ADFIAP’S ROLE IN IMPROVING ACCESS TO FINANCE FOR THREE SWITCH ASIA PROJECTS
15 – 17 May 2017
Bangkok, Thailand
SWITCH-Asia Seminar on Measuring and Reporting Project Results and
Networking with Regional Finance Institutions
106 MEMBERS
39 COUNTRIES
1976 DURING the 6th ADB
conference for DFIs
FOUNDED
SECRETARIAT in
MANILA, Philippines
ASSOCIATION OF DEVELOPMENT FINANCING INSTITUTIONS IN ASIA AND THE PACIFIC (ADFIAP)…In Brief
Financing Sustainable Development
OVER 40 YEARS OF EXPERIENCE IN PROVIDING CAPACITY BUILDING TO FIS IN ASIA AND THE PACIFIC
SWITCH ASIA PROJECTS
ASIAN CLEANTECH MSME FINANCING NETWORK
(ACMFN)
Lead – Association of Development Financing
Institutions in Asia and the Pacific (ADFIAP)
SWITCH TO HIGH EFFICIENCY MOTORS (HEMS)
Lead – Institute of Integrated Electrical Engineers of the
Philippines, Inc. (IIEE)
SMES FOR ENVIRONMENTAL ACCOUNTABILITY,
RESPONSIBILITY AND TRANSPARENCY (SMART
MYANMAR 2)
Lead – Sequa gGmbH
FINANCING COMPONENT OF THE 3 PROJECTS
Build and leverage a cleantech-financing ecosystem to spark improved access to finance for Asian cleantech MSMEs in order to enhance sustainable consumption and production patterns in Asia.
FINANCING COMPONENT OF THE 3 PROJECTS
Ensure the availability of financing that will bankroll prospective projects of Philippine Industries and energy service companies (ESCOs) willing to adopt highly efficient motors and motor systems. Financing is believed to be critical in ensuring the sustainability and success of the project.
FINANCING COMPONENT OF THE 3 PROJECTS
Support financial institutions to enable them to offer green financial products that would result to improved access to green finance by MSMEs
OPPORTUNITIES
INDIA
CHINA
INDONESIA
• High potential cleantech destinations • As the world’s mfg. hubs, cleantech innovations will strengthen their economic competitiveness • Key issue – lack of financing which can only be tackled by addressing both the demand (SMEs) and the supply (FIs) sides of the problem
OPPORTUNITIES • One of the countries in the world with the highest power cost affecting competitiveness of the energy-intensive indus- trial sector which accounts for 27.4% of the country’s total electricity consumption. • Of the total electricity consump- tion of local industries, 65-70% are due to electric motors. Switching to more efficient electric motor drives systems translates to substantial energy savings and reduces companies’ operating cost. • Consultation with banks showed strong interest in financing HEMS projects.
PHILIPPINES
OPPORTUNITIES
MYANMAR
• The garment sector is one of the most dynamic and is highly regarded as driver of future growth in mfg. with high economic development potential. There are about 300 garment factories engaged in production for export markets.
• The banking sector and the Central Bank are open to financing green investments if provided the proper risk assessment capacity and funding.
• Build on positive results achieved under SMART Myanmar I of improved production and increased consumption of sustainably produced garments from Myanmar.
COMMON CHALLENGES ACROSS THE 3 PROJECTS ….LACK OF
LONG-TERM FUNDS/DOMESTIC
FINANCING
RISK GUARANTEE MECHANISMS
DISCLOSURE OF ENVIRONMENTAL INFORMATION BY
COMPANIES
RISK ASSESSMENT AND ANALYTICAL CAPABILITIES
“BANKABLE GREEN SME PROJECTS”
STRATEGIES TO OVERCOME CHALLENGES: WHERE ARE WE NOW……
Advocacy and Awareness
Raising
Financial and Technical Training
Regulators/Policy Makers
Financial Institutions
Small and Medium Enterprises Project/
Product Development
Dialogues/ Group
Discussions
“Matchmaking” Activities
AWARENESS RAISING AND TOT
Trainings on Cleantech Consulting- 2016
National Awareness Raising Activities - 2016
3 workshops conducted at
Bandung
90 MSME
participants
(IT
Providers:
16)
TRAINING ON CLEANTECH FINANCIAL PRODUCTS
Training of Financial Institutions on the Development of Cleantech Financial Products -2017
DIALOGUES AND TRAININGS
ACTIVITY OBJECTIVE DATE
Dialogue between sugar milling and banking sector
To address roadblocks in project financing; information sharing
March 11, 2015
Energy Service Company (ESCO) Business Development Series
To discuss funding options for ESCOs and present HEMS financial model for evaluating potential projects
March 1 - 4, 2016
Technical and Financial Training on HEMS and Energy Efficiency to: • Landbank of the Philippines • Development Bank of the Phils. • Philippine National Bank
To train loan officers on the HEMS Program, energy efficiency concept, ESCOs and the ESCO concept and models; technical and financial aspects of the HEMS financial model; and credit risk and mitigants
• April 4-5, 2016 • July 15, 2016 • July 20, 2016
Panel discussion and open forum on the energy efficiency ecosystem
To present the Energy Efficiency Financing Programs of the Development Bank of the Philippines and Bank of the Philippine Islands
Dec. 12, 2016
OTHER FINANCING RELATED ACTIVITIES
Forging of Memorandum of Agreement with trained banks to include HEMS project proposals as eligible for financing under their lending programs. Consultation meeting with Small Business Corporation and Philippine Bank of Communications to invite them to join the HEMS capacity building training programs. Focused Group Discussions between the Department of Energy and senior officials of financial institutions on financing energy efficiency projects in support of the Philippine Energy Efficiency and Conservation Roadmap 2017-2040.
SCP AND GREEN FINANCE ADVOCACY
ACTIVITY COVERAGE DATE
SCP Advocacy Briefing for Officers of the Myanmar Bankers Association (MBA)
Introduction of the SCP concept and its relevance to banks; training needs of banks on green finance
Jan. 22, 2016
Executive Briefing on Green Finance for Directors and Officials of the Central Bank of Myanmar
Advocacy campaign to trigger dialogues on the enactment of policies that would encourage banks to mainstream green financing in their lending operations
Jan. 23, 2016
Advocacy Briefing on SCP and Green Finance
CAPACITY BUILDING FOR BANKS
ACTIVITY COVERAGE DATE
The Green Project Finance1.0 Training for 39 loan officers/managers from 22 government and private-member banks MBA
Introduction to Green Project Finance, Green Credit Cycle, Loan Evaluation and Green Credit Scoring System
June 20-24, 2016
The Green Project Finance 2.0 Training for 36 asst. managers/managers from 25 government and private member banks of MBA
Hands-on application of the principles learned under Green Project Finance 1.0 using case studies evaluated/appraised and packaged by the participants and presented to a simulated Credit Committee.
Sept. 12-16, 2016
The Green Project Finance 3.0 Training for 36 asst. managers/managers from 25 government and private member banks of MBA
Development and marketing of green products and services using the Business Model Canvas
Nov. 7-11, 2016
Green Bankers Certification Course
CAPACITY BUILDING FOR SMEs
ACTIVITY COVERAGE DATE
The SME Competency Training for 50 members of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) and Myanmar Industries Association (MIA)
• Understanding SME Financial Needs: Do You Really Need to Borrow
• Understanding, Choosing and Securing the Right Source of Funding
• What do Banks Look Into in Financing SME Projects
• Being a Responsible Borrower: Enterprise Planning and Business Plan Preparation
• Introduction to Green Finance
May 11-12, 2017
SME Competency Training Program
Main contact of the member companies and the LGUs
Provide list of potential loan availees
Assist in marketing the financing program to program beneficiaries
Provide inventory of acceptable technologies
Provide information on current developments and trends in
environmental requirements for European market
Conduct promotional activities such as briefings
Evaluate projects
Provide credit financing
Provide technical advisory assistance
Support investment req’ts of SMART Cebu Project
Conduct SCP Awareness Briefings and SME Access to Finance Forums
Undertake linkage building, training and advocacy on SCP and Green Investments
Provide coaching and advisory services
Coordinate with ECCP in identifying clients interested to avail of the services of ADFIAP
Assist in marketing Green Financing
Hold deals flow/matching activities where clients can present proposals for possible financing
BUILDING PARTNERSHIPS
TO OVERCOME VARIOUS CHALLENGES:
THE SMART-CEBU CASE
BUILDING PARTNERSHIPS
TO OVERCOME VARIOUS CHALLENGES:
THE HEMS CASE
PHILIPPINE NATIONAL BANK
INSTITUTE OF INTEGRATED ELECTRICAL ENGINEERS OF THE PHILIPPINES, INC. (IIEE)
ASSOCIATION OF DEVELOPMENT FINANCING INSTITUTIONS IN ASIA AND THE PACIFIC
ROEL FOODS CORP. (Food processing to shift to high efficiency motors)
MULTILATERAL AND BILATERAL
FUNDING AGENCIES
DEVELOPMENT BANK OR STATE BANK SOURCES MEDIUM-TO-LONG TERM
FUNDING
DEVELOPMENT BANK OR STATE BANK ACCREDITED
COMMERCIAL BANKS
SCP PROJECT OF SME
AS A LONG-TERM FINANCING SOLUTION
COMMERCIAL BANKS
SCP PROJECT OF SME
DEVELOPMENT BANK OR STATE BANK
STAND-ALONE FINANCING
STAND-ALONE FINANCING
CO-FINANCING
TO PROMOTE DOMESTIC FINANCING
LOCAL
GOVERNMENT
PRIVATE
BANKS DFIs
COOPs/
CHAMBERS
THE SURETY FUND (Guarantee lending to MSMEs)
CREDIT SURETY FUND CONCEPT
• A Memorandum of Agreement is executed among donors
• The fund is deposited with and managed by a Trustee Bank
• An Oversight Committee formulates guarantee and
investment policies
• Loans granted to individual members of participating coops/
chambers by banks can be rediscounted by the Central Bank
AS A RISK GUARANTEE MECHANISM
ORGANIZATIONAL SUPPORT
Creation of an Environmental Consultation and Financing Unit in Financial Institutions to provide advisory and consultation services to SMEs with green projects and offer demand-driven green financing products and services.
TO ADDRESS ASYMMETRIC INFORMATION AND LACK OF “BANKABLE”SME PROJECTS
An ESCO can help put the pieces together:
Identify, evaluate and propose energy-saving opportunities
Develop engineering designs and specifications
Manage the project from design to installation to monitoring
Train the staff and provide maintenance services
Guarantee that savings will cover all project costs
1
2
3
4
5
6
Arrange for financing;
Fixed repayment
Performance Guarantee
Shared Savings Model
Fixed repayment Performance Guarantee
Performance & Credit risk
Credit risk Performance risk
CLIENT
ESCO Banks/FIs
Banks/FIs ESCO
CLIENT
Guaranteed Savings Model
HOLISTIC FINANCING MODEL
ENABLING SME
ACCESS TO GREEN
FINANCE
ADVOCACY
&
AWARENESS
BUY-IN
NETWORKING
CAPACITY
BUILDING
GREEN PRODUCTS
AND SERVICES
MATCHING AND
FINANCIAL CLOSURE
FINANCIAL INSTITUTIONS/
FUND SOURCES
SMALL AND MEDIUM
ENTERPRISES
NATIONAL/LOCAL
GOVERNMENT
INDUSTRY ASSOCIATIONS
AND CHAMBERS
POLICY MAKERS
ENERGY SERVICE
COMPANIES
CENTRAL BANK BANKERS
ASSOCIATIONS
IN SUMMARY…..