Innovations in Microfinance: Tackling the Energy Needs of the Poor

Harald Schützeichel is director of  Solar Energy Foundation, which has made several clean-energy investments in developing countries.

NEW YORK, March, 24, 2009 – Approximately 1.7 billion people around the world have no access to electricity. At a discussion held at the Asia Society headquarters in New York, experts stressed the need for urgency in meeting the energy needs of underprivileged communities.

For Harald Schützeichel, director of German-based Solar Energy Foundation, experiencing a few nights of complete darkness in rural Africa was enough to inspire a philanthropy-driven business that has made several clean-energy investments in developing countries. In India, the heart-breaking sight of children, some of whom are less than 10 years of age, selling flowers in the summer heat was cause enough for Harish Hande, managing director of SELCO-INDIA, to dedicate his career to humanitarian causes.

Empowering underdeveloped communities, however, is not as simple as it seems, said Philip LaRocco, president & CEO, E+Co. The optimal energy solution is one that has been running concurrently with the existing, obsolete energy paradigm for some time before making a complete switchover. Additionally, an appropriate approach to empowerment is one that enhances the ability of the customers to afford the modern energy services. For a strategic scale-up in such underdeveloped sectors the operative word is holistic view; a regime must be organized where the needs of the poor are addressed from an environmental and social perspective and not just from a business perspective. A compartmentalized approach is not the answer to solving the worlds energy needs, Harish added.

It is reported that every dollar invested in energy has a payoff of .08 percent in GPD for emerging counties. Asim Buksh, founder of Buksh Foundation, recognizes an opportunity in doing social good for the 47 percent of Pakistan that does not have access to energy. He believes that the poor should be considered as an underserved market segment to whom organizations, either profit or not-for-profit, must provide options. There needs to be more ground research to understand what energy solution works best for each rural area, added Ellen Morris, managing director and co-founder of Arc Finance.

The openness of developing nations to an increased participation of foreign organizations for addressing the energy needs leaves few impediments in the way of humanitarian efforts. While bureaucracy continues to be an issue, it is not compelling enough to overcome the resilience of those dedicated to improving the livelihood of the underprivileged.

The panel agreed that a convergence between microfinance groups and corporate financing will give rise to successful mission-driven organizations. And it will be this successful concoction of good intentions and business acumen that will eventually solve the energy problems of the poor.

Reported by Chandani Punia