Using Microfinance to Expand Access to Energy Services: Summary of Findings
This paper presents findings from a study that examined business models, clients and operations of selected MFIs in Asia, Africa, and Latin America and the Caribbean that currently have energy lending programs. If appropriately designed, MFI loans can provide clients with access to high quality modern energy services by closely matching loan payments to existing energy expenditures or income flows. The study presents findings about:
- Different methods of establishing energy lending;
- Energy products offered;
- Role of donors and governments;
- Business and financial models for energy lending;
- Potential risks for MFIs in energy lending.
The paper sets out success factors for expanding access to finance for energy services and products for the poor. These highlight the importance of:
- Building capacity to sell the product and educate the market;
- Flexibility for deeper market development;
- Reaching out to existing infrastructure and distribution networks;
- Risk mitigation;
- Regulatory issues;
- MFIs and energy companies charting ways to work together;
- Taking advantage of new funding strategies.