Microfinance Infrastructure Can Expand Access to Energy in Africa

Wednesday, October 5, 2011

The Center for Financial Inclusion at ACCION has on Tuesday released a report ’Microfinance and Energy Poverty’. The report highlights strategies for leveraging infrastructure of microfinance institutions and savings groups to increase access to energy in Africa.

According to the findings of the report, there is a large and growing demand for small-scale household off-grid energy products. A number of small energy start-up companies have set up shop in the past five years. However, the sector needs to improve reliability in its value chain.

With their wide outreach in rural areas, MFIs can bridge gaps like educating clients about the benefits and availability of clean energy products, making the products physically available, financing product purchases, and ensuring customer service.

“Microfinance institutions and savings group promoters that reach many off-grid clients may wish to become promoters of micro-energy solutions and, if so, they may wish to start with solar lighting”, it says.

MFIs or savings group promoters that market an energy product in conjunction with a savings program can incentivize savings. Since MFI clients typically start to save money within a few weeks or months of taking an energy loan, quite a bit of capital can be unlocked through savings.

Source: Microfinance Focus (link opens in a new window)