Lending Scheme to Bring Solar to Cambodia’s Poor
By SIMON MARKS (The New York Times)
With access to solar-powered energy products for Cambodia’s rural poor extremely limited, the solar energy company Kamworks and the Cambodia Mutual Savings and Credit Network are partnering to provide low-interest loans to customers hoping to outfit their homes with solar panels, while Kamworks will provide and install the equipment.
Directors at the two firms say the scheme — the first of its kind in Cambodia — will facilitate access to renewable energy for Cambodia’s rural poor, who currently have little surplus capital to invest in such measures.
“You have to say the investment for solar powered technology is higher initially than fossil fuels,” said Jeroen Verschelling, a director at Kamworks. “Even though there is a payback time of less than one year, people still find it very hard to make the investment.”
Mr Verschelling said all the equipment Kamworks produces will have to be of the highest quality as “the moment it stops working the client will stop paying” back the loan and the foundations of the entire partnership will come undone.
Buyers interested in equipping their homes with solar technologies will first pay a visit to Cambodia Mutual Savings, which will share retail space with Kamworks at a building in Cambodia’s Kandal province, to take out a loan ranging from $25 to $599, depending on the product. A visit to Kamworks would finalize the purchase.
Customers can go for a small solar-powered lantern, which aims to replace kerosene lighting at a cost of $25, or they can purchase a complete solar home system, which ranges from $199 for a 20-watt array to $599 for 80 watts.
The lantern comes with a one-year warranty, while the panel systems are covered for 20 years.
“This should create less dependency on fossil fuels for power,” said Mr Verschelling. “We are trying to do something about climate change.”
Mr Verschelling said that entering the market before the national grid expands is probably its best bet with less than 20 percent of rural inhabitants with a sustained power supply for electricity.
“I’m not sure if the grid is really the answer for the poor parts of society,” he said. “It’s not a clean energy source as most of the energy comes from fossil fuels.”
Moreover, once the loan is paid off, households fitted with the solar products should see their living costs decline.
“It is totally new and if it is efficient we can develop it further,” said Christine Dellocque, managing director at Cambodia Mutual.
Ms. Dellocque said the lender had determined interest rates for the loans — which could be as low as 1.7 percent — by conducting studies of household wages and saving capabilities among potential borrowers in Kandal province.
Before a loan is handed out, Cambodia Mutual will ensure that borrowers have set up a savings account at the firm — a measure Ms. Dellocque said will act as security to the loan.
“If clients have a capacity for saving, they also have the capacity for credit,” she said.
Ms. Dellocque added that using traditional collateral — land titles and property — as security for such small loans was unbalanced. Instead, the solar panels themselves will be used as collateral, she said.
With access to solar-powered energy products for Cambodia’s rural poor extremely limited, the solar energy company Kamworks and the Cambodia Mutual Savings and Credit Network are partnering to provide low-interest loans to customers hoping to outfit their homes with solar panels, while Kamworks will provide and install the equipment.
Directors at the two firms say the scheme — the first of its kind in Cambodia — will facilitate access to renewable energy for Cambodia’s rural poor, who currently have little surplus capital to invest in such measures.
“You have to say the investment for solar powered technology is higher initially than fossil fuels,” said Jeroen Verschelling, a director at Kamworks. “Even though there is a payback time of less than one year, people still find it very hard to make the investment.”
Mr Verschelling said all the equipment Kamworks produces will have to be of the highest quality as “the moment it stops working the client will stop paying” back the loan and the foundations of the entire partnership will come undone.
Buyers interested in equipping their homes with solar technologies will first pay a visit to Cambodia Mutual Savings, which will share retail space with Kamworks at a building in Cambodia’s Kandal province, to take out a loan ranging from $25 to $599, depending on the product. A visit to Kamworks would finalize the purchase.
Customers can go for a small solar-powered lantern, which aims to replace kerosene lighting at a cost of $25, or they can purchase a complete solar home system, which ranges from $199 for a 20-watt array to $599 for 80 watts.
The lantern comes with a one-year warranty, while the panel systems are covered for 20 years.
“This should create less dependency on fossil fuels for power,” said Mr Verschelling. “We are trying to do something about climate change.”
Mr Verschelling said that entering the market before the national grid expands is probably its best bet with less than 20 percent of rural inhabitants with a sustained power supply for electricity.
“I’m not sure if the grid is really the answer for the poor parts of society,” he said. “It’s not a clean energy source as most of the energy comes from fossil fuels.”
Moreover, once the loan is paid off, households fitted with the solar products should see their living costs decline.
“It is totally new and if it is efficient we can develop it further,” said Christine Dellocque, managing director at Cambodia Mutual.
Ms. Dellocque said the lender had determined interest rates for the loans — which could be as low as 1.7 percent — by conducting studies of household wages and saving capabilities among potential borrowers in Kandal province.
Before a loan is handed out, Cambodia Mutual will ensure that borrowers have set up a savings account at the firm — a measure Ms. Dellocque said will act as security to the loan.
“If clients have a capacity for saving, they also have the capacity for credit,” she said.
Ms. Dellocque added that using traditional collateral — land titles and property — as security for such small loans was unbalanced. Instead, the solar panels themselves will be used as collateral, she said.
Labels: Energy
