A Green Agenda for Microfinance

June 17, 2014

The concept is really simple one once you hear it. If a business is getting access to microfinance, how can its financial process become more environmentally friendly? How can the transaction be not only about how the money is used and paid back, but also about how the business incorporates processes that are good for the environment?

That is the idea at the heart of the ‘Green Performance Agenda (GPA) for Microfinance Institutions (MFIs)’ that Hivos is rolling out through its global microfinance partners, starting with Africa.

Hivos Head Office provided  funding for the development of a user-friendly, ineractive, electronic application that explains and promotes enviromental management in the microfinance sector. This was done in collaboration with Enclude Solutions in the Netherlands.

Three GPA training sessions were scheduled for the first three quarters of 2014 and Hivos regional offices in East and Southern Africa then identified eight consultants from these regions to be trained on rolling out the programe to MFIs.

In February 2014 the first GPA training was held in Harare, and it brought together microfinance consultants from Uganda, Kenya, Tanzania, Malawi, Zambia and the host country, Zimbabwe.

The week-long workshop included visits to microfinance partners Virl Microfinance and the Zimbabwe Microfinance Wholesale Facility so that participants could experience first-hand some of the challenges of rolling out the GPA.

They also visited microfinance recipients to identify practical opportunities for the GPA. One of these was a peanut butter manufacturer who will be introducing energy-efficient wood-saving stoves. Another was a panel beating company that is looking at water harvesting possibilities to recycle the thousands of litres of water it uses every month.

In early March 2014, the participants visited Uganda, Kenya and Tanzania for the second training session.

Here they also visited MFIs and their clients who were implementing environmentally-friendly practices. These included the Kenya Women’s Finance Trust in Nairobi, the Arusha SokoKuu Savings & Credit Cooperative Society in Tanzania and UGAFODE Microfinance in Uganda.

The client projects ranged from a furniture manufacturer in Tanzania who is finding better use for wood shavingsto enterprising recyclers in Uganda who make money out of collecting plastic bottles for recycling.

Early August, a third session with the 8 local consultants will be held to evaluate and prepare the next steps to spread the implemetation of the GPA tool in the Southern African region.

Hivos Green Entrepreneurship Programme officer for the Southern Africa office, Ndumiso Mpofu, explains: “GPA is a process that helps Microfinance institutions (MFIs) reflect on their current environmental performance against the expectations of their stakeholders,who are their donors, financiers, the government, society, etc.”

“The process assists MFIs to develop strategies to improve their environmental performance in order to contribute to the triple bottom line: planet, people and profits.”

The GPA in action in Uganda and Tanzania

He says that MFIs can generate significant business opportunities for themselves and their clients through greening activities. At the same time, greening activities can help mitigate and reduce the risks for the MFI and reduce costs for the enterprises they’re supporting.

“Everybody wins. The GPA demonstrates that there is a business case (profit) in greening while creating a positive impact on the environment (planet) and society. All these activities create employment (people).”

The next regions on the agenda are Asia and Latin America, making Africa a frontrunner in the area of greening microfinance.