Derek Newberry

Where Microfinance and Climate Change Meet

DOThe World Bank recently released the April edition of Development Outreach, which happily addresses head-on the connections between development and climate change. I was pleased to see articles on topics as diverse as development for climate change adaptation and environmental considerations in China’s growth, but NextBillion readers might want to check out a piece called “Microfinance: Climate Change Connections” in particular.

I was surprised and maybe even a little disappointed to see that most of the article by CGAP’s Katharine McKee focused more on the possibilities of using microfinance to provide renewable energy to BoP households and businesses rather than financing microenterprises working in environmental sectors.

Still, Katharine does a good job of summarizing current challenges and opportunities for creative partnerships that utilize microfinance to expand the consumer base for renewable energy. These include:

  • Generating BoP demand for low cost, renewable energy sources and
  • The conflict between the large-scale, long-term investment needed for these projects vs. the short-term, small-scale nature of microfinance.

The article is certainly worth a read and importantly pushes forward dialogue between the microfinance community and sustainable development practitioners.