From Crisis to Solution – Microfinance Saves the Day
Global power shortages, the deepening energy crisis and the environmental impact on the planet have led researchers in India to look to alternative solutions to a problem that grows more serious every year. Providing microloans for individuals and households to enable them to set up solar energy systems may be the answer that will both benefit the planet and help alleviate poverty.
Energy Consumption and Natural Resource Degradation
In many rural areas in India, households are run using firewood for cooking, kerosene for light and cow dung patties for warmth. The reliance on kerosene is a rising cost and many people have to travel great distances to purchase it. The depletion of natural forests for firewood is a serious problem around the world and pollution and health risks are on the rise.
Solar energy has been regarded as a good solution for many years, but at the same time it has also been out of reach for low-income families, especially those based in rural areas. While it should be a cost efficient green energy alternative for all, it is the poor who end up paying the most for basic energy requirements.
Tailored Loans to Help Finance Solar Energy
Microfinance organizations have been working on a solution to help low-income households invest in solar energy with a loan that is easily repayable on a weekly basis. It is a low interest loan that actually helps people save money and invest in the future without deepening their financial strain. These loans do not only address the need for lower cost technology, but the need for creative, effective finance solutions that are within reach for everyone.
Solar power device manufacturers market their products to microfinance institutions who are then able to bring the products, and the loan solutions to rural areas. As the sector develops, the microlenders are able to offer slightly larger loans to individuals in order to help them get started in their own solar energy businesses. There are several microfinance organizations focusing on affordable green energy, among them SELCO India, which is a pioneer in this field. Both loans and solar energy systems are customized to suit the individual needs of every household.