Lessons learned: Microfinancing and technical service in one hand

Functioning and efficient financing options for end customers are a key in order to achieve larger solar home systems, and therefore sustainable energy supply for off-grid regions. This was often aimed to be implemented by the cooperation of solar companies, producers and micro-credit organizations (MFI). However, the practice shows again and again that the interests of the partners involved are too different in order to really work reliably and durably.

Enterprises with their headquarters in the town have already made their greatest profit with the sale and installation of the solar systems. It will therefore not be easy to motivate them to provi-de fast maintenance service. In the event of a technical defect, however, the customer stops paying the instalments and the microloan enterprise gets into difficulties. 

On the other hand, MFIs only provide credit to their members. In this way, a comprehensive energy supply is hardly possible. And also the profit margins levied by the MFIs are frequently so high that consumers have to unnecessarily overpay for their solar system.

Experience since nearly 10 years
The Solar Energy Foundation and SunTransfer trail a completely different way for nearly 10 years now: they provide end user finance as well as installation and maintenance in-house.
The combination of technical service and financing in one organization has several advantages:

  • The customer has one single point of contact for the installation, financing and mainte-nance.
  • The technician knows that his monthly wage – and that of his colleague in the financing department – is dependent on the satisfaction of the customer.
  • The responsibilities are clear and there is no attempt to mutually play off financing and service enterprise one against the other. The contact people are always the same.

It is important, of course, that the technicians have more than just technical knowledge. At the same time, the microfinancing (in the same way as training, quality control and production) should be done by a separate department within the organization which is staffed by specially trained people.

It is important, however, that technical services and financing are kept together.
In this way Stiftung Solarenergie – Solar Energy Foundation has achieved a 100% repayment rate for the microloans.

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