FGDA Thematic Workshops “Share” Series

“Microfinance and green energy towards a sustainable development” July 08th, 2014

Speakers’ Profiles Marion ALLET Senior Environment & Microfinance Programme Officer PAMIGA, Paris Marion has been working in micro finance sector and development economics for over seven years. Specialized in green microfinance thanks to her profession and her academic studies. In February 2013, she started working at PAMIGA as Senior Environment & Microfinance Programme Officer. She coordinates the programme Energy & Microfinance, focused on improving access to solar energy in rural areas of Sub-Saharan Africa through microfinance. Previously, she worked with PlaNet Finance in projects linking microfinance to energy. PhD in Microfinance and the Environmental Bottom Line, during which she analysed the environmental strategies for MFIs and developed an instrument to assess environmental performance. Marion is graduated in International Relations at Sciences Po University of Paris and obtained a Master in microfinance at Université Libre de Bruxelles. Davide CAREGNATO Founder and Manager Blucomb s.r.l., Udine Charter member of Blucomb s.r.l., spin-off company of Udine University. He graduated in Environmental and Resources Engineering at Udine University, studying theoretical, planning and practical approach to micro-gasification. He cooperated in planning and construction of Elsa stove with Bebi project (Agricultural and Environmental Benefits from Biochar use in ACP Countries) founded by European Union in collaboration with Udine University and CNR. He is also specialized in the study of combustion with a particular focus on micro-gasification and biomass combustion. Davide FORCELLA Researcher niversit ibre de ru elles and M , Bruxelles Davide Forcella is associate researcher at the Centre for European Research in Microfinance (CERMi), and researcher for the Fonds National de la Recherche Scientifique (ULB). He owns a PhD in Physics from the International School for Advanced Studies (ISAS/SISSA) and a Complementary Master in Microfinance from the European Microfinance Programme (EMP). His MF research focuses on green microfinance and sustainable development for which he has experiences both in developing and developed countries. His main research topics are: the role of MF in biodiversity conservation and rural development; MF and adaptation to climate change; MF and access to renewable energy and energy efficiency; environmental indicators for MFIs. He is the author of the first study on green microfinance in Europe for EMN. He is member of the “ E ” g -MFP. He has field experiences in Nicaragua, Cambodia, Dominican Republic and Europe. His research activity received in 2013 the FIR-PRI Finance and Sustainability European Research Award. Fabio MALANCHINI Executive Director Microfinanza, Vicenza After having graduated with a Master of Science Degree from Bocconi University in Milan, Mr. Malanchini worked for several years in the Department of Economics at Bocconi University and as 1

FGDA Thematic Workshops “Share” Series a consultant in the field of microfinance. He went on to co-found both Microfinanza, a consulting firm specialized in microfinance and finance for development, and MicroFinanza Rating, a specialized rating agency in microfinance, jointly with other specialists in the field. A past as Executive Director of MicroFinanza Rating, Mr. Malanchini is currently the Executive Director of Microfinanza. He has a long experience as a consultant and as a rating analyst in the microfinance sector in NIS/CEE countries, Latin America, Africa, MENA countries, Asia and Western Europe. Tiziana PIRELLI Post-doc Udine University Post-doc at Agricultural and Environmental Science Department of Udine University. She obtained ’ g Ag E ience and a PhD in Economy, Ecology and Safeguard of Agricultural and Environmental Systems at Udine University. In 2012 she attended the First International School on Biochar in Potsdam (Germany). She worked at the Institute of Soil, Water and Environmental Sciences of Volcani Center ARO in Bet Dagan (Israel) about ammonium ion absorption in biochar for maximization of fertilizers use. In October 2013 she received the European Biochar Award. Since 2010 she has been working on sustainable agriculture at Udine University. From February 2014 she is supervisor manager of the European project Energy, health, agricultural and environmental benefits from biochar use: building capacities in ACP Countries (Biochar Plus), coordinated by Prof. Alessandro Peressotti. Giampietro PIZZO President Microfinanza Srl, Vicenza Giampietro Pizzo is a founding member of Microfinanza Srl and has been the President since 2007. Economist and microfinance expert, he has gained considerable expertise in an international setting over the past twenty-five years, working in contact with cooperative organizations, credit unions, rural finance and microfinance organizations. He has promoted and carried out microcredit programmes and consultancy assignments in Latin America, Africa and Europe. Between 1987 and 2003 he worked for numerous Development Cooperation Programmes in Africa and Latin America. Between 2003 and 2008 he was the Coordinator of the Technical Unit for Internationalization at Italian Minister for Foreign Affairs. Giampietro Pizzo is Vice President of EMN, The European Microfinance Network, and RITMI, the Italian Microfinance Network. Umberto TRIVELLA Project Officer Microfinanza Srl, Vicenza is a microfinance and project management specialist with more than six years of experience in both developing and developed countries. At Microfinanza, he has been involved in a project in Sub Saharan Africa aimed at linking microfinance with the distribution of green energy products through the implementation of an innovative methodology called REEP-DEMO (Reduction Expense Energy Product Delivery Model). Previously, he spent two years in Northern Ghana, coordinating a value chain project focused on connecting rural women involved in shea processing with international markets through a combination of microfinance, training and ICTs. He has also worked in Italy, where he was in charge of developing and promoting financial inclusion initiatives in the country, and in South Africa, providing capacity building to a local housing microfinance institution. His professional experience includes collaborations with MicroFinanza Rating in Kenya and with the United Nations Conference on Trade and Development (UNCTAD) in Switzerland. g z ’ Cooperation and Development from the Institute for Advance Study of the University of Pavia, Italy. He is fluent in English, French and Italian.

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FGDA Thematic Workshops “Share” Series

Participants: SURNAME - Name

INSTITUTION

ALBANESE Gemma

MAG Verona

ALLET Marion

PAMIGA

CAREGNATO Davide

BluComb Srl

CARRARA Paolo

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CASSETTI Gabriele

Politecnico di Milano

COBOS Clara

ACAF Italia

CUSA Emanuele

Università degli Studi di Milano-Bicocca

DAGRADI Diego

z

G

D ’A

DE MATTEIS Laura

z

G

D ’A

ERRAIS BORGES Faiza

PlaNet Finance Italia

FORCELLA Davide

Université Libre de Bruxelles, CERMI

GITTI Giulia

Università Bocconi

LANZONI Simona

Fondazione Pangea Onlus

MAGGIANI Andrea

Carbon Sink Group Srl

MALANCHINI Fabio

Impact Finance Management SA

MILLOZZI Piero Luigi

Microcredito di Solidarietà SpA

NEGRO Maria Cristina

z

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PIRELLI Tiziana

Università di Udine

PIZZO Giampietro

Microfinanza Srl

PUJIA Valeria

Microfinanza Srl

RODRIGUEZ PULIDO Patricia

ACAF Italia

TRIVELLA Umberto

Microfinanza Srl

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FGDA Thematic Workshops “Share” Series

Document of synthesis of the workshop On July 8th 2014, G g g w project “E /AC ”.

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g z w k : “ ” w Microfinanza Srl within the II – New financial products for a sustainable

The crisis of the microfinance industry and especially the criticisms related to its commercialization and mission drift encouraged the sector in finding new ways to meet the needs of the population attended. Stakeholders started asking whether microfinance is currently at the service of the population at the base of the pyramid, and if it uses a reasonable comprehensive approach. The interest of the sector on renewable energies gives an example of this situation: it has grown as a response to a loss of effectiveness of microfinance mission towards the population served. It is evident that this leads to a more complex discussion that requires a cultural change (strategy, management, operations of MFIs) and it is not an easy task for two main reasons: 1) large MFIs with good market positioning may not be so interested in innovation, since with green microfinance they may realize small changes without affecting the structure of their portfolio. Thus with such MFIs the discussion should be focused on how and under what circumstances it is possible to invest or find resources for large-scale investment. Of course, this scenario requires functioning business models and suitable funding networks. 2) small MFIs have greater sensitivity to the issue but they have the opposite problem as they may encounter difficulties in finding resources and being approached by large investors. Therefore, if one of the big questions is how green microfinance can attract investments, the existing challenges in its implementation are many: from the market screening, to the identification of the bottlenecks in the linkage between the MFIs and Technical Provider Institutions (TPIs), the g , … The workshop aimed at understanding how the microfinance sector, with the support of the research in new and green technologies (as solar lanterns, improved cook stoves or bio digesters), can take up the challenge of improving the access to energy for the population, while at the same time protecting the environment. To this purpose, the event adopted a multi-sectorial approach, showing different points of view (microfinance, research and investment fields). The concrete experiences highlighted how new technologies can be promoted in order to support people at the base of the pyramid in developing and emerging countries, especially in rural areas. GREEN MICROFINANCE IN EUROPE: STATE OF THE ART AND FUTURE – DAVIDE FORCELLA In 2013 the European Microfinance Network realized a research to understand the development of green microfinance initiatives in Europe. The study concerned 36 countries and 415 MFIs. Web research, on-line survey and one to one interviews were realised. The research analysed 5 dimensions of the green microfinance:  Environmental Policy: existence of environmental mission, vision, or a formalised policy;  Ecological Footprint Reduction: reduction in paper, water, waste, energy consumption, travels, CO2 emissions;  Environmental Risk Assessment: evaluation of environmental aspects within the credit-risk analysis;  Green Micro-credits: provision of credits for photovoltaic, solar water-heaters, energyefficient technologies, habitat insulation, recycling, waste management, organic farming, ecotourism, etc.;  Environmental Non-Financial Services: environmental awareness raising of clients, training for environmentally friendly activities. From the study emerged that 115 MFIs undertake some environmental activities (27.7% of the full sample), 56% of which are based in Western Europe and 44% in Eastern Europe. The legal status of MFIs involved in environmental initiatives is quite heterogeneous. The study found initiatives in 4

FGDA Thematic Workshops “Share” Series every one of the 5 environmental dimensions. Older MFIs result to be among the ones more involved in environmental management. Even if the data does not take into consideration the engagement level but only the existence or not of one of the five dimensions analysed, it shows the existence of more initiatives than expected. A statistical and econometric analysis of these results showed that:  Profit status does not influence the environmental performance;  I ’ performance of the MFI (similarly to non-microfinance companies);  MFIs that provide also non MF credits achieve better environmental performance;  Larger or more mature institutions seem to have better environmental performance (similarly to MFIs in developing countries);  The environmental performance of European MFIs is comparable to the one of MFIs in developing countries. Social responsibility, competitiveness, and legitimation represent the principal motivations for an MFI to engage in environmental initiatives. The main constraints

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The strategy generally used is the establishment of partnerships with specialized organizations along with training for the staff. Some interesting environmental initiatives are: green jobs support, by Partner MKF in BosniaHerzegovina, and the private-public partnership implemented by Crédal in Belgium and FNCE in France respectively.  Partner MKF with the support of USAID aimed to create a market for solar energy. It indeed provided loans, grants, technical assistance and business training to 20 micro-enterprises to start the production of solar collectors. It then stimulated the demand thanks to the use of media, brochures and the activities of loan officers. After that it provided credits to 200 clients to buy the solar collectors produced by the 20 micro-enterprises.  The private-public partnership instead aims to create a leverage effect for poor households to improve their living condition. The objective is to improve the energy efficiency and apartment insulation and consequently reduce the energy cost and allow the poor households to have access to public incentives for energy efficiency. In the Belgian experience: Crédal provides a credit at 0% interest rate plus TA to fulfil all the formalities to have access to the public incentives paid by Région Bruxelles-Capitale, that also pays the loan interest, finance TA and provides guarantees on credit defaults. In the French experience: FNCE, in partnerships with other specialised organisations, provides reduced interest rate credit and training for energy efficiency, that allow to have access to a 50% public guarantee plus the public incentives. These experiences underline: the lack of environmental awareness among the population, and the consequent importance to stimulate the demand; the importance to work in partnership with different actors; the necessity that someone assumes the perceived credit risk (that in actual experiences it reveals to be pretty low). Strictly related to green micro finance is indeed the debate regarding the role of subsidies. Indeed because the provision of clean energy devices or improvement in energy efficiency is perceived as something new and unknown by both the MFIs and the clients, subsidies (in term of grants, reduced interest rate, free TA, awareness raising, guarantees, etc.) are often perceived as necessary to develop the green micro finance market. What is the best way to use public subsidies for green micro finance is a very important issue, such as the strategies and potentialities to scale up programmes, and require more research. Sometimes external factors, independent from the MFI could spur the development of green microfinance, such as the reduction in the cost of renewable energy devices, or the increase in 5

FGDA Thematic Workshops “Share” Series energy price that can induce a higher number of MFI clients to be interested in solar panels, “as it is told to happen in the solar panels credit program of Fondi Besa in Albania”.

HOW THE SCIENTIFIC RESEARCH ON NEW TECHNOLOGIES CAN SUPPORT THE SUSTAINABLE DEVELOPMENT IN ACP COUNTRIES. A CASE OF STUDY: THE ELSA STOVE – TIZIANA PIRELLI AND DAVIDE CAREGNATO.

According to the World Health Organization, more than 41% of world's population cook and heat with solid fuels such as wood, crop residues, dung, charcoal and coal (Africa: >78%; Europe: