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How clean cooking financing will boost financial inclusion for low-income women


Financial inclusion is a key enabler in reducing extreme poverty and income inequality. Access to financial products – from owning a bank account to obtaining credit – is vital in helping communities feed their families, generate income, lead healthy lives, and access basic services such as water, sanitation, and energy. However, lack of financial access remains a key barrier for many people in sub-Saharan Africa. This is especially true for women, 70% of whom are excluded by financial institutions unable or unwilling to offer financial services upon terms that meet their needs.

Energy 4 Impact has joined forces with Jersey Overseas Aid –an international aid agency providing life-changing assistance to people in developing countries – to tackle this issue through the Financial Inclusion for Clean Cooking in Rwanda and Sierra Leone (FICCARS) programme. This three-year collaboration will support the development and expansion of financial inclusion products for clean cooking in Rwanda and Sierra Leone, enabling women living and working in urban informal settlements to buy clean cooking solutions on credit, and use this as a way to climb the financial ladder.

In sub-Saharan Africa, 850 million people rely on burning wood and charcoal in inefficient stoves to cook their food, largely because they lack access to modern alternatives or are unable to afford them. The pollution generated by burning traditional fuels while cooking also puts women at risk of serious health complications. Cleaner technologies such as LPG, electricity, and biogas are available, but multiple barriers including cost place them out of reach for many low-income women. Women living in informal settlements are especially reliant on biomass as these communities are often excluded from access to basic services such as energy as well as formal financing for appliances.

Only 30% of women in sub-Saharan Africa have a formal bank account, let alone access to financial services and the credit needed to buy cleaner, more efficient stoves. Legal and regulatory barriers make it difficult for women to open accounts. They also struggle with lower rates of digital literacy which makes it harder for them to use online or app-based services. Women also typically lack the assets for collateral required by financial service providers to secure credit. Moreover, the lack of gender-focussed data on credit reporting, end-user needs, and market segments, limits interventions by policy makers and service providers and their ability to deliver relevant and impactful financial and clean cooking products, particularly for women. 

There are also challenges on the supply side. For example, the design and marketing of modern energy cooking products in some instances may not be a good fit for women even though they are predominantly responsible for cooking and feeding families. There is a lack of end user financing available to make it possible for low-income customers to pay for items over a set period of time, due to the high costs and risks of extending and managing credit. The cost of last mile distribution can be high, especially in urban informal settlements and awareness on the benefits of clean cooking solutions is often lacking.

A more gender inclusive financial system, underpinned by an inclusive regulatory environment, is  key to breaking down the barriers. Studies show that providing low-income women with effective and affordable financial tools can empower them and contribute to poverty reduction. Financial inclusion will help women address the fundamental issue of accessing clean cooking solutions so they can feed their families without risking their health. More broadly, financial inclusion can also improve women’s ability to educate their children, start income generating activities and improve their homes.

Access to clean cooking as a first step to financial inclusion sets off a virtuous circle. Mercy Rose, Programme Lead at Energy 4 Impact says:

Modern cooking entails an ongoing fuel supply relationship between supplier and customer involving the collection of credit or interest instalments. As such, there is a mutually reinforcing, two-way relationship here which allows us to exploit the development of the modern cooking market in order to expand financial inclusion.

Through this innovative approach, Energy 4 Impact aims to lay the foundations for the growth of a more sustainable sector. It will do so by supporting four clean cooking companies or financial service providers to secure a foothold for their financial inclusion products. The focus will be on the markets of Sierra Leone and Rwanda where only 3.2% and 2.1% of the population respectively has access to clean fuels and technologies for cooking. The countries’ governments are also supportive of initiatives that facilitate access to modern cooking technologies, promote financial inclusion and enable private sector participation in the provision of these solutions.

Working at every level of the clean cooking value chain, Energy 4 Impact will seek to create ideal conditions for the success of these solutions through private sector grant support, tailored technical advisory to companies, capacity building with key market actors, and awareness raising with target customers. Energy 4 Impact will also generate the knowledge, data and evidence needed to enable and motivate local public and private stakeholders to support women’s financial inclusion.

After three years, it is expected that 8,000 will have a clean cooking product in their home, which they have accessed through financial inclusion, with 30% of these women going on to access additional financial services. 2,000 women will be trained on business skills and income generating opportunities with mentoring offered to at least 400 women starting their own small businesses.

The FICCARS programme will draw upon Energy 4 Impact’s and Mercy Corps’ extensive experience in promoting financial inclusion for low-income participants across sub-Saharan Africa, empowering women and supporting clean cooking companies to test their business models and scale their operations. Energy 4 Impact will also bring their experience of encouraging lending to micro enterprises, including training financial institutions to improve their knowledge of energy sector lending and helping micro-enterprises to secure loans, which have been used to finance equipment purchases, expand inventory, and extend end-user credit.

Mercy Rose, Programme Lead says:

At present, we are implementing two complementary programmes in Sierra Leone and Rwanda, where we work with local governments, the private sector and local communities to improve access to clean cooking for the urban poor. We aim to leverage the knowledge derived from these ongoing programmes and the expertise of our local teams to increase the audience for activities, ensure efficient use of resources, and tap into established knowledge and networks, thereby maximising our impact.