Green micro-finance scheme calls for corporate donations

Funding and equipment needed to develop solar powered businesses and IT networks in developing countries

A charity providing green energy technologies to help some of the world’s poorest people start businesses and gain education is urging companies to step up funding after corporate donations dipped significantly over 2011.

Michael McGrath, head of fundraising at the Microloan Foundation, which provides loans to help rural people start solar energy-based business, told BusinessGreen the organisation’s donations had fallen by a third.

“Last year we raised just over £1.5m,” he said. “But while this year has been more of a struggle with the economic environment, we’re looking to raise just over £1m.”

Over the last 18 months the foundation has added loans for solar systems to its model of providing finance of between £4 and £25 to people, primarily women, in rural areas in Malawi.

Around 90 per cent of Malawi’s 15 million population have no regular access to electricity meaning they are cast into darkness when the sun sets at 6pm, making studying or working impossible without expensive, dangerous, and carbon intensive kerosene lamps.

A six month loan of around £150 enables some of the Foundation’s clients with previous business experience to buy 10 solar packs, each of which contains a 1.5w solar panel so tough a 4×4 can drive over it without any damage, 10 LED lamps, a rechargeable battery, and a set of five to 10 mobile phone charger connectors.

“It’s not buying and selling panels, it’s taking a loan to get a stock of panels, using those panels as a basis for the business and basically either renting out the panels or using them to charge up LED lamps,” McGrath said. “People rent those lamps and use the light at home. Local schools are also renting them from our clients, while charging people’s mobile phones is also very cost-effective and profitable.

“If they rent out to their maximum capacity, the loan pays for itself within two and a half months and they then spend the next four months making profit. The market potential for people accessing energy is huge. It’s very difficult to say when you’re dealing with people in remote rural areas, but you are potentially looking at millions of people.”

The Microloan Foundation would like to expand into another 15 to 20 African countries, but McGrath admitted more corporate sponsorship is required to provide the capital necessary to deliver on its expansion plans.

This article first appeared on Business Green on December 29th 2011.