Reinventing Microfinance
through Solving the “Last-Mile
Problem”
Bringing Clean Energy Solutions and Actionable
Information to the Poor
Alex Counts, President and CEO
Grameen Foundation
With assistance by Julia Arnold, Muhammad Nurul Alam,
Heather Thorne, and Nicola Armacost
Overview
• The microfinance industry is experiencing an
identity crisis
• Recent criticisms provide the opportunity for selfreflection by the industry
• Microfinance has many unique strengths,
including its human & physical infrastructure, that
it can leverage to address larger societal problems
• Energy poverty and information poverty are two
areas with great potential
Microfinance: Key Issues as of 2011
A social innovation that scaled was criticized, often
unfairly, but some issues were real:
• Poorly designed, overpriced products not segmented
• Undertrained staff responding to wrong incentives
• Policies and practices encouraged over-indebtedness
• Excessive profits due to oligopolistic market dynamics
raising questions about intent/outcomes
• Profits leading to excessive private benefit for non-poor
Result: In key markets, m/f losing support of civil society
An Agenda for Change
How can microfinance respond?
• Embrace consumer protection efforts and apply to all
• Define social purpose driven microfinance & adopt
standards (“Seal of Excellence”)
• Re-align incentives & reset investor expectations
• Coordinate thru new and invigorated apex bodies
– Microfinance CEOs Working Group, SEEP, SPTF, Smart, etc.
• Focus on leveraging infrastructure to meet client needs
– Examples: Energy Poverty and Information Poverty
Climate Change, Microfinance & Poverty
• Scientific consensus: climate change largely from human
activity is coming – really!
• Poor will be major victims of climate change
• Poor can also help slow/reduce it
• MFIs can help poor slow climate change through clean
energy lending to clients
• MFIs can help poor prepare for climate change
– See Asif Dowla paper, “Climate Change and Microfinance”
– Free on www.grameenfoundation.org
Energy Poverty: A Huge Issue
• Poor lack access to affordable lighting & cooking fuel
• Indoor air pollution causes 1.4 million premature
deaths every year, more than malaria and tuberculosis
combined
– By 2030 it is projected to exceeded the number of deaths
from HIV/AIDS
• About 1.7 billion poor people
have no access to electricity
– Market gap of $195 billion
– More than combined portfolios of
all the world’s MFIs
Solutions Abound!
• Poor households spend 20-25% of their household
income on energy services
• Cleaner and cheaper alternatives exist, though the lastmile problem has so far stymied widespread adoption
• Existing solutions include:
solar home systems,
micro-utilities, biogas plants,
improved cooking stoves,
insulation, and solar lanterns
• Pound for pound, improved cook stoves ($13) have
greatest positive impact on climate change
Organizations at the Forefront (from paper)
• MFIs w/ Energy Lending
–
–
–
–
–
–
–
Grameen Bank/Shakti
Emprenda
XacBank
SEWA Bank
Faulu Kenya
Fonkoze
BASIX
• Energy Companies
– SELCO
• Solar Lantern Companies
–
–
–
–
Barefoot Power
Greenlight Planet
ToughStuff
d.light
• GF Tech-Enabled
Microfranchise Models
–
–
–
–
CKW Uganda
Village Phone Uganda
AppLab Uganda
Village Phone + AppLab
Indonesia
Grameen Shakti
• Fewer than 40% of Bangladesh’s 162 million people
have access to grid electricity
• GS offers three products
– Improved cook stove: 214,125 installed (126,549 in 2010)
– Biogas plant: 15,543 installed (5,127 in 2010 alone)
– Solar home system (SHS): 539,504 installed (1000/day now!)
• Reasons for success:
– Custom financing methodology
to meet the needs of the
rural communities
– Excellent customer service
– Training women and youth
to build and support SHSs
XacBank (Mongolia)
• Ulaanbaatar, Mongolia, is the world’s most polluted
capital city
• XacBank (“HaasBank”) provides two energy
products to poor, migrant populations
– Ger insulation blanket for yurts, which emit eight tons of
carbon without a blanket and about three with it
– Highly efficient wood burning stove
• XacBank pays for its program through carbon
credits
– Critical Role of MicroEnergy Credits (Seattle, USA)
Information Poverty
• The poor rarely have easy, effective access to
available knowledge that could help them
• Need information about: agriculture/weather,
health, markets/prices, jobs, education
• Information must be: actionable, timely,
contextualized, locally relevant
• MFIs can use mobile technology, specialized
applications and their field staff to bring relevant &
actionable information to the poor
Community Knowledge Worker (Uganda)
• “Trusted intermediary” peers provides farmers with
access to valuable information through mobile phone
• Can also collect/aggregate information about farmers
for govt. agencies, corporations, & NGOs for a fee
• MFI clients and staff can play the role of Community
Knowledge Worker (CKW)
• 725 CKWs deployed in Uganda, reaching 45,000 farmers
 >85% have adopted new practices based on CKW info
• Uses GF’s Progress out of Poverty Index
(PPI) scorecard to track poverty figures/
outcomes
Lessons Learned
• Time to re-think the microfinance business model
– Less greed & naiveté, more value creation for poor
• MFIs can contribute to bridging the “last mile” for
bringing clean energy solutions to the poor
• Low-hanging fruit for MFIs: finance entrepreneurs
who can sell clean energy solutions to the poor
• Rapid growth of mobile phones offers a unique
opportunity for MFIs & pro-poor orgs to combat
information poverty by bringing actionable and
timely info on health, agriculture, markets, etc.