Clean Energy Promotion through Microfinance in Ethiopia

Project Objectives

The project aims to promote inclusive green growth by stimulating private sector business development within the renewable energy and financial sectors of Ethiopia. The specific objectives of the project are

  1. To increase access to reliable and affordable clean energy technologies (CET) for low-income households and microenterprises in Ethiopia
  2. Contribute to the reduction of GHG emissions through improved energy efficiency and introduction of sustainable energy sources
  3. Raise living standards through improving the access of low-income households and microenterprises to reliable, affordable, and sustainable energy products and services.

 

Project Description

The project initiates an innovative and replicable mechanism to finance clean energy technologies (CET) for households and small and middle size enterprises (SMEs) through a microcredit financing mechanism.

The project puts in place innovative business mechanisms and develops the entire supply chain for high-quality, clean energy technologies for low-income markets. This includes logistics, design of credit products, post-sales services and monitoring. The project trains the microfinance institutions and clean energy technology providers in the execution of the new credit mechanism. In addition, the project studies ways to further scale up clean energy technology usage through innovative finance mechanisms.

During the project, a business concept is established for three Ethiopian microfinance institutions (MFIs), with a total of more than 130.000 current clients. Once established, the business concept can be extended to other MFIs in Ethiopia as well as to other developing markets with similar needs, creating a potential customer base of tens of millions of people.

 

Phases

  • Energy needs assessment and market segmentation. Expected to be achieved by the end of February 2015.
  • Technology and supplier selection. Expected to be achieved by the end of November, 2015.
  • CET credit line designing (microloan and CET supply chain designs). Expected to be achieved by the end of June 2016.
  • CET credit lines functioning (i.e., microloans disbursed), CO2e reductions achieved (i.e., CET operational). Expected to be achieved by the end of April 2017. 

 

 

 

Timeline: 11/2014 - 04/2017

Client

Nordic Climate Facility (NCF), financed by the Nordic Development Fund (NDF) and administrated by NEFCO

Project partners

Gaia 

Beneficiaries

Harbu Microfinance

 

Buusaa Gonofaa Microfinance

Specialized Financial and Promotional Institution (SFPI)