Eric Kissel, Microfinance Partnerships Manager for EIC

True confessions: all this green is starting to make me see red.  I like clean air and water, and am fairly frugal so conservation makes sense to me, but without a positive economic return I don’t believe many alternative energy initiatives can or should survive.  RFPs for projects which combine green energy and microcredit seem to be popping up more and more frequently, making my skeptic’s radar glow hot.  Can microloans for green energy products make financial and environmental sense?

Projects like Energy in Common give me hope.  Energy in Common has demonstrated both positive economic and lifestyle returns for its borrowers who invest in alternative energy, utilizing a Kiva-like platform to finance investments.  In order to get a better understanding of why and how it works (and hopefully pick up some how-to tips), I interviewed Eric Kissel, Microfinance Partnerships Manager for Energy in Common (EIC).

Hi, Eric.  So what exactly is this “energy poverty” I’ve been reading about?

Eric:  One-third of the people in this world still rely on rudimentary, polluting, inefficient forms of energy. Charcoal, dung and wood for cooking, kerosene for lighting – these are still common in much of the world.  Using this type of energy is more expensive than you would imagine. Families spend hours gathering wood and a significant part of their income is spent on products like charcoal and kerosene. 

I noticed in your bio that you learned about the relationship between access to credit and energy needs when you were in Bangladesh.  So what’s the relationship?

Eric: The families I spent time with in Bangladesh were forced to rely on dirty forms of energy until they were extended credit to pursue other options. Gaining access to modern energy comes with higher upfront costs than business as usual. Cash-poor families require access to cheap credit to be able to spread out the costs over time.  Over the long run an improved cook stove or a solar-powered LED lamp ends up being cheaper for them and more efficient.

Is it really cheaper and more efficient?

Eric: Absolutely. For example, two of EIC’s current partners – Christian Rural Aid Network and Toyola Energy provide solar-lighting kits using microcredit to tackle the high up-front cost. Toyola supplies solar-powered LED lamps and with money raised through Energy in Common, CRAN provides the financing.  A typical client in this part of Ghana spends about $10 every month on kerosene for lighting.  These solar-powered products are being sold for $45 for the basic model.  You can see how the savings will start adding up quickly.

How do these solar kits work?

Eric: They come with a panel and a lamp with different power settings. They also have an outlet so that, in addition to lighting, you can charge a mobile phone off of the system.  While their main use is for providing light for a client’s business or home after dark, users have realized that they can bring in additional revenue by letting their neighbors recharge their mobile phones for a fee.

I think it’s interesting that EIC is lending primarily to entrepreneurs – for the most part these aren’t consumer loans.  Why did EIC choose that route?

Eric:  The majority are for business use, but often, particularly with the improved stoves and solar lamps, the products are used within the home as well. The customer might take the lamp with them to their storefront, use it to extend store hours, and then take it home in the evening.  The same is true with the cook stoves– many are being used in a restaurant, which is often attached to their home.  Many women express that the improved stoves will help them save time and money acquiring wood and charcoal. EIC also features loans that are solely quality of life improvements for families. Most of the clients purchasing improved stoves cite health and safety high on the list of reasons for moving away from charcoal and wood in the home.

How long has EIC been around?

Eric:  Energy In Common has been built over the last year and our official launch was in March. 

You’re probably getting tired of being compared to Kiva, but lots of people know the Kiva model so… how does Energy in Common compare?

Eric: We have a similar model in terms of the person to person lending approach, loans being repaid to the lender, and then, ideally, the lender loaning money all over again.  We believe, however, that access to modern forms of energy is key to all development outcomes. EIC lenders exclusively fund green energy projects. These projects typically allow for extra income generation while creating tangible quality of life and health benefits.

Like Kiva, we accomplish this through strong partnerships with our MFI partners. For many of our MFI partners energy loans are a new kind of product. A lot of work goes into building strong ties between the MFI and the energy service provider.

Last, our focus on energy allows people to combat climate change AND poverty at same time. Every dollar that is lent through EIC funds a product that reduces dependency on polluting fuels.  Every LED lamp, every fuel efficient stove, and every solar panel purchased, not only makes life a whole lot easier for these communities, but greenhouse gas emissions drastically drop as well.

 What is EIC looking for in an MFI partner?

Eric:  Since our MFI partners are the ones who actually administer the loan at the local level it is critical that they have a strong reputation for good business practices. A strong presence in rural areas, straightforward loan products, and a willingness to innovate with energy loans are important. The real challenge that I’ve seen so far is finding MFI partners that have an established relationship with an energy service provider or that are willing to develop that relationship.  Creating strong bonds between the energy service providers and the MFIs is crucial – making sure there’s an understanding between both parties on the financing that’s involved, product costs, what the customer can expect, what kind of after-sales support there is, if there’s a warranty, and who’s on the hook if the product malfunctions.

It’s still a bit early in the game for EIC, but are there any lessons learned you’d like to share?

Eric: The practice of making clean energy available and affordable to the poor using microfinance is still new. Many of our MFIs have not entered into this sort of partnership before. Developing those strong partnerships I mentioned between MFIs and energy providers takes time and that has been a learning experience for us. But we are learning!

By Kirsten Weiss

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• Meeting Kiva Borrowers in Kitengela, Kenya (3.5 minute video)

Last week I attended a presentation on Mobile Banking given by Ignacio Mas of the Gates Foundation. The issue he discussed focused on the great need for financial infrastructure, specifically providing access to savings, to everyone in developing countries. He noted that 70% of people in developing countries have no access to financial services and that providing such access to saving is possible if we can leverage physical infrastructure and technological systems that are already in place.

The basic idea he presented discussed providing people the opportunity to bank at stores (kiosks) and provide access to deposits/withdrawals over their cell phone using a SIM card. This would alleviate the need for people to travel to a physical banking institution which is often too far and too costly; increase the business and income generated by store owners; and would utilize existing shops and small retailers.

MAS discussed M-PESA, a cell phone provider in Kenya, and explained their business model as the primary example for the direction that he hopes mobile banking will take. The way M-PESA currently works is a person purchases a cell phone and a SIM card from any one of 11,000 plus M-PESA agents. The SIM card is prepaid and a used to make calls and send SMSs until the funds expire. At that point, more funds are added so that the service will continue. The key here is that money is effectively deposited for prepayment and with-drawled upon with cell phone usage. Thinking about the thousands of people who have a cell phone, but no savings account (or access to basic financial tools), prompted a merger of forces to face the challenge. In May 2010 M-PESA joined forces with Equity Bank and now customers are able to transfer funds, lend money, and most importantly save money through their cell phone. Customers can also check bank balances, review previous transactions, and have access to additional basic financial services. The customer benefits as they have tools to save, the agent benefits from increased business, and the overall mission of the Equity Bank is met as they are able to provide clients with customer-focused financial services that socially empower both clients and other stakeholders’.

The M-PESA partnership with Equity Bank is paving the road to Mobile Banking by combining technologies, infrastructures, existing cell phone agents, and a market of cell phone users with out savings accounts. This is just a small part of a bigger goal of providing general financial infrastructure to people with out access to savings, credit, and loans in developing countries. The goal of the Gates Foundation is to continue investing in the mobile banking model; develop additional technology and deploy the system in five more countries over the coming years. To learn more about microfinance in the Seattle area visit www.seattlemicrofinance.org.

Frustrated by MFIs with loose credit policies? Fed up with regulators bent on imposing interest rate caps?  Finally, MFI managers and stakeholders can take some constructive action.

On June 14^th, Beth Porter, founder of Women Advancing Microfinance spoke to the Silicon Valley Microfinance Network (SVMN) about the Smart Campaign.

The Smart Campaign is a global effort within the microfinance industry to bring transparency to the pricing of microloans.  The general idea is that one MFI can’t go it alone – if all its competitors use flat interest rates and front or back-end fees, it’s difficult if not impossible to remain competitive without joining the flat interest rate crowd.  The lack of transparency also increases suspicion and misunderstanding from well-meaning regulators and politicians about pricing microcredit.

The Smart Campaign puts forward a set of fair-lending principles for MFIs to adhere to, such as avoidance of over-indebtedness, transparent pricing, and client privacy.  The website presents a series of steps MFIs, associations and networks, and investors and donors can take.

So.  Let’s stop complaining about the badly behaving MFI next door or that government ministry which just doesn’t understand.  Check out the Smart Campaign and see how you can take action.

And if you’re in the San Francisco Bay Area, I highly recommend SVMN educational events, which occur roughly on a monthly basis.

IShop4Microfinance is a new website that just came out that is similar to Project Red, but benefits microfinance. The way that it works is that when you shop at any of their partner stores, including: Amazon, Gap, Best Buy, itunes and more, 4% of your total purchase goes towards Kiva, Grameen, or Acumen.  The great thing about Ishop4Microfinance is that it never costs you more than if you made the purchase on other sites.  They have partnerships with all sorts of stores that have allowed them to get a discount on their items, which is then being given to microfinance.  So go shop for some gifts, spread the word to friends, and lets get more money going to microfinance.

Here are some of the stores that you can shop at:

Although I don’t really follow or care much for celebrity gossip, it’s always good to see a celebrity in the news supporting microfinance.  I came across this picture on the daily start where Hugh Jackman poses with Muhammad Yunus at the opening of the manhattan branch.  Here’s what the Daily Star had to say about Jackman:

“Jackman is a strong supporter of Nobel Laureate Professor Muhammad Yunus and a longtime advocate of microcredit. The actor has made a commitment to promote Yunus’s work on social business.
Professor Yunus invited Jackman to visit Bangladesh. Jackman assured him that he’d come to Bangladesh as soon as his schedule permits.
Jackman wrote a letter to Professor Yunus that he was inspired and moved by Yunus’s book ‘Banker to The Poor.’ The actor said in a recent article (The Oprah Magazine) ‘He (Yunus) is fighting at the frontline of poverty, and you couldn’t find a happier guy.’”

Celebrities always support non-profits as we’ve seen over the years, but very few of them are supporting microfinance.  I’m hoping that the trend continues and microfinance will get some more exposure in pop culture.

Professor Yunus (left) with Hugh Jackman. *picture from the Daily Star*

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• Sustainability in Microfinance: Canadian and Bolivian Models
• Creative Enterprise Microfinance Fund Launched

Here’s a short video where Alex Counts from Grameen and Yeardley Smith (actress known for the voice of Lisa Simpson) visit Fonkoze in Haiti:

The Microcredit Summit Campaign is hiring for a Research Director to oversee the research and education strategy. The job is located in Washington DC and requires a masters degree:

“MCS is the world’s largest global network of microfinance stakeholders. The Campaign has led, guided, and supported the global microfinance sector towards reaching the ambitious goals of ensuring that 175 million of the world’s poorest families are receiving credit for self-employment and other business and financial services, and that 100 million families rise above the US$1 a day threshold by 2015. Candidates must have a passion for the Microcredit Summit’s goals

Primary responsibilities will include:

• Monitoring and sharing general trends in the field of microfinance through listserves, media, and other sources.
• Providing content and managing the topic selection, editing and translation of all MCS commissioned papers and other publications.
• Manage the MCS Health Integration Project and its efforts to ensure appropriate long term implementation of integration of microfinance with health education by practitioners in Asia, Africa and Latin America.
• Manage the MCS Movement Above the $1 a Day Threshold Project and oversee the project’s consultants in Asia, Africa, Latin America and the United States.
• Provide ongoing support to MCS regional organizers in the areas of research, training and budget management.
• Provide technical project inputs for MCS grant proposals and reporting.
• Serve as one of the Campaign’s spokespersons to the media and MCS members.
• Represent the Campaign at global and domestic conferences.
• Provide support to and oversight of the State of the Microcredit Campaign Report team.
• Provide support in the selection and hiring of MCS staff including volunteers and interns.
• Serve as liaison to MCS partners on issues related to the Campaign’s core themes. “

More info at Idealist.org

Whole Planet Foundation (WPF) is a 501c3 private foundation established by Whole Foods Market (WFM) whose mission is to provide financial support to Microfinance Institutions (MFI) to alleviate poverty through expansion of microcredit services in communities that supply Whole Foods Market with product. Partner MFIs deliver financial services that are tailored to the realities of people living in poverty while maintaining efficient operations in a financially sustainable manner.
About the Job:

“In 2010 WPF is focusing microfinance expansion efforts on countries in Latin America and plans to contract one person to facilitate due diligence of new projects and oversee M&E for the existing portfolio of projects. It is imperative that this person have significant experience working in rural Latin America with an understanding of the reality facing the poor. Knowledge of microfinance will be important. The ability to speak Spanish fluently (FSI 4.0 or better) is imperative to being successful in this position. Ability to speak Portuguese is an added benefit. As well, extensive global travel of 50% to 75% will be required.

Although this position will be hired as an Independent Contractor, this position will need to be filled as long as WPF continues to operate.

Job Objectives:

• Assist Whole Planet Foundation to expand and oversee the portfolio of microfinance projects in Latin America
• Build and maintain relationships with Foundation microfinance partners in the region
• Tell the story of Microfinance Institutions (MFI), clients, and the realities of poverty through various mediums

Objectives and Activities:

• Conduct desk due diligence of potential MFIs that may qualify as a partner through internet and other forms of remote research
• Assess MFIs abilities to grow loan portfolios in an efficient and sustainable manner to maximize Foundation support
• Analyze MFIs approach and objectives to delivering microfinance services to the poor
• Visit MFIs based on outcomes of remote research and Foundation expansion plans
• Recommend MFIs based on research finding
• 6. Communicate with Foundation partners on a regular basis to assess performance of MFI as compared to original grant agreement
• Compile quarterly metrics of MFI partners and analyze accomplishments versus project goals
• Perform thorough review of MFI partners financial statements on an as needed basis
• Conduct field reviews of projects on an as needed basis
• Provide the Foundation with video and photographic MFI client stories
• Manage and be responsible for all activities as an independent contractor with guidance from WPF
• Provide logistic support and coordination on an as needed basis for visits from WPF representatives to the region

Work Environment:

• Work location is based out of San José, Costa Rica and will require extensive travel throughout the Americas.
• Position involves exposure to conditions found in the developing-world and requires complete immunization as recommended by the CDC.
• Additional job demands include a wide-range of adaptability to move between extreme poverty and professional environments
• Noise level in the work environment depends on work location.

Additional Qualifications:

• Min. bachelor’s degree in international development, business, economics or related studies.
• Fully fluent in Spanish and Portuguese a plus
• At least 2 years of experience working in rural development in Latin America
• Experience with microfinance or other related business field
• Understanding of financial statements
• Strong analytical skills to assess potential MFI partners
• Ability to interview MFI clients in the field
• Ability to provide high quality photos and video of MFI clients based on WPF requirements
• Strong writing skills”

For information on how to apply, visit IdeaList.org