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Spring 2015

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How Banks Can Help Businesses Reduce Their Energy Costs

Energy consumption can account for up to half the cost of doing business for small and medium-sized enterprises (SMEs). These businesses of 250 or fewer employees make up 95 percent of enterprises across the world; they also account for approximately 60 percent of all private sector employment. Globally, there is great potential to reduce their energy costs and carbon emissions.

But SMEs generally have been slow to improve or replace their old heating, cooling, lighting, and power systems, or to insulate their buildings, because the cash outlay is too great and credit is not available. Many banks lack the technical knowledge to calculate sensible energy-upgrade loans for these small firms.

The Poland Sustainable Energy Finance Facility (PolSEFF) and other facilities in Eastern Europe are proving that commercial banks can bridge this gap. In Poland, for example, SMEs have submitted nearly 2,000 applications to five PolSEFF partner banks since 2010 to finance energy efficiency projects; these banks, in turn, have disbursed €180 million in loans. In all, the European Bank for Reconstruction and Development (EBRD) has provided more than €2 billion and the International Finance Corporation (IFC) €3.8 billion in sustainable energy financing via PolSEFF and other credit lines.


Importantly, most of these well-designed energy finance projects are showing positive cash flows quickly. For SMEs, this often means paying off their energy investments and loans in three to five years.

While impressive, this lending marks only the beginning for energy efficiency financing. The International Energy Agency (IEA) estimates that implementing efficiency measures can reduce the global need for primary energy by 900 million tons of oil equivalent through 2020. Most of these savings would occur in sectors such as transportation, construction, and agriculture—industries well populated by SMEs.

Making Energy Financing Viable

Depending on the investment, a...

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Better Data Transfer Reinforces Kenya’s Hunger Safety Net, Enables Emergency Payments

The traditional pastoralists of northern Kenya are increasingly challenged by the changing climate.

Most of the land they inhabit is classified arid or semi-arid and prone to droughts which, in recent years, have become almost annual. Seventy-four percent of the people—much higher than the national average—live below the national poverty line, with poverty rates highest in the most arid counties of Wajir, Mandera, Marsabit, and Turkana. The struggles for those in Wajir and Mandera are compounded by the effects of insecurity from neighboring Somalia.

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Sustaining the Facebook Revolution

The nexus of social media, Internet access, and smartphone technology has spawned a revolution in political activism. Ordinary people using new technology and digital media platforms—people whose voices would otherwise be drowned out by dominant political forces—are now contributing to or joining political debates. And their price for admission is almost zero.

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Monitoring Our Assumptions

For many of the world’s poor, usable land is in short supply. In Africa, for example, more than 90 percent of rural land is undocumented and vulnerable to land-grabbing and expropriation. This leaves smallholder farmers and pastoralists—people trying to eke out an existence—vulnerable, especially in countries where land governance is weak.

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The Phantom Team Leader

Most industry observers believe the leaders of increasingly complex development projects must combine subject matter expertise with strong executive skills—a rare combination. Do the leaders we are searching for exist?

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