The move is part of the regional Monetary Affairs Committee mandate through which the EAC’s Central Bank Governors are tasked to enhance monetary and financial cooperation.

Speaking during the launch of the two-day meeting the Governor of BNR, Francois Kanimba, said that apart from a functioning legal system, financial development requires a functioning financial system.

“It is worthwhile to stress that the regulation of microfinance generally lies within the legal infrastructure of each country and a weak legal infrastructure can undermine financial development in a variety ways,” Kanimba said.

This means that Rwanda will have to align its MFI law and regulations with other EAC countries. The MFI law in Rwanda caters for licensing requirements, corporate governance, performance and accounting standards, accountability and transparency, deposit protection as well as liquidation mechanism.

Kanimba added that the workshop will harmonise regulatory tendencies. Participants are expected to discuss benefits and challenges with regard to harmonisation of regulation of microfinance, access to finance, microfinance policy, regulation and supervision, similarities and differences.

“The roadmap resulting from the discussions will make it possible for us to provide a strong foundation for a more harmonised regulation of the microfinance sector in the EAC countries,” Kanimba said.

The meeting that started yesterday brought together representatives from the EAC central banks, regulators of savings and credit co-operatives (SACCOs) as well as consulting firms.

Author: Gertrude Majyambere

Source: All Africa News (http://allafrica.com/stories/201009090052.html)

The bank is seeking to create 1.2 million shares that will be sold to existing shareholders as it targets between Sh350 and Sh500 million before December.

It hopes to beef up its capital, expand its outlet and rebrand its business as it races to shake off its loss making tag.

The bank has been making losses since 2005 and brought in new shareholders in 2008 to shore up its eroded capital base and sharpen its competitive edge in the face of growing competition in the banking mart.

The new shareholders including Jamii Bora Trust, Scandinavian Group and local investment firm Baraka Africa Fund (BAF) have settled in and restructured the bank including merging its operations with micro finance business run by Jamii Bora Kenya.

“The money will help grow our capital levels and provide working capital the bank badly needs to support its growth plans,” said a director who requested anonymity.

The Banking Survey 2010 has ranked the bank as one of the worst performing on the income front controlling a measly 0.07 per cent of the industry’s total income.

Start of trouble

Troubles at the bank started in 1998 after it was placed under statutory management due to failure to meet its financial obligations.

The bank was also adversely mentioned in the multi-billion shilling Goldenberg scandal resulting into mass withdrawals.

In 1998, Central Bank of Kenya recommended the closure of City Finance bank, but its high net worth investors, who feared losing their cash, crafted a rescue plan that saw depositors holding more than Sh100, 000 convert their deposit into equity.

The result is that the bank ended up with about 900 shareholders with a huge chunk of them being default investors—who remained unsupportive of the bank’s growth plans prompting its search of the strategic investors.

At present, these shareholders have a 20 per cent stake, Jamii Bora Trust (25 per cent), Scandinavian Group (40 per cent) and 15 per cent for BAF—a five year-old investment group founded by young top business executives.

These new shareholders will also have to grow the bank’s core capital to a minimum of Sh1 billion by 2012 from its December level of Sh315 million.

Besides complying with regulatory requirements, the high capital levels will help the bank rev up its lending now that it’s planning an expansion blitz without hurting its statutory ratios.

Jamii Bora and the Scandinavian Group, for example, bought into the bank with an eye on the licence—which allows it to tap deposits to grow their lending business.

Previously, Jamii Bora relied on bank borrowing to serve its lending that was targeted at the bottom end of the market.

It also lost some its former clients to commercial banks after turning their businesses around.

“For that reason Jamii Bora has taken the decision to become competitive with those banks so it can keep its successful members,” said Jamii Bora in a brief to partners last year.

This set the stage for the battle for control of the bottom end of the market placing Jamii Bora Bank in a head-to-head contest with Equity and Family Finance banks.

For BAF, having the bank sit on its portfolio was a major catch since the investment firm had been desperately angling for a piece of the lucrative banking market.

Analysts reckon that City Finance Bank was a good buy, arguing that the bank has plenty of room for growth despite it’s under performance.

It posted a loss of Sh7 million in 2009 compared to a loss of Sh3 million a year earlier.

People familiar with BAF say the investments group is looking to turn around the bank and exit either through an IPO or private equity transaction, which promises to offer outsized gains to the fund rekindling the transformation of Equity Bank, which minted a club of millionaires after its listing in 2004.

Author: Michael Omondi

Source: Business Daily (http://www.businessdailyafrica.com/Jamii%20Bora%20Bank%20targets%20Sh500m%20from%20rights%20issue%20/-/539552/1005698/-/kolbbgz/-/index.html)

The Grameen Foundation, a Washington-based group known for helping women with the smallest of business loans, has two dozen people in a technology lab here developing mobile Internet applications to help spread its microfinance model. It’s warning farmers in Uganda about banana crop rot through text messages and collecting data on spreadsheet applications on smartphones.

And the Bill & Melinda Gates Foundation has dedicated $12 million to help village farmers in Tanzania, Cameroon and Rwanda save money through electronic mobile-phone deposits. It has launched a $10 million contest in Haiti to fund the best mobile banking ideas to channel earthquake relief to people who would otherwise stand in long lines at overwhelmed bank branches to collect cash.

In all, 5 billion cellphones are in use globally, and the most aggressive adoption is coming from low-income and poor communities, where the low cost of phones and the availability of cell networks even in remote areas has fueled the rapid growth. The innovations in development programs are relatively new, and it’s too early to predict their success. Political instability and dictatorships make it hard to work with telecom service providers, and some central banks are reluctant to cooperate with companies that could take away their control over their citizens’ finances.

Even so, cellphones have broken through bureaucracies and are reaching many who traditionally have been isolated from help. A basic phone that sends text messages can cost $20. A family or village can share one phone, with each person switching out cheap SIM memory cards for access. Kenya and Uganda have mobile broadband networks rivaling those in the United States and Europe that support the iPhone and BlackBerry.

“Mobile penetration is at almost every single level of geography and income, and given that situation, we are asking how that technology can be used to increase social and economic benefits,” said Chris Locke, managing director of development programs for GSM World, a global wireless trade group.

Cellphones are being adopted faster than even the most basic services, such as routine medical care and schools. GSM World predicts there will be 1.7 billion cellphone users by 2012 without a bank account. The nonprofit Consultative Group to Assist the Poor estimates that 150 million people receive regular social welfare payments but that fewer than 25 percent of them have a bank account in which to deposit those funds, save and build assets. Much of that is because bank branches aren’t available in rural areas and transaction costs are high.

As such, the Gates Foundation is trying to replicate a popular electronic banking program in Kenya in 19 other nations, including Cameroon and Tanzania. Through M-PESA, a joint venture launched by a British development fund and Vodafone, a Kenyan farmer can deposit a few dollars of cash with a local shop owner who converts the cash into electronic currency through a mobile text message sent to a city bank. A local telecom provider acts as the armored money vehicle, circulating the money electronically, and a bank manages the deposits so that even the poorest people can save money – a key to breaking out of poverty, aid workers say.

“Savings is an option everyone should have but is not available to the poorest because of the transaction costs and because there is simply no business case for a bank to set up a branch where the poorest live,” said Ignacio Mas, deputy director of financial services for the Gates Foundation. “That’s where mobile technology comes in. It allows for even $5 to be converted into electronic value without the high costs like never before.”

A bank branch transaction costs $2.50 in the Philippines, but if done on a mobile phone can be reduced to 50 cents or lower, according to CGAP. The cost to set up a village shop as a bank agent is relatively low, the group said, and studies in Africa show that mobile banking agents at village shops are generating more cellphone banking transactions on the continent than Western Union.

Mobile phones have also spurred programs in health, agricultural and educational development.

In the past two months, Grameen has registered 500 expectant parents in the Kassena-Nankana area of Ghana, near the border with Burkina Faso, to receive free, regular phone calls and text messages guiding them through pregnancy. At week seven in the pregnancy, a parent receives a text reminder to take a malaria vaccination. At week 37, the parent is told that contrary to myth, eating fruits such as mango and proteins such as eggs is nutritious and won’t harm the fetus.

Grameen’s founder, Muhammad Yunus, won the Nobel Peace Prize in 2006 for micro-lending aimed at women in Bangladesh and other impoverished nations.

A former Microsoft executive set up Grameen’s technology lab in Seattle three years ago and attracted two dozen high-tech veterans to come up with Web and mobile phone solutions for the developing world.

In a partnership with Google and Uganda’s government-run wireless service provider, Grameen launched a smartphone application last year that allows a community worker on the ground to visit local farmers and deliver information on crop disease and weather. That worker – an entrepreneur funded by Grameen – also collects data on farming trends and sends it through a smartphone to Uganda’s agricultural regulatory agency.

“Tech is an enabler, not the end goal,” said David Edelstein, vice president of technology programs for Grameen. “It’s about putting information into people’s hands and empowering them.”

Author: Cecilia Kang

Source: Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2010/09/07/AR2010090706625.html)

Author: Ignacio Mas

Source: Social Science Research Network (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1663954)

It is estimated that half of the world’s population does not have access to financial services. In developing countries, over 70 per cent of the population is excluded. Of the estimated 2.6 billion people living on less than $2 per day (almost 40 per cent of the world’s population), less than 10 per cent have access to formal savings products.

According to the paper titled “New opportunities to tackle the challenge of financial inclusion”, the world’s poor use savings to protect against shocks.

“We tend to think of the poor as a uniform mass of people who trundle along. The reality is that if you observe a group of poor people over, say, five years, a significant fraction of them will have escaped poverty during this time. The problem is that just as many will have fallen back into poverty because of some kind of shock. A health problem, a failed crop can set them back many years. But if people had good savings cushions or insurance mechanisms, they would be able to weather these shocks without setting them back many years,” Ignacio Mas, deputy director of Bill and Melinda Gates Foundation pointed out in the study.

According to the paper, the main problem of access is the high transaction costs that both customers and financial service providers need to incur to contract with each other. A large cost component is handling the cash payments that underpin most financial transactions (deposits or repayments, withdrawals or disbursements), while other costs are informational such as to establish their identity or proof of residence as required by regulatory authorities, and it is costly for a credit provider to ascertain customers’ character and financial condition.

Meanwhile, when people transact infrequently or in small amounts, or when they are located in remote or low-density areas, these transaction costs can wipe out the profitability as perceived by financial service providers. Financial institutions, especially large commercial banks, do not have the business model that allows them to deal with the triple whammy of low savings balances, small transaction sizes and a large number of customers.

Mas noted that formal institutions have not typically seen much profit in offering savings and there is now a historic opportunity to use emerging technology, especially mobile phones, to enable very small banking transactions to happen through local non-bank retail agents in a secure way that gets the economics right for both clients and banks.

“We’re optimistic such models can transform the economics of financial service delivery, which will in turn give poor people more tools to manage their lives and plan paths out of poverty. The key to reducing microfinance transaction costs is to push the conversion of hard cash into electronic value as close as possible to where people live and work. Leveraging increasingly ubiquitous mobile communication networks, developing countries can leapfrog to a banking system that is built into the retail fibre of every community,” he added.

Author: Sanjay Vijayakumar

Source: Mydigitalfc.com (http://www.mydigitalfc.com/companies/poor-people-better-savers-need-safe-places-put-money-767)

The Top 100 survey is the brainchild of audit firm KPMG and Business Daily, a publication of the Nation Media Group.

“Small and medium businesses are critical in creation of wealth and jobs and the potential of this sector cannot be over-looked,” said Mr Humphrey Muturi, the general manager for SME banking at StanChart.

The bank has been sponsoring the Top 100 competition since its inception in 2008, with the fresh support bringing its cumulative contribution to Sh11 million.

The support from StanChart comes after Sage Pastel, an accounting and business management software firm, rolled out a Sh11 million sponsorship plan for the competition last month, bringing this year’s total sponsorship pool to Sh16 million.

“We are seeking more sponsorship from industry associations in East Africa,” said Ms Anne Gitao, the head of marketing at Nation Media Group.

Kenya has about 1.6 million registered SMEs accounting for nearly 60 per cent of all businesses in the country, according to the Ministry of Trade.

The small businesses employ about 5.1 million people accounting for 75 per cent of the total labour force and contribute 20 per cent to Kenya’s gross domestic product.

According to Mr Robert Onyango, the project manager for the surveys, an assessment of the firms that entered the competition has been completed.

“We are now at the stage of processing the data to identify the winners,” Mr Onyango said in an earlier interview.

Winners will be honoured at a gala dinner on October 8 at a yet to be named venue.

Third time

This is the third time the survey is being conducted in Kenya and the first time the competition has been extended to Tanzania. Uganda is participating for the second time.

The competition targets firms with a turnover of between Sh70 million and Sh1 billion.

They must have audited financial records and be unlisted at the stock exchange. Law firms, insurance companies and banks are excluded.

Mellech Engineering and Construction topped the 2009 survey.

Its turnover has since more than doubled and the firm has expanded to Uganda, Southern Sudan and Rwanda.

The survey aims at creating an industry data base which will enable SMEs to benchmark themselves against their peers while highlighting to policy makers their contribution to economic growth.

Author: Victor Juma

Source: Business Daily (http://www.businessdailyafrica.com/Company%20Industry/StanChart%20gives%20Sh5m%20to%20Top%20100%20SME%20survey/-/539550/1001450/-/13jjx40/-/index.html)

“We launched in Kenya in March 2007 and it was a brand new service, there was nothing else like it anywhere in the world so we didn’t know what to expect,” says Susie Lonie, head of Vodacom payment services, who has been seconded to this country by Vodafone to oversee the local roll out. “At launch in Kenya our business aim was about 320,000 customers for the first year. We delivered our millionth customer eight months after launch. Our second millionth customer came about three or four months after that. By the end of the first year we had 2.5 million registered customers using the service,” says Lonie.

A Swahili word, “pesa” means money and the idea for the mobile transfer system was conceived in 2004 when Vodafone was awarded a $1 million grant by the UK department for international development (DFID) to take financial services to the poor.

“I was asked to go out to Kenya and set up a small-scale pilot project with a microfinance institution and a local network operator called Safaricom. It was one of those classic ‘I went out for three months and stayed for three years’ kind of jobs,” says Lonie. “M-Pesa really took off on the back of customer demand. After the first three months we didn’t do much above-the-line advertising because we were struggling to keep up with demands from customers, it just took off like a sky rocket.”

A Vodafone affiliate, Safaricom transfers some $10 million in transactions a day through M-Pesa, according to Foreign Policy magazine and the system helped the mobile operator post record profits set at some $250 million in 2009. The service is so successful that The Economist reports about 60 similar copy-cat services have been established around the world.

“The adoption was huge because M-Pesa met a need that was not yet serviced in Kenya. This is the need for people without bank accounts to be able to send money to their friends and relations, whether that is across the other side of the city or across the other side of the country. Most African countries have vast migrant populations wanting to send money back to the village or the farm, and Kenya is no exception,” says Lonie, who says that Vodacom and Nedbank expect to replicate M-Pesa’s success locally, although not quite as easily.

Arthur Goldstuck, head of World Wide Worx says M-Pesa might not be the silver bullet Vodacom is hoping for. “Kenya has been the great success story of mobile money transfers, but that doesn’t automatically mean M-Pesa will readily translate to South Africa. In fact, the mistake that a lot of banks make throughout Africa is assuming that M-Pesa is a template for the rest of Africa when it is not.”

Goldstuck says it is a classic marketing mistake to see Africa as homogenous.  “Every country in Africa has different circumstances that pertain in terms of the take up of financial services and the importance of specific types of financial services. M-Pesa took off in Kenya for very specific reasons which in part included the fact that the majority of the population was unbanked. We don’t have that situation in South Africa anymore.” Goldstuck says more than half of the adult population in SA have bank accounts so there isn’t a desperate need for an alternative to what banks are providing. “Bear in mind that mobile banking is part of the offering of all South Africa banks, in fact, South Africa is a world leader in mobile banking,” says Goldstuck.

“Another element is that Kenya has a massive remittance economy,” he adds. The concept of remittance is that people who work in another country or another area send money home, a factor that has fuelled Western Union’s success on the continent. “Western Union is one of the big enablers of the remittance economy and to some extent M-Pesa feeds into that culture. People are familiar with the concept of remittance and collecting money at a post office or an equivalent place in Kenya. The idea of money transfers without a bank account is very deeply ingrained in the Kenyan economy.”

Goldstuck says that while South Africa has some semblance of a remittance economy there are banking and payment services geared around this concept. “You can go to a Shoprite Checkers and pay in money that someone can collect in a small town or village somewhere in another part of the country. Despite this, the remittance culture is not as deeply ingrained in South Africa as it is in other parts of Africa.”

The author of various research studies into the local mobile sector, Goldstuck says another reason M-Pesa was so hugely successful in Kenya was because the country’s banking regulations didn’t require a mobile supplier to work with the banks. “In South Africa, Vodacom has to work with Nedbank because Vodacom doesn’t have a banking license. In Kenya you had a mobile operator providing money transfers, in this country you have a cellphone network operator using a bank to send money transfers so that immediately adds another element to the value chain and it remains to be seen whether that will be an advantage.”

With Vodacom and Nedbank currently negotiating with Pep, Pick ’n Pay, Game and Edcon to expand reach for M-Pesa outlets, it appears the mobile network operator’s claim that “M-Pesa is expected to repeat in South Africa the success seen in Kenya” is bullish. Lonie says that M-Pesa helped Kenya’s Safaricom grow market share and profitability, but a repeat performance may not be as easy locally for Vodacom.

Source Mandy De Waal

Source: The Daily Maverick (http://www.thedailymaverick.co.za/article/2010-09-02-m-pesa-arrives-in-sa-hoping-to-repeat-its-kenyan-success)

When Menard visited Africa in 2008, he came to the realization that traditional aid to developing countries, while well intentioned, wasn’t working.  He describes what he saw in Tanzania as “broken links in the economic chain” of that country.  For example, small farmers were growing a lot of food, but there was a breakdown in the system of transporting it to market and selling it.

Originally educated as a biochemist, Menard has been involved in business development and consulting for nearly 30 years.  After Sept. 11, 2001, he was instrumental in the effort to design a system for the logistics and security of hauling debris away from the World Trade Center site.

While in Africa, Menard realized that business development is the key to success for developing countries. “It’s Development 101,” he says. He started up Cheetah Development, a non-profit company here in Minnesota that invests in small- to mid-sized for-profit business ventures in Africa.

“There is a better way than handouts,” says Menard. “What we’re doing is helping them unlock their own resources, so they can feed themselves, clothe themselves and send their own kids to school.”

Discipline and profit

Cheetah Development is based on the premise that the discipline required to turn a profit will help these business owners develop the skills necessary for long-term success. Menard sees a gap between existing large-scale venture capital and microfinance in the developing world. He calls this “the missing middle” and believes this is where investment capital is most needed. Cheetah’s projects will focus on the $5,000 to $500,000 range of business size.

Cheetah has already begun a handful of projects in Tanzania, mostly involving transportation, preservation and distribution of foods. The most visible of these so far is the bicycle project.

In Tanzania, bikes are used for far more than transporting people – they are trucks for moving goods. Farmers add structure to the frame of an ordinary bike and pile on hundreds of pounds of food and other items to transport to market. Sometimes they get so heavy that they can’t even be ridden and are used as something like a wheelbarrow. Regular bicycles aren’t built for this kind of stress and often break.

In keeping with its philosophy, Cheetah Development is planning to build a bike factory in Tanzania that will build ultra-heavy duty bicycles, specifically designed for use by farmers that will bear loads up to 1,000 pounds.

Cheetah has put together a design team of Twin Cities engineers and marketing people from various fields that have volunteered their time and expertise to build a prototype bike as well as design the new factory in Tanzania.

Pam Saylor, a sales manager for Kurt Kinetic, a manufacturer of parts for the bicycle industry, will be in charge of sales. Design and construction of the prototype is being done by Bob Brown, owner of Bob Brown Cycles, a St. Paul custom-frame bike company, Lloyd Keleny, part of the original Rollerblade engineering team, Mark Stonich, owner of Bikesmith Design and Fabrication in Minneapolis, and John Hehre, president and CEO of Creative Processes, Inc. They’ve been working since last spring to build a prototype bike.

Menard hopes to have the first factory in Tanzania up and running in the first quarter of 2011. The factory will be sized based on pre-orders, but he hopes to build several thousand bikes in the first year of production. He’s currently raising money for that effort and for the other projects that are underway.

Menard uses the word catalyst from his biochemistry days — something that facilitates a reaction without getting used up by the reaction — to describe Cheetah Development’s role. He thinks the economic challenges of sub-Saharan Africa present enormous opportunities for investment in the people who live there.  Cheetah Development is in the business of teaching fishing (business-building) to the people of Africa to give them the skills to change their own lives.

Author: Steve Date

Source: MinnPost (http://www.minnpost.com/stevedate/2010/08/31/20879/minnesota_non-profit_working_to_bring_profitable_outcome_in_africa)

Alquity Group, a company with $130m (£84.4m) assets under management, launched an investment management arm this year to provide a different type of investment that, it says, will provide clients with long-term double digit returns while “protecting their long-term fiduciary interests.

A donation of 25% of the fund’s net management fees will go to microfinance projects in Africa aiming to create 100,000 jobs by the end of 2012 and 100,000 jobs annually thereafter.

Cash will go to those setting up small businesses or to enhance those already existing in hope that a circle of investment will be created.

The group says there are many favourable reasons to invest in the region, despite the negative headlines, such as accelerating domestic growth and improving fiscal balances and savings ratios.

David McIlroy, Alquity’s CIO, says: “The 1990s was the decade of the Latin American Puma markets, while the past ten years has been the decade of China and the Asian Tiger economies. We believe that the essential elements are now in place for the decade to come to belong to the African Lions.”

The fund invests on a pan-African, pan-sector basis and is open for sterling subscriptions. It is an open-ended, daily-dealing, Ucits III Sicav listed in Luxembourg. Minimum investment is £1,000.

Author: Natalie Kenway

Source: Investment Week (http://www.investmentweek.co.uk/investment-week/news/1730703/alquity-launches-africa-fund-charitable-focus)

Lighting consumes the highest percentage of expenses for energy in the home; African consumers spend between $10 billion and $17 billion on kerosene for lighting. To improve this situation, public and private sector partners are modeling a new distributed innovation approach — acting as market makers — to accelerate product innovation that will bring modern off-grid lighting products to this “bottom of the pyramid” population.

Private Sector Cannot Develop the Market on its Own

Advanced modern lighting technologies have the potential to replace kerosene with better consumer products, but substantial barriers block commercial markets for these products in the developing world. Moreover, the private sector is ill equipped to capture the market on its own.

Lighting Africa, a World Bank and International Finance Corporation (IFC) joint program, acts as a partner clearinghouse to facilitate international collaboration to address these problems. Starting with lighting and advancing to additional energy services, Lighting Africa acts as broker between private companies and customers to create markets for better lighting products. By supporting the development of improved products and business models, it helps provide practical, affordable alternatives to kerosene.

An essential role of Lighting Africa is as a “matchmaker” between industry groups and other relevant stakeholders such as non-government organizations (NGOs), local governments, academia, financial institutions, and international development organizations. By matching products to buyers, Lighting Africa helps provide African consumers with modern lighting options at affordable prices, substantially improving their lives and reducing the impacts of climate change.

Without intervention, a number of barriers that have been addressed through this distributed innovation approach would have inhibited the development of markets for better lighting products in sub-Saharan Africa, South Asia, and other parts of the world:

* Lack of understanding and high transaction costs that deter the private sector from fully appreciating the market opportunities

* Lack of consumer awareness about the benefits of off-grid lighting, resulting in poor consumer purchasing decisions

* Lack of product quality assurance and technical support services, resulting in fewer products and compromised quality

* Policy and regulatory impediments such as import duties, customs issues, and market-distorting subsidies that undermine creation of sustainable markets

* Lack of business support services and access to business networks/partners

* Limited access to finance along the supply chain, undermining purchasing power

Response

Lighting Africa reduces barriers and promotes rapid market acceleration by providing market intelligence and consumer education, business support services, and policy and public sector operations. Two of its most visible services involve providing quality assurance and access to financial assistance.

A multi-pronged approach to quality assurance helps manufacturers design high quality products and protects consumers from buying poor quality ones. Lighting Africa accredits test labs near manufacturing centers (mostly in Asia) and builds local testing capacities at universities to provide manufacturers access to a “quick screening” of their products. The project also works with local regulators and collaborates with the new International Stakeholder Association to develop a ” quality seal” to help buyers make informed decisions.

Lighting Africa partners with commercial financing institutions to educate them about the business opportunities in this sector and supplies them with wholesale capital and risk mitigation tools to guide them in financing participants throughout the supply chain. The project also is considering offering direct financing to organizations such as E+Co and Acumen Fund, which provide project funding in developing countries.

Partnering with microfinance institutions and leveraging innovations in mobile banking also better enables consumers to finance their purchases of these products. The project’s strategy is to create self-sustaining markets that make efficient, carbon friendly products affordable to consumers rather than rely on often limited and short-term donor funding.

Results

Early evidence shows that the project’s support has helped accelerate many parts of the market for modern off-grid lighting in sub-Saharan Africa. In 2008, fewer than 10 products were developed specifically for this market; today more than 70 product types manufactured by 50 companies find space on African retail shelves. Also in 2008, products above $50 dominated the market; now many quality products retail between $25 and $50. Manufacturing costs of solar portable lighting are projected to decline by 40 percent per year, largely due to falling solar photovoltaic (PV), battery, and light-emitting diode (LED) prices.

Lighting Africa’s success illustrates the direct benefits of a coordinated public-private effort to help nascent industries mature and to achieve full-scale commercialization of new technologies. Lighting Africa also is an excellent example of the important role a neutral international organization can play in facilitating this kind of coordinated action to develop and distribute products that are urgently needed in high-risk environments.

Author: Lindsay Madiera

Source: Trading Markets (http://www.tradingmarkets.com/news/stock-alert/ifk_coordinating-bright-ideas-yields-off-grid-power-in-africa-1140632.html)