Today is time to take a moment to make a plug for a specific charity as I am about to write a check and you might want to as well. A bit of background first.
Micro-finance programs are, imo, one of the most empowering developments around the world over the past several decades. Providing sensible (low-cost) paths for small entrepreneurs to receive funding to develop and expand their business activities can foster development and social stability. The ability to engage with the loan process, to have a tangible feel for how my donations have an impact, is a reason why Kiva has been on the donation list for years. This post, however, isn’t about Kiva and its interesting loan process. (For similar programs, see World Vision’s Micro and, related, United Prosperity’s loan guarantee program.)
To another subject, the potential for helping people ill-served by existing fossil-foolish energy systems leap frog to energy efficiency systems powered with clean (renewable) energy is a developing empowering path around much of the world. For example, an LED-light/solar power with battery combination can be had for the cost of a few months of kerosene for a home lamp. The direct financial ROI for that capital investment could, easily, be many times over due to eliminating those kerosene costs. Once paid off, there are years of now ‘free’ and clean energy services. There are also the ‘indirect’ benefits, such as reduced air pollution within the home, not having to spend the time (a resource) on buying/managing the kerosene, and the potential that the LED/solar system could enable extended business. The real challenge, not surprisingly, is that a solar system requires an upfront capital investment that is beyond the resources of the vast majority of the world’s citizens.
The value of marrying micro-lending with energy smart leapfrogging options seems quite clear.
There has been very little research on the specific impact of microfinance on environmental sustainability. However, around two billion people around the world use kerosene (paraffin) for household lighting, consuming the equivalent of 1.7 million barrels of petroleum a day, greater than the petroleum production of Libya. Many of these poor people are, or could be, microfinance clients. Recently, new technologies, in particular inexpensive, reliable solar/light-emitting diode (LED) systems, have opened up the possibility of consumer lighting products that are cost-competitive with kerosene lighting, even for very poor people. The market for clean energy products is enormous; there are 200 million households in Africa alone that could switch from kerosene to solar/LED lighting.
Grameen Shakti (e.g, same family as Grameen Bank in Bangladesh, the poster child of a successful micro-financing program) has been doing solar lighting, biogas, and improved (more efficient) cook stove deployment using microfinancing principles. (In essence, the new system will save / earn you money, use that money to pay on installment for the provided system.)
To be honest, I hadn’t really picked up on the growing marriage of micro-financing with sustainable energy systems.
Opening my mail the other day changed that equation. For better or worse, most of our mail is fundraising material and most goes unopened — especially from organizations that we ‘know’ and are happy to donate to on a regular basis. (Sigh, try to signal that the mailings are a waste of resources but not all charities get the message. That, by the way, is becoming a guideline as to who should receive funds. Send me a letter every week and, well, you don’t really merit funding in my book.) Thus, the FINCA mailing almost went right into the recycling but, with opening, the letter’s first paragraph grabbed my full attention:
Dear Mr Siegel,
You and I take many things for granted that familes in developing countries simply don’t have. Take electricity, for example, I am writing to you on a computer in an air-conditioned office powered by a reliable source of electricity. Yet, as I do, I am acutely aware that millions of families cannot afford to light their homes.
A serious challenge: even as we seek to decarbonize the world’s energy system and increase energy efficiency in existing systems, the truth is that a good share of the world’s population has little to no access to electrical services. And, while not perfect, reliable access to affordable electricity becomes a reasonable proxy for prosperity and social stability.
The letter continues:
According to the United Nations, 1.5 billion people worldwide have no access to electricity. This puts them at a huge disadvantage. It affects their health — since most cook with wood or charcoal or kerosene in poorly ventilated homes. It hampers their ability to work — since whatever they do or produce must be done by hand and during daylight hours only. And, it affects their children’s education — how do you read or write or do homework without light?
One estimate that I’ve see is that an hour of nighttime lighting can translate to two years additional educational achievement, on average, for girls in the developing world.
By the way, lets not forget the largest impacts: black carbon from dirty cook stoves and lighting has a measurable impact on accelerating climate change.
Back to FINCA’s fundraiser:
In Uganda, just five percent of people have access to the public electricity grid. Millions of Ugandans rely on kerosene, candles, and batteries for power; millions more go without. Imagine trying to run a business — or a home — without power. If you owned a small store, how would you light your shop or power the refrigerator? If you owned a small store, how would you light your shop or power the refrigerator? If you were a parent, how cold your children do their homework at night? What if you ran out of kerosene, or wood, or charcoal for cooking? What if you couldn’t afford to buy more?
What if you couldn’t afford to maintain any level of energy services? That is not an answer any of us wish to face and it is not a good answer to dealing with the poor’s (legitimate) desires for improved living conditions and opportunities. The answer to these questions, just as to America’s fossil-foolish addictions, should not be to increase subsidies and ignore all of the secondary (and tertiary) problems that reliance on burning carbon (especially fossil) fuel sources creates. When it comes to telecommunications, the developing world isn’t installing copper cables to rip them out to install fiber optics to see them obsolete with wireless comms, they are growing (exponentially) their wireless networks (increasingly powered by renewable energy systems). The question: How can we leap frog past the broken and inadequate fossil-foolish energy system to something better?
Micro-lending for renewable systems certainly seems one of the tools to enable that sort of leap frogging.
FINCA recently finished a test program of 430 renewable energy loans in Uganda. And, there are some pretty good success stories. For example,
FINCA Uganda client Rose Nassimbwa lives in a small two-room brick house near a market. She runs a small restaurant and a tailor shop in the market. The FINCA-financed SHS appealed to her because, though she lives within range of the electricity grid, she cannot afford the connection fee. Ms. Nassimbwa uses her SHS at home to charge her cell phone and to power a lamp for an hour in the mornings and two-three hours in the evenings, so that her children can do their homework in the electric light. She still uses kerosene for making tea, but not for lighting her house anymore. Ms. Nassimbwa is so pleased with her FINCA SHS that she is now considering acquiring a second system for her restaurant. She is also thinking about moving her sewing machine from her shop to her house for the pre-Christmas holiday period—when demand for her clothing designs rises—so that she can put in extra hours sewing during the evenings with lighting from the solar panel. Her goal is to use her additional revenue to expand her tailoring business by purchasing a larger inventory of fabrics and sewing materials to better meet her clients’ requests.
Reduced costs, reduced pollution, improved educational opportunities, and increased (very small) business activity. That is exactly the sort of the type of win-win-win-win solutions that we should (and I like to) invest in. With this letter and this program, FINCA sent me looking for a pen and a checkbook.
What is FINCA telling me will be done with the money they’ll receive?
you can ensure that low-income families throughout the developing world will reap the benefits of light and electricity, just as you and I do. Your gift will help them generate clean electricity from the power of the sun — power that doesn’t rely on fossil fuels, that doesn’t generate carbon emissions, that is reliable and there when they need it. … your gift will help families invest in their own energy independence.
Rather than tax dollars spent subsidizing new coal plants in South Africa via the World Bank, this is a path forward for electrifying the developing world that I can support … including with resources.