Energy access is strongly correlated with economic development. Moreover, there are clear gender-related benefits of energy access, including improving women’s quality of life, health, safety, livelihoods, and economic mobility. However, Nithio has found that ~76% of solar home system and solar productive use buyers are men.
Nithio is dedicated to scaling energy access equitably. We plan to launch an innovative, data-driven Gender-Lens Financing window that incentivizes solar companies to prioritize women customers. To do so, we aim to collaborate with investors and grant-makers with strong mission alignment to ensure women are not left behind. Interested in partnering on this initiative? Read more about the necessity of the approach, overview of the structure, and how we can work together.
Benefits of Improved Energy Access for Women:
Ensuring equal access to solar products positively impacts women by providing more viable economic opportunities and improving their livelihoods. Additionally, companies are losing out by not prioritizing women customers. For example, according to a study looking at microfinance institutions, increased share of women borrowers can improve distributors’ financial performance by reducing the number of non-performing loans.
Women’s empowerment increases by 11% with reliable energy access, according to a study by the World Bank. Empowerment is defined as enhanced participation in labor force, bargaining power, and control over assets, as well as improved health, education and social participation. Additionally, energy access increases women’s job opportunities by 23% because of more time saved in completing tasks inside the household and of improved connection to radio, tv and phones. Countries with higher levels of electricity have seen a 9.5% increase in women in the labor force. Improved energy access significantly enhances women’s health and safety, as it eliminates the need for women to gather firewood and minimizes household labor hours. For example, lack of access to clean cooking fuels increase women and girls’ risks to be exposed to household pollution, which caused 700,000 deaths in Africa in 2019.
By providing distributors of solar home systems and productive use appliances the right incentives to find and sell to women-led households and businesses, a double bottom line is met: Improve women’s empowerment to ensure gender equality while at the same time reduce the risk of non-performing loans.
Nithio’s Innovative Gender Lens Financing
Nithio is developing a product that leverages its data-driven, Artificial Intelligence (AI)- enabled credit scoring tool to provide gender-focused financing via our existing open-ended investment vehicle, Nithio FI. Since the Nithio Analytics Engine provides data disaggregated by gender, it can be used to efficiently incorporate this gender-focused structuring in Nithio’s investments.
This concept would promote greater energy access to women by providing a discount on the interest rates charged to distributors when they achieve pre-established targets of women-led households and women-owned businesses customers.
How the Gender Lens Financing works:
- Through its Analytics Engine, Nithio plugs into a potential borrower’s CRM system and ingests anonymized customer repayment data. The Engine allows Nithio to disaggregate the borrower’s portfolio by risk segment, product, location, and gender. As a result, Nithio can identify and track the baseline of % women customers for each borrower as well as changes over time.
- Nithio will then set an initial interest rate determined by its internal assessment of the borrower, and provide a discount on the interest rate based on the increase of gender customers the distributor manages to reach. In other words, the more female end-consumers a solar distributor or microfinance institution reaches, the lower the overall interest rate on the loan they will pay to Nithio.
- Nithio will partner with gender lens funders to secure concessional funds to offset the discounted interest payments from the borrowers that achieve the pre-agreed targets.
- Nithio monitors the company’s performance with monthly updates and the gender breakdown at various intervals to accordingly adjust the interest rate charged to the borrowers.
Nithio can play a central role in reaching more women customers in the off-grid solar market. Nithio investments’ track record in small, local, clean energy companies and its Analytics Engine can uniquely enable the launch of this gender lens financing by accessing an underserved market and providing accurate discounts based on the gender breakdown of the portfolio. To hear more or to partner with Nithio in launching this gender-based financing facility to empower more women borrowers, reach out to solutions@nithio.com.
If you want to know more or partner with Nithio in launching this first, gender-based financing facility in the solar off-grid market and empower more women borrowers schedule a call now If you’re interested in financing, schedule a call now.
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Sources:
Aktaruzzaman, K., & Farooq, O. (2023). Does gender diversity affect nonperforming loans? International evidence from microfinance institutions. Borsa Istanbul Review, 23(4), 865-875. ISSN 2214-8450. July, 2023
Cecelski, E. (2023, March 2). The lack of gender targets for clean energy is harming women and girls. SDG Action. Retrieved September 13, 2023, from https://sdg-action.org/the-lack-of-gender-targets-for-clean-energy-is-harming-women-and-girls/
Clark, L. (2021, May 5). Powering Households and Empowering Women: The Gendered Effects of Electrification in sub-Saharan Africa. Journal of Public and International Affairs. Retrieved September 13, 2023, from https://jpia.princeton.edu/news/powering-households-and-empowering-women-gendered-effects-electrification-sub-saharan-africa
Improving energy access key to meeting development goals in Africa. (2023, March 21). unctad. Retrieved September 13, 2023, from https://unctad.org/news/improving-energy-access-key-meeting-development-goals-africa
Samad, H., & Zhang, F. (2019, 03). Electrification and Women’s Empowerment. In Evidence from Rural India. https://documents1.worldbank.org/curated/en/112131553786901131/pdf/Electrification-and-Womens-Empowerment-Evidence-from-Rural-India.pdf
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