Using Microfinance to Expand Access to Energy Services: The Emerging Experiences in East Africa of Faulu Kenya and Kenya Union of Savings and Credit Cooperatives (KUSCCO)

This case study examines the energy lending of Faulu Kenya and KUSCCO, two MFIs from the East African region. The study highlights best practices and mechanisms that worked well in their respective environments. It identifies some common features. Both MFIs initiated energy lending programs in response to repeated client requests, and their clients took advantage of different financing options to purchase energy technologies. Both MFIs were able to successfully establish energy lending on a small scale using internal funding mechanisms, and engaged a range of energy partners to provide affordable and appropriate energy technologies. KUSCCO offers loans on a declining balance basis, while Faulu offers fixed rate loans. There are several ways to expand energy lending programs and set the stage for their replication in the region. Recommendations highlight the importance of:

• Commitment of MFI and the energy company to energy lending;
• Clearly defined roles and responsibilities;
• Market research;
• Diversification of technology and loan product options;
• Coordination between microfinance and energy sectors.