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MFIs and Energy Lending (1/2) Profiles and drivers Marion Allet mallet@ulb.ac.be

MFIs and Energy Lending (1/2) Profiles and drivers Marion Allet mallet@ulb.ac.be Université Libre de Bruxelles, CERMi Université Paris 1 Panthéon-Sorbonne, IEDES-UMR 201. 1. PROFILES OF MFIs OFFERING ENERGY LOANS. Microfinance Environmental Performance Index (MEPI).

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MFIs and Energy Lending (1/2) Profiles and drivers Marion Allet mallet@ulb.ac.be

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  1. MFIs and Energy Lending (1/2) Profiles and drivers Marion Allet mallet@ulb.ac.be Université Libre de Bruxelles, CERMi Université Paris 1 Panthéon-Sorbonne, IEDES-UMR 201

  2. 1. PROFILES OF MFIs OFFERING ENERGY LOANS Microfinance Environmental Performance Index (MEPI) Source: Allet, M. (2011) ‘Measuring the environmental performance of microfinance’

  3. 1. PROFILES OF MFIs OFFERING ENERGY LOANS Quantitative study: sample of 160 MFIs worlwide (in 2011) • 24% already offer Energy Loans (38 MFIs) • 14% are in the process of developing Energy Loans (23 MFIs)

  4. 1. PROFILES OF MFIs OFFERING ENERGY LOANS Equipmentspromoted by MFIsofferingEnergyLoans 21 MFIs

  5. 1. PROFILES OF MFIs OFFERING ENERGY LOANS Percentage of MFIsofferingEnergyLoans per REGION

  6. 1. PROFILES OF MFIs OFFERING ENERGY LOANS Percentage of MFIsofferingEnergyLoans per SIZE < 10,000 borrowers Between 10,000 and 30,000 borrowers > 30,000 borrowers

  7. 1. PROFILES OF MFIs OFFERING ENERGY LOANS Percentage of MFIsofferingEnergyLoans per LEGAL STATUS

  8. 2. DRIVERS FOR ENERGY LENDING • Qualitative study: Semi-structured interviews of 23 MFIs’ directors (2010-2011) • MFIs engaging in energy lending are mainly driven by competitiveness motives: • They identified a market need. • They perceive a clear business opportunity. • The triggering role of technical assistance Source: Allet, M. (2012) ‘Why do microfinance institutions go green?’

  9. MFIs and Energy Lending (2/2) Challenges and opportunities Marion Allet mallet@ulb.ac.be Université Libre de Bruxelles, CERMi Université Paris 1 Panthéon-Sorbonne, IEDES-UMR 201

  10. 3. CHALLENGES IN ENERGY MICRO-LENDING « MFIs have no skills… » • Hire an energy expert (FONDESURCO) Creation of a new function, toocostly? • Partner with an energy provider How to conciliatetwodifferentmindsets? • Create a separateentitywith a specialized team (Grameen Shakti). Toocomplicated, not for all MFIs?

  11. 3. CHALLENGES IN ENERGY MICRO-LENDING « Energylendingis more risky… » No more payment if the equipment breaks down: • Select distributors/providers for theirequipmentquality How to manage the absence of labels? Whowill monitor? • Ensure the availability of guarantees and after-sale services • Train clients on equipment use Not a productiveloan?? • Adaptinstallments to energysavingsamounts

  12. 3. CHALLENGES IN ENERGY MICRO-LENDING « Loanofficers have no time… » • Review objectives and incentives • Negotiate a commission on eachequipment sale to compensate for productivityloss Let’sbecautious on the commercial role of LOs!

  13. MFIs and EnergyLending Marion Allet mallet@ulb.ac.be Université Libre de Bruxelles, CERMi Université Paris 1 Panthéon-Sorbonne, IEDES-UMR 201 Thanks for your attention

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