Access to Renewable Energy through Microfinance: a new Impact Investing opportunity

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Impact Investing: how it really works?
the case of pamiga finance s.a. (PFSA)
September 2015 – Presentation at WAME Milan
PFSA debt & equity impact investments
for underserved rural Africa
access to water & energy
through microfinance

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70% of the sub-saharan population live in the rural areas
Massive economic growth reservoir to unlock
Rural is underserved, when urban is near saturation
Clients of partner MFIs are interested in water
For production or for consumption
The rural population is not connected to the national grid
Clients of partner MFIs are interested in energy
For lighting, cellphone charging or productive activities after dark
The rural population is not connected to the national grid
No adapted financing solutions: bigger amounts and longer tenor
required to finance the equipment
Impact objective: fill the 4 key gaps identified for Sub Saharan Africa
RURAL
WATER
RENEWABLE
ENERGY
ADEQUATE
FINANCING

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PAMIGA Association : the Monitor
The NGO provides Technical Assistance to the
MFIs, coordinates the selection of technical partners
MFIs member of PAMIGA: the Channel
new microcredit products for access to water and
energy in rural areas
Technical partners: the Supply Chain
adapted solar system/water solutions for the
BOP, technical support and capacity building
to local entrepreneurs
Integrated solution
PFSA: the Financier
PFSA brings the adapted financial
resources to the MFIs and SMEs

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Solutions for Water
Adduction to national grid
Water tanks
Motorpumps
Wells

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Solutions for Renewable Energy
Technical partners, such as Schneider Electric, offer solar solutions designed to meet the
domestic, entrepreneurial and community needs of energy for the BOP:

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PAMIGA Association (NGO)
NGO based in Paris, Nairobi and Dakar, supporting the 16 MFI members of its network
Technical Assistance in : Governance, Risk Management & Institutional Strengthening,
Digital Finance & MIS, New Product Development, Social performance
PAMIGA Network of MFIs
16 tier-2 MFIs in 10 Sub-Saharan African countries, representing more than 1.3Mio clients
All active in the rural areas, and duly authorized and monitored by the Central banks
Sharing values of integrity, environmental and social performance, and financial inclusion
Strong mutual knowledge and trust based on years of close field work and co-development
Pamiga Finance S.A. (PFSA)
The investment vehicle based in Luxembourg, controlled and owned by PAMIGA NGO
Various compartments of investment providing long-term capital to MFIs, financial
intermediaries and SMEs
The 3 pillars of PAMIGA action

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The financing pillar
Pamiga Finance s.a. created 2 investment compartments for rural Africa:
PFSA B, dedicated to rural outreach, digital finance and capital strengthening of FIs
PFSA C, dedicated to access to water and renewable energy.
Total funding amounts to near 20M€ in equity, subordinated and senior debt

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Pamiga Finance S.A. investments
Accompany the growth of partner FIs by providing them with financial resources:
▪ - mid to long term (3 to 6 years),
▪ - in local currency,
▪ - at competitive conditions
▪ - adapted to seasonality and end-beneficiaries’ constraints
Complement their external resources and create the conditions to attract them : equity,
quasi-equity, co-financing, support for negotiation.
Support their innovative and transformational initiatives, with high added value, for the FIs
and for their customers: new product development, project financing for MSMEs, capex
investments (digital finance, new branches,…).

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Rural x (Water+Energy) x Adapted Finance = Impact
I m pact of the W ater & Renew able I nitiative
Microloans financed over 7 years ( M€ )
nb of
m icroloans
Nb indiv
/ loan
Nb indiv
im pacted
of w hich,
w om en
Drinking water for households 6,57 32 859 4,0 131 438 50%
Productive Water for agriculture 9,10 6 067 4,0 24 268 50%
Energy for households 8,01 53 425 4,0 213 700 50%
Energy for MSMES 4,05 1 350 1,5 2 025 10%
Energy for Villages/Communities 4,60 230 800 184 000 50%
Access to finance 21,50 107 500 4 430 000 50%
Total 53 ,8 4 2 01 4 3 1 98 5 4 31 4 9 ,9 %
Roll-over of funds
Average outstanding amount of the Facility (M€) 9,92
Estimated amount of underwritten microloans (M€) 53,84
Corresponding roll-over multiple of average outstanding funds 5 ,4 x

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Productive water solutions such as irrigation for the agricultural and pastoral activities enable to:
Alleviate rain-dependency and seasonality
Improve productivity and income
use water resources more efficiently and contribute to protect the environment
Increase surfaces and create jobs in the community
save time on watering and get the youth more available for school
Improve food production and the health of the population
Connecting people to the national grid or invest in water tanks secure access to clean
drinking water
Impact of Water

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Access to energy enables :
Healthcare
Lighting
Battery charging, fan
Fridge
(sample from the most common needs for
electricity expressed by base of the Pyramid)
Access to solar energy will also:
enable the youth to study even after dark
enable the community to use telecommunications means
replace expensive and polluting fossil energy sources and contribute to protect the
environment
Impact of Energy

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Credit conditions are fixed on a case by case basis, between each FI and PFSA.
Amount, tenor, installments, guarantees, interest rates.
On the basis of the demand appraisal, of the local needs, of the FI’s capacity of
absorption, of the management ambition, and of Due Diligence works led by PFSA
with the FI (economic, financial, accounting, HR, MIS, portfolio performance and
external resources)
The way PFSA works

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Our Partners

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Structuring of Pamiga Finance S.A.
a compartmented vehicle for impact
investment

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Pamiga Finance S.A. is registered in Luxemburg, under Securitization Law of March, 22,
2004.
Luxemburg is the first market place for Microfinance investment vehicles in Microfinance
and provides a privileged access to investors and to skilled and competitive service
providers.
The Securitization Law enables the vehicle to raise capital operation per operation, under
separate compartments, with different share categories, and segregate an investment from
another.
Features of Pamiga Finance S.A. by-laws

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Each compartment may lend or invest independently from another compartment’s activity
The vehicle may emit new titles at any time, without having to consult existing investors in
existing compartments, by creating a new compartment
Each compartment has its own accounting and reporting
Separate compartments enable to isolate risks
There is no solidarity between compartments
Features of the compartmented structure

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Risk mitigation
PFSA aims at mitigating the geographical risks for each compartment
Exchange risk may be covered by an insurance or supported by the investor, depending on
its appetite
Financings are structured so as to match consumers’ needs and resources on a given
project, in terms of amount, tenor and seasonality in order to limit the risks
FIs staff benefit from PAMIGA Technical Assistance to market the new products
Disbursements are conditioned by the presentation of a corresponding authorized loan
portfolio by the FI

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Contacts
www.pamiga.org
Renée Chao-Beroff, General Manager, PAMIGA
renee.chaoberoff@pamiga.org
+33 1 42 01 60 16
Mathieu Merceret, Investment Director, Member of PFSA Board
mathieu.merceret@pamiga.org
+33 1 42 01 60 14
7, rue Taylor, 75010 Paris - France
26-28 Rives de Clausen L-2165 Luxembourg - Grand-Duchy of Luxembourg

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Thank you