Solar water-heaters
12 MFIs
Biogas digesters
9 MFIs
Solar cook stoves
8 MFIs
Solar dryers
Other
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7 MFIs
2 MFIs
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1. PROFILES OF MFIs OFFERING ENERGY LOANS
Percentage of MFIs offering Energy Loans per REGION
EXISTING
ASIA
25%
AFR
24%
MENA
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34%
EECA
LAM
IN PROCESS
16%
18%
9%
18%
17%
16%
8%
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1. PROFILES OF MFIs OFFERING ENERGY LOANS
Percentage of MFIs offering Energy Loans per SIZE
EXISTING
SMALL
< 10,000 borrowers
MEDIUM
Between 10,000 and
30,000 borrowers
LARGE
> 30,000 borrowers
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IN PROCESS
20%
22%
25%
24%
14%
10%
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1. PROFILES OF MFIs OFFERING ENERGY LOANS
Percentage of MFIs offering Energy Loans per LEGAL STATUS
EXISTING
BANK
NBFI
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IN PROCESS
31%
15%
25%
NGO
22%
COOP
21%
18%
13%
11%
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2. DRIVERS FOR ENERGY LENDING
 Qualitative study:
Semi-structured interviews of 23 MFIs’ directors (2010-2011)
 MFIs engaging in energy lending are mainly driven by
competitiveness motives:
 They identified a market need.
 They perceive a clear business opportunity.
 The triggering role of technical assistance
Source: Allet, M. (2012) ‘Why do microfinance institutions go green?’
contact@e-mfp.eu
www.e-mfp.eu
MFIs and Energy Lending (2/2)
Challenges and opportunities
Marion Allet
mallet@ulb.ac.be
Université Libre de Bruxelles, CERMi
Université Paris 1 Panthéon-Sorbonne, IEDES-UMR 201
contact@e-mfp.eu
www.e-mfp.eu
3. CHALLENGES IN ENERGY MICRO-LENDING
« MFIs have no skills… »
 Hire an energy expert (FONDESURCO)
Creation of a new function, too costly?
 Partner with an energy provider
How to conciliate two different mindsets?
 Create a separate entity with a specialized team (Grameen
Shakti).
Too complicated, not for all MFIs?
contact@e-mfp.eu
www.e-mfp.eu
3. CHALLENGES IN ENERGY MICRO-LENDING
« Energy lending is more risky… »
No more payment if the equipment breaks down:
 Select distributors/providers for their equipment quality
How to manage the absence of labels? Who will monitor?
 Ensure the availability of guarantees and after-sale services
 Train clients on equipment use
Not a productive loan??
 Adapt installments to energy savings amounts
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3. CHALLENGES IN ENERGY MICRO-LENDING
« Loan officers have no time… »
 Review objectives and incentives
 Negotiate a commission on each equipment sale to
compensate for productivity loss
Let’s be cautious on the commercial role of LOs!
contact@e-mfp.eu
www.e-mfp.eu
Thanks for your attention
MFIs and Energy Lending
Marion Allet
mallet@ulb.ac.be
Université Libre de Bruxelles, CERMi
Université Paris 1 Panthéon-Sorbonne, IEDES-UMR 201
contact@e-mfp.eu
www.e-mfp.eu