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Universal Energy Access Should be Financial Inclusion's Top Priority for Climate Action and Gender Equality

Leadership Insights: A series from FinEquity’s Technical Advisors
Photo credit: Sujan Sarkar


SD5 + SDG7 = SDG13?


(SDG) 5+ (SDG) 7 = (SDG) 13?  

Creating universal access to clean energy could be the biggest opportunity for financial inclusion’s impact on mitigating climate change and building the resilience of low-income women and men to economic shocks. This is especially pertinent as the discussion around financial inclusion moves from access and use of financial services to improving the lives and livelihoods of marginalized populations.  

Climate change is one of the key threats that hang over the lives of low-income families in many parts of the world and its impacts are not equal. Low-income women often suffer the harshest consequences despite being the smallest contributors, as reflected in a recent CGAP Leadership essay. As climate change and gender equality become more important than ever before, discussions often center on the impact financial inclusion can have on climate change or on increasing economic opportunities for women, but less so on the interconnectedness of all three – financial inclusion, gender equality and climate change.  

By considering the interconnectedness of all three issues there is potential to create a more robust and impactful suite of sustainable development solutions. Given that energy is the primary source of greenhouse gas emissions and energy poverty limits women’s economic opportunities, we argue that increasing women’s financial inclusion and women’s access to renewable energy could lead to climate mitigation and, we hypothesize, resilience to climate change. However, to achieve this potential impact we must try to understand: what is the opportunity here for both women and the private sector? 

Why does energy matter to women? 

Access to energy is a key enabler of economic growth and poverty reduction in low- and middle-income countries (LMICs). Access to light and power gives women more time to finish their household chores, enables their children to study longer, and provides safety at night – adding up to improvements in quality of life. This is especially important given that women and girls are more likely to be “time poor” and responsible for the majority of the unpaid care tasks within a household. 60 Decibels found that 64% of female customers report their life has improved “very much” since acquiring a solar lantern as compared to 56% of men. Research in Brazil showed that girls in rural areas with access to electricity are 59% more likely to complete primary education than those without.  

Studies from Tanzania and M-Kopa’s distribution across Kenya, Uganda, Nigeria, and Ghana show PAYGo systems for lighting, clean cookstove, energy efficient ovens, mobile phones, refrigerators and other household appliances are improving the lives of women. There are increases in time savings, cost savings, lower stress, increased reliability, and income gains. PAYGo companies are also using their credit scoring systems to support smartphone financing, which contributes to addressing the gender digital divide. While evidence is still anecdotal, we believe that increased access to off-grid energy systems through affordable financing solutions will increase the overall well-being of women and girls in LMICs. CGAP’s analysis on the impact of PAYGo financing for renewable energy products on women highlights some of the promise (see theory of change below).  

Credit: CGAP 2021, Sai Krishna Kumaraswamy

Access to “productive use leveraging solar energy” (PULSE) appliances, such as machinery for food processing and/or production or access to refrigeration for home-based or small enterprises can significantly increase productivity and grow businesses. Indian women quadrupled household income using a solar-powered roti maker, a machine that makes local flatbreads (roti) at home for significantly less time than the manual process, and sells them to local restaurants. Some 71% of women who have access to these appliances are more likely to start a business using these productive assets (e.g., refrigerators). These additional income streams provide a compounded positive impact, improving household financial resilience.  

What is the gender gap in access to energy?

Access to energy – whether on-grid or off-grid – is almost always measured at the household level, unlike financial inclusion. While it would be safe to assume that women living in male-headed households benefit from household energy access such as lighting and the ability to charge mobile phones, it is important to understand that as a result of gender norms and gendered roles in the household and economy, women’s energy needs are different from men.  

The most commonly used statistic on the energy access gap is 770 million people without access to energy, of which 77% are in Sub-Saharan Africa (SSA), and 84% of the population that lacks access to electricity lives in rural areas. Unfortunately, this data is not sex-disaggregated. Given women’s responsibility for cooking within a household, a commonly used proxy for understanding women’s energy exclusion is the 2.6 billion people that do not have access to clean cooking stoves, which implies that even in households that are either connected to the grid or have access to off-grid solutions, women’s energy needs may not be prioritized due to prevailing gender norms that do not value women’s time.  

In addition, the proxy measure of access to clean cooking only accounts for one aspect of a woman’s energy needs and ignores the fact that many women are involved in income-generating activities and might have additional energy needs to support their enterprise(s). Even though the role of access to energy as a catalyst for economic growth is well recognized, literature on the impact of access to energy for women’s entrepreneurship is limited at best.  

While the energy poverty gender gap is difficult to validate and varies from country to country, lack of access to clean, reliable, and affordable energy is a challenge for billions of women. Our colleagues at ENERGIA believe this to be fact and base their policy guidance on the assumption that men and women have fundamentally different energy uses which in most cases are not adequately addressed in country-based energy policies.  

PAYGo & Women's Resilience to Climate Change Events: For women in climate-sensitive geographies, many of the tools that help build climate resilience and adaptation are increasingly 'digital' (e.g., information, education services, farming advice, etc.). Early warning systems in Island nations often use mobile-based notification systems that put women at a disadvantage as they typically are less likely to own phones and/or have access to phone charging than men. Phone PAYGo systems can mean the difference between life and death for some women. 

Why is there an Energy Gender Divide and what role do Financial Services play in addressing it? 

Existing literature references numerous challenges to women’s access to energy. First, despite the burden of collecting and cooking biomass being largely placed on women, the decision-making power to purchase any productive asset would likely be held by the male head of household. As the previously mentioned study from Tanzania found, even when there is “joint decision making” about energy-related asset purchase for the household, men often have the final say.    

Second, even when women can make the decision to purchase a renewable energy asset either for cooking or for their enterprise, financing the purchase is limited by the face prerequisites. In the case of PAYGo-based assets, this includes access to mobile phones, which women are less likely to have (there is a 7% global gender gap in access to mobile phones and a 13% gender gap in SSA), and the ability to open and operate digital wallets, which require identity documents (IDs) to meet Know Your Customer (KYC) requirements, but one in five women do not have national IDs. As newly-released Global Findex data shows, mobile money has become an important enabler of financial inclusion in Sub-Saharan Africa, presenting an opportunity for women-focused PAYGo to close the gender energy gap while also creating digital transaction records. 

Lastly, a challenge that many people – but especially women – face in accessing renewable energy technologies is financing purchases beyond basic solar home systems (SHS).1 A recent study from India assessing the state of financing for small solar-powered appliances in two specific sectors – tailoring and digital services (copiers, printers, computers, etc.) – highlights the mismatch in terms of the size and tenure of financing that is available to women entrepreneurs, despite the fact that they saw a significant increase in income after switching to these appliances. When it comes to more complex PULSE appliances such as those used in agriculture, costs can be anywhere between USD 600 to USD 2,000. This is a much higher figure than average loans available (likely microfinance and/or digital finance lending) and when credit is available, it typically has difficult-to-meet collateral requirements for most women in LMICs.  

An overlooked opportunity for the private sector 

Inclusive digital ecosystems are about using digital tools to improve quality of life for their citizens, and there is growing awareness among the private sector about the link between renewable energy business models and digital financial services (DFS) like PAYGo Energy. Often, these business models are powered by the availability and use of DFS in that market ecosystem. This linkage begins to nudge us towards a more holistic understanding of why, as a financial inclusion community, we may want to think about not just “one woman, one account” but also “Sustainable Energy For All (especially women)” as a critical catalyst for the growth of inclusive digital economies. 

As urban markets become more saturated, both DFSDFS and off-grid systems providers will have to look to “frontier markets” (semi-urban and rural areas) to explore how to make these markets viable. Lighting Global estimates, “The total ‘addressable’ market in sub-Saharan Africa for three key PULSE appliances—irrigation pumps, cooling & refrigeration, and agro-processing…[is] USD 11 billion today. When we factor in an affordability constraint (i.e., which of those farmers could afford the appliance) the ‘serviceable’ market is reduced to USD 700 million.”  

Given this data, we suggest the private sector consider how improving the affordability of these off-grid systems as a significant opportunity not only for climate-smart business models, but for increasing women’s access to energy and income-generating activities as well. There are billions of dollars targeting climate-smart, gender-smart and/or ESG-focused investment available for the private sector to capitalize upon like the influential 2X Challenge which recently has released a focus on gender-smart investments for climate action. In addition, there are opportunities to leverage the carbon credit market if PULSE systems can show impact at scale. Examples in the sector leading the way are PAYGo to Clean Cookstoves.  

How do we deliver on the promise? 

Despite the drop in cost and increased availability, off-grid energy-based appliances remain out of reach for most low-income individuals, especially women. Innovative asset financing models such as buy now/pay later, micro leasing, rent-to-own and assets-as-a-service are being tested out across the globe and have shown initial promise. To realize the promise of these business models to address “sustainable energy for all”, contribute to gender equality and stimulate climate action, we make the following recommendations: 

  • Seize the opportunity: First, the case must be made for how increased access to off-grid energy technologies can contribute to increased livelihood opportunities and income for women. The Generation Equality Forum’s Feminist Action for Climate Justice Coalition has already designated this as one of their top priorities. To make a solid case, however, we need data on 1) unmet energy access, and 2) financing needs of women for off-grid products. When this data exists (which is rarely), it is typically only available at a country level and likely to be describing on-grid energy access at the household level, not the entrepreneur level. Both data sets are important to build sustainable business models. If we know why gender energy access gaps exist in some countries while not in others, it will provide some direction toward focused efforts to reduce the gap and contribute to universal access to clean and renewable energy.  
  • Invest in innovations for off-grid systems asset financing: Testing new asset financing business models and scaling them requires capital. Donors and investors can play a critical role in testing and scaling financing business models that promote women's access to renewable energy technologies. The growing interest amongst investors on gender lens investing and investing in climate change mitigation presents an opportunity but requires investors to communicate these priorities to their investees.  

Now what? Prioritize financial inclusion’s investment in women’s access to energy 

Creating universal access to clean energy is the most important task we can undertake to mitigate the impacts of climate change while ensuring adaptation and resilience for the most vulnerable around the world. Increasing women’s access to off-grid energy solutions both decreases reliance on carbon-based power and increases the amount of time they have. With increased time, women have increased livelihood and income-earning opportunities, which increases the economic value of that time and ideally, household income resilience to any economic shock, including climate change.   

As financial inclusion stakeholders work to determine their frameworks to help address the impacts of climate change, access to clean energy should be prioritized. Given that off-grid energy models tied to digital finance systems are growing in popularity and, in some cases, represent some of the largest use cases for digital finance in LMICs, the synergies make business sense. Investing in understanding the size of the opportunity at a country level and how to match financing models to off-grid businesses go hand-in-hand toward achieving the vision of creating universal access to energy. 

1PAYGo companies have increased the affordability of the basic SHS, which can be used for two to three lights and phone charging and costs in the $125 - $200 range. Group-based lending models and microfinance place clean cookstoves that cost between $40 -$80 within reach for women in many parts of the world, but limited household decision-making, lack of a credit history and gender norms can still sometimes limit their purchase power.


The authors would like to thank Ashley Allen of Oatly, Alison Boess of ENGIE, and Rebecca Rhodes of GOGLA for their valuable review, comments, and suggestions; and Rebecca Radix for her editorial and publishing support.  


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Elvis Isaac Keuber , DanChurchAid, Uganda
15 July 2022

Wonderful, what a mazing research. Until now i have been troubled on how one would integrate financial inclusion models into environment and energy programing to build a much more resilient community but i would like to thank and appreciate all the efforts put in this research together. The publication is so comprehensive with evidences that provides the reader with a clear understanding why access to energy should be prioritized in financial inclusion. This can help so much in coming with an innovative models for financial inclusion while designing programs.
I am a financial inclusion practitioner with five years working experience enhancing financial inclusion in the rural areas with focus on integrating and scaling prototypes for VSLA digitalization and innovative farming solutions. What i have read here has provided me with more insights that financial inclusion is a broad section that requires an holistic approach from all the lens of programs.

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