When Energy Inclusion Helps to Alleviate Poverty

As Sebastian Groh - Project Manager at MicroEnergy International (MEI) in Germany - said during the Partnerships Against Poverty 2013 Summit: "Financial inclusion causes energy inclusion and energy inclusion causes financial inclusion. This is a bi-directional relationship and combine both financial and energy inclusion initiatives have synergy potentials".

Address a new market

If you were part of this summit which held in the Philippines last October, then you may have heard S. Groh reveal that there are an estimated 1.6 billion people who do not have access to both financial and energy services.

In order to clearly identify the link between financial inclusion and energy inclusion, S. Groh showed us the folowing table:

New projects arise

We learned during the summit that some organizations such as the Asian Development Bank (ADB) located in the Philippines, was actually developing some projects in order to bound financial and energy inclusion. Besides, one of these projects consist of using solar energy for housing insulation (by capturing sunlight for power during winter) in Tajikistan and thus attempt to solve energy deficiency and energy-inefficiency in this country.

Addressing this new market, the organization wanted to develop a commercially viable and sustainable solution to provide affordable credits to the households. ADB also chose microfinance institutions because they could be more efficient in their sector than other traditionnal financial institutions.

Otherwise, the projects established to fight against poverty remains fragile and take a long time to be implemented.

We know that the ADB's project is trying to provide an investment facility to the tajik government so it could lend money to the MFIs at a more affordable rate than the one of the central bank.

In addition, ADB asked the government to put MFIs based on a highly reduced rate to better allow local people access to credit.
ADB is also currently working with local cooperatives (that process raw materials and manufacture some commodity) in an attempt to create more jobs for the Tajiks.

A promising future, but...

Obviously even if this kind of project offers a great perspective to fight against poverty in developing countries, we know that it will take a long time for it to be implemented effectively. Many efforts will have to be made by all actors of MFIs and private sector in order to put all these ideas together to offer people an appropriate solution.

What we know for sure now is that some organizations are really trying to support the private sector to implement and try out different business models that could work. This is especially true for energy since the fact that firms want to provide financial support. But they also need the support from the private sector because only the private sector can take up these ideas, to be replicated in a larger scale and in the long-term.

Sources: Partnerships Against Poverty, 1OO Million Ideas

Tags: Microfinance, Eco-friendly, Tajikistan, The Philippines, Partnerships Against Poverty 2013 Summit, Financial Inclusion, Energy Inclusion, MicroWorld