AMERMS Workshop 8: Microfinance for a Sustainable Environment (PPT by Patrick Lumumba)

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Sustainable Environment: Using Microfinance and People’s Own Initiatives to Propel Investment in Renewable Energy, Water and Sanitation
ROOM: Lenana Hall
Translated session: English & French
PANEL:
Panelist: Mr. Patrick Lumumba, East Africa Watercredit Program Officer, Water.org, Kenya
Panelist: Mr. Ziad Al Refai, Executive Director, Jordan Micro Credit Company ''Tamweelcom'', Jordan
Panelist: Mr. David Kuria, CEO, Ecotact Limited, Kenya
Panelist: Mr. Tamim Islam, Director - Development, Grameen Trust, Bangladesh on behalf of Abser Kamal, Managing Director, Grameen Shakti, Bangladesh

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AMERMS Workshop 8: Microfinance for a Sustainable Environment (PPT by Patrick Lumumba)

  1. 1. Investment Opportunities for Micro-Finance Institutions in Renewable Energy, Water and Sanitation Presentation by Patrick Lumumba East Africa WaterCredit Programme Officer
  2. 2. Water.org and WaterCredit <ul><li>What is Water.org? </li></ul><ul><ul><li>Non-profit organization founded in 1990 to address water and sanitation crisis (by a former UNC graduate) </li></ul></ul><ul><ul><li>Relaunched as Water.org with Matt Damon in 2009 </li></ul></ul><ul><ul><li>Active in South Asia, East and West Africa, and Central America </li></ul></ul><ul><ul><li>Work with local implementing partners to execute effective, sustainable programs </li></ul></ul><ul><ul><li>Offer mix of financing models, including WaterCredit </li></ul></ul><ul><li>What is WaterCredit? </li></ul><ul><ul><li>WaterCredit enables households and communities to gain access to credit to access water and sanitation. </li></ul></ul><ul><ul><li>First projects began in 2004 </li></ul></ul><ul><ul><li>Current programs in Bangladesh, India & Kenya. Other countries under consideration for expansion. </li></ul></ul><ul><ul><li>Over 140,000 people have benefited to date </li></ul></ul>
  3. 3. What is Renewable Energy? <ul><li>Renewable Energy is energy which comes from natural resources such as sunlight, wind, rain, tides and geothermal heat which are naturally replenished. In 2006, 18% of global final energy consumption came from renewables. </li></ul>Type % contribution Biomass 13.0 Hydro-electric 3.0 Wind 2.4 Solar Bio-fuels
  4. 4. Micro-Credit for Water and Sanitation <ul><li>This is an innovative application of micro-credit to provide loans to small enterprises and households in order to increase access to an improved water source and sanitation. Examples of WatSan products include </li></ul>Type Type Toilets, Septic Tanks & Latrines Water Asset Financing Water Connections SME loans for WatSan Water Harvesting Package Water Value Additions products
  5. 5. Opportunities for MFIs in Renewable Energy, Water and Sanitation (REWS) <ul><li>Globally, over 850M entrepreneurs are in need of finance </li></ul><ul><li>In most developing countries, over 50% of the population do not have access to finance </li></ul><ul><li>Over 0.9B people do not have access to clean water; </li></ul><ul><li>Over 2.6B people do not have access to proper sanitation </li></ul><ul><li>Active poor in developing countries spend about 6-8% of their total income on different types of energy </li></ul><ul><li>NB: Kenya has the world’s highest household solar </li></ul><ul><li>ownership rate with roughly 30,000 small (20-100watt) </li></ul><ul><li>solar power systems sold per year. </li></ul>
  6. 6. Opportunities for MFIs in REWS contd. <ul><li>As of today, MF has reached about 130M people in developing countries many of whom live in areas with severe water shortages and poor sanitation. </li></ul><ul><li>Potential demand to the tune of USD 12B in microloans in the next 12 years mainly for rural sanitation ( www.gatesfoundation.org ) </li></ul><ul><li>People’s/client own initiatives </li></ul><ul><ul><li>Client demand on MFIs </li></ul></ul><ul><ul><li>People’s creativity </li></ul></ul><ul><ul><li>Groups/SHGs/CBOs coming together through REWs SMEs </li></ul></ul><ul><li>Government Initiatives </li></ul>
  7. 7. Opportunities for MFIs in REWS contd. <ul><li>Indirect income revenue for their clients </li></ul><ul><li>Increased retention of clients by MFIs by offering additional products; </li></ul><ul><li>Up-scaling of existing successfully donor REWS projects </li></ul><ul><li>Facilitate their clients to own assets that improve their Quality of Life . ‘Water is Life. Sanitation is Dignity. Renewable Energy is the future’. </li></ul><ul><li>It enables MFIs meet their Multiple Bottom Line missions </li></ul>
  8. 8. Challenges Hindering MFIs from Up-scaling REWS Products <ul><li>Lack of specific REWS Credit product services </li></ul><ul><li>Lack of REWS expertise </li></ul><ul><li>Perceived risks associated with REWS Credit products </li></ul><ul><li>REWS products are not direct income-generating products </li></ul><ul><li>‘ Before-Sales’ logistics and ‘After-Sales’ issues raised by clients on REWS Credit products </li></ul>
  9. 9. Challenges Hindering MFIs from Up-scaling REWS Products contd. <ul><li>Inadequate credit capital </li></ul><ul><li>Perception by the public that provision of REWS is the role of the Government </li></ul><ul><li>Lack of support to conduct market development campaigns, promotion, exposure visits etc </li></ul><ul><li>Inhibiting MFI regulatory frameworks </li></ul><ul><li>Tracking of REWS products is a challenge </li></ul>
  10. 10. Possible Solutions to the Challenges <ul><li>Lack of Specific REWS Credit Products : </li></ul><ul><ul><li>Assistance to develop appropriate products </li></ul></ul><ul><ul><li>Partnership with manufacturers and other service providers to develop innovative products </li></ul></ul><ul><ul><li>Integration of Research & Product Development </li></ul></ul><ul><ul><li>Establishment of Special Project Departments </li></ul></ul><ul><li>Lack of REWS Expertise : </li></ul><ul><ul><li>Partnerships and collaborations </li></ul></ul><ul><li>Perceived Risks : </li></ul><ul><ul><li>Design Risk Management Frameworks </li></ul></ul><ul><ul><li>Some of the risks are just perceived </li></ul></ul>
  11. 11. Possible Solutions to the Challenges contd. <ul><li>Logistics Challenges : </li></ul><ul><ul><li>Proper pilot-testing processes </li></ul></ul><ul><ul><li>Well-thought out and well-structured collaborations </li></ul></ul><ul><li>Inadequate Credit Capital and Support : </li></ul><ul><ul><li>Convincing Wholesale Lenders and Development Partners on the sustainability of REWS Credit Products and their impact to improve quality of life of clients </li></ul></ul><ul><ul><li>Its an opportunity for philanthropic partners to facilitate/capacitate MFIs to initiate and institutionalize REWS products </li></ul></ul>
  12. 12. WaterCredit Innovations by Water.org <ul><li>Microfinance used institutions as conduit for WatSan loans </li></ul><ul><li>Strategic subsidies for MFIs to develop WatSan loan programs </li></ul><ul><li>Recycling and leveraging end user payments </li></ul><ul><li>Partnerships among organizations that enable them to reach more people by doing what they do best </li></ul><ul><ul><li>Water.org: Program design & management, capacity development </li></ul></ul><ul><ul><li>NGOs: Community mobilization and development </li></ul></ul><ul><ul><li>MFIs: Financial training, investment, and management </li></ul></ul><ul><ul><li>Private sector: Construction and repair services </li></ul></ul><ul><ul><li>Public sector: Service provision, regulation </li></ul></ul><ul><li>Secondary spin-offs </li></ul><ul><ul><li>Creation of new economic opportunities </li></ul></ul>
  13. 14. <ul><li>Ahsanteni Sana kwa Kunisikiliza </li></ul><ul><li>(Swahili for: Thank you very much for Listening to me) </li></ul>

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