micro-energy lending: increasing access to energy for finca clients via end-user financing
DESCRIPTION
Micro-energy Lending: Increasing Access to Energy for FINCA Clients via End-User Financing . March, 2011. Agenda. Overview of FINCA Client need and demand Research Results from Uganda and Tanzania Results of pilot with SHS in Uganda Operational approach Client impact - PowerPoint PPT PresentationTRANSCRIPT
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Micro-energy Lending:
Increasing Access to Energy for FINCA Clients via End-User Financing
March, 2011
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Agenda
• Overview of FINCA• Client need and demand• Research Results from Uganda and Tanzania
• Results of pilot with SHS in Uganda* Operational approach* Client impact
• Approach for scale up
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FINCA Mission and Vision
MISSION:
To provide financial services to poor entrepreneurs so that they can create their own jobs, raise household incomes, and improve their standard of living.
VISION:
A global network of sustainable financial institutions dedicated to meeting the financial needs of the lowest market niche.
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FINCA’s Geographic Footprint
EurasiaArmeniaAzerbaijanGeorgiaKosovoKyrgyzstanRussiaTajikistan
DR CongoMalawiTanzania- 55K clientsUganda- 40K clientsZambia
EcuadorEl SalvadorGuatemalaHaitiHondurasMexicoNicaragua
FINCA HQWashington
DC
Latin America
Africa
AfghanistanJordan
Greater Middle East
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Agenda
• Overview of FINCA• Client need and demand• Research Results from Uganda and Tanzania
• Results of pilot with SHS in Uganda* Operational approach* Client impact
• Approach for scale up
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Current Client Energy Use and Expenditures- Uganda
• Clients spend 37-41% of their incomes on cooking fuel (wood or charcoal) and traditional lighting inputs (kerosene and dry cell batteries)
• Only 36 % of large loan clients, 31% of small loan clients have access to electricity in rural areas
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Current Client Energy Use and Expenditures- Tanzania
CookingLightingWHAT ARE CLIENTS USING NOW FOR COOKING AND LIGHTING?
0
20
40
60
80
100
120
54%46%
11% 9%4%
1%
95%
50%41%
5% 3%
rural
urban
Based on 131 clients interviewed across 8 focus groups
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Product Cost Lifetime Value: Warranty
Lantern: Solata/Firefly
22,500 ($15)30,000 ($20)
4 years Firefly has phone charging
1 yr
Lantern:Nova
65,000 ($43) 4 years Phone charging
1yr
Small SHS:PowaPack
160,000 ($107)
5 years Phone charging, 4 lights
1 yr
Products Tested in Market Research- Tanzania
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Product Preference- Lighting
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
large SHS small SHS lantern nothing
Based on 131 clients interviewed across 8 focus groups
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Agenda
• Overview of FINCA• Client need and demand• Research Results from Uganda and Tanzania
• Results of pilot with SHS in Uganda* Operational approach* Client impact
• Approach for scale up
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Pilot Operational Model- Uganda
•SHS only for Pilot•End user financing+ awareness and training+ back-up after sales care•Specialized sales force •Partnerships with suppliers •Energy loan bundled with business loan
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Pilot Results - Client Uptake
•550 loans
•70 cash sales
•98% would recommend SHS to neighbor
Children at a school using a solar home system sourced from FINCA Uganda
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13Client Feedback Indicates Positive Impact on Health, Education, Savings
Impact on
Business
Impact on
Health
Impact on
Education
Impact on
Savings
* Based on a survey of 56 clients.
When asked about overall benefits from having an SHS:
•57 % of clients felt they had improved respiratory health•50% reported improved eye health •84% indicated that their children were able to study at night•91% saved on kerosene costs•82% saved on mobile phone charging costs.
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14
Client Are Using SHS for Business Purposes
Client Feedback on Business Benefits of SHS
Kerosene cost savings 83%
Mobile charging cost savings 75%
Attracting more clients 67%
Longer operating hours 58%
Increased income 50%
Modern looking 42%
Expanding business 38%
Other 8%
No benefit 0%
Impact on
Business
Impact on
Health
Impact on
Education
Impact on
Savings
• 43% of FINCA Uganda clients surveyed use their SHS for business
• 22% have started a new business with the system, mostly by offering mobile phone charging services
• Others clients are using the systems for lighting in poultry or pig farming businesses, clinics, retail shops, schools, and salons.
Based on a survey of 56 clients.
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15Impact Assessment Results Show Clients Feel They are Saving Money with SHS
Weekly Expenses Before and After SHS*
Weekly Kerosene Expenses
Weekly Mobile Expenses
Frequency before SHS
Frequency after SHS
Frequency before SHS
Frequency after SHS
No costs 0 26 3 53
Under 1,000 8 18 24 1
1,000 – 1,999 21 11 13 0
2,000 – 4,999 18 1 10 0
5,000 plus 9 0 6 2
Impact on
Business
Impact on
Health
Impact on
Education
Impact on
Savings
* Based on a survey of 56 clients; savings include transport costs
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16SHS is more cost-effective for business vs household, but new products are cost effective for both
Impact on
Business
Impact on
Health
Impact on
Education
Impact on
Savings
10 W System for hh use
New Product- hh use•Cost is 20-25% of 10 W system•5W but same functionality as 10 W
20 W system for business use; charge up to 6 phones daily
Loan repayment (monthly)
60,000 UGS 14,000 136,000
Kerosine savings (monthly)
8,600 8,600 8,600
Savings on phone charging (monthly)
6,000 6,000 6,000
Revenue- mobile phone charging* (monthly)
80,000
Breakeven 17-18 months 4.5 months (within repayment period)
7 months
Ongoing benefit after breakeven (net of maintenance)
11,600 Assume no change 101,600
*Assuming 500 UGS per phone charged; 6 phones charged per day, 26 days per month)
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Agenda
• Overview of FINCA• Client need and demand• Research Results from Uganda and Tanzania
• Results of pilot with SHS in Uganda* Operational approach* Client impact
• Approach for scale up
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Approach for Scale Up
• Supplier agreements, FINCA sales force key to success
• Lower cost, standardized products
• Diversify products- cook stoves, lanterns, etc.
• Target more customer segments- business loans, innovative partnerships to reach energy entrepreneurs
• Explore savings-related services
A pharmacy owner using a solar home system for lighting
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Thank You!