ADFIAP’S ROLE IN IMPROVING ACCESS TO FINANCE FOR THREE SWITCH ASIA PROJECTS

15 – 17 May 2017

Bangkok, Thailand

SWITCH-Asia Seminar on Measuring and Reporting Project Results and

Networking with Regional Finance Institutions

106 MEMBERS

39 COUNTRIES

1976 DURING the 6th ADB

conference for DFIs

FOUNDED

SECRETARIAT in

MANILA, Philippines

ASSOCIATION OF DEVELOPMENT FINANCING INSTITUTIONS IN ASIA AND THE PACIFIC (ADFIAP)…In Brief

Financing Sustainable Development

OVER 40 YEARS OF EXPERIENCE IN PROVIDING CAPACITY BUILDING TO FIS IN ASIA AND THE PACIFIC

SWITCH ASIA PROJECTS

ASIAN CLEANTECH MSME FINANCING NETWORK

(ACMFN)

Lead – Association of Development Financing

Institutions in Asia and the Pacific (ADFIAP)

SWITCH TO HIGH EFFICIENCY MOTORS (HEMS)

Lead – Institute of Integrated Electrical Engineers of the

Philippines, Inc. (IIEE)

SMES FOR ENVIRONMENTAL ACCOUNTABILITY,

RESPONSIBILITY AND TRANSPARENCY (SMART

MYANMAR 2)

Lead – Sequa gGmbH

FINANCING COMPONENT OF THE 3 PROJECTS

Build and leverage a cleantech-financing ecosystem to spark improved access to finance for Asian cleantech MSMEs in order to enhance sustainable consumption and production patterns in Asia.

FINANCING COMPONENT OF THE 3 PROJECTS

Ensure the availability of financing that will bankroll prospective projects of Philippine Industries and energy service companies (ESCOs) willing to adopt highly efficient motors and motor systems. Financing is believed to be critical in ensuring the sustainability and success of the project.

FINANCING COMPONENT OF THE 3 PROJECTS

Support financial institutions to enable them to offer green financial products that would result to improved access to green finance by MSMEs

OPPORTUNITIES

INDIA

CHINA

INDONESIA

• High potential cleantech destinations • As the world’s mfg. hubs, cleantech innovations will strengthen their economic competitiveness • Key issue – lack of financing which can only be tackled by addressing both the demand (SMEs) and the supply (FIs) sides of the problem

OPPORTUNITIES • One of the countries in the world with the highest power cost affecting competitiveness of the energy-intensive indus- trial sector which accounts for 27.4% of the country’s total electricity consumption. • Of the total electricity consump- tion of local industries, 65-70% are due to electric motors. Switching to more efficient electric motor drives systems translates to substantial energy savings and reduces companies’ operating cost. • Consultation with banks showed strong interest in financing HEMS projects.

PHILIPPINES

OPPORTUNITIES

MYANMAR

• The garment sector is one of the most dynamic and is highly regarded as driver of future growth in mfg. with high economic development potential. There are about 300 garment factories engaged in production for export markets.

• The banking sector and the Central Bank are open to financing green investments if provided the proper risk assessment capacity and funding.

• Build on positive results achieved under SMART Myanmar I of improved production and increased consumption of sustainably produced garments from Myanmar.

COMMON CHALLENGES ACROSS THE 3 PROJECTS ….LACK OF

LONG-TERM FUNDS/DOMESTIC

FINANCING

RISK GUARANTEE MECHANISMS

DISCLOSURE OF ENVIRONMENTAL INFORMATION BY

COMPANIES

RISK ASSESSMENT AND ANALYTICAL CAPABILITIES

“BANKABLE GREEN SME PROJECTS”

STRATEGIES TO OVERCOME CHALLENGES: WHERE ARE WE NOW……

Advocacy and Awareness

Raising

Financial and Technical Training

Regulators/Policy Makers

Financial Institutions

Small and Medium Enterprises Project/

Product Development

Dialogues/ Group

Discussions

“Matchmaking” Activities

AWARENESS RAISING AND TOT

Trainings on Cleantech Consulting- 2016

National Awareness Raising Activities - 2016

3 workshops conducted at

Bandung

90 MSME

participants

(IT

Providers:

16)

TRAINING ON CLEANTECH FINANCIAL PRODUCTS

Training of Financial Institutions on the Development of Cleantech Financial Products -2017

DIALOGUES AND TRAININGS

ACTIVITY OBJECTIVE DATE

Dialogue between sugar milling and banking sector

To address roadblocks in project financing; information sharing

March 11, 2015

Energy Service Company (ESCO) Business Development Series

To discuss funding options for ESCOs and present HEMS financial model for evaluating potential projects

March 1 - 4, 2016

Technical and Financial Training on HEMS and Energy Efficiency to: • Landbank of the Philippines • Development Bank of the Phils. • Philippine National Bank

To train loan officers on the HEMS Program, energy efficiency concept, ESCOs and the ESCO concept and models; technical and financial aspects of the HEMS financial model; and credit risk and mitigants

• April 4-5, 2016 • July 15, 2016 • July 20, 2016

Panel discussion and open forum on the energy efficiency ecosystem

To present the Energy Efficiency Financing Programs of the Development Bank of the Philippines and Bank of the Philippine Islands

Dec. 12, 2016

OTHER FINANCING RELATED ACTIVITIES

Forging of Memorandum of Agreement with trained banks to include HEMS project proposals as eligible for financing under their lending programs. Consultation meeting with Small Business Corporation and Philippine Bank of Communications to invite them to join the HEMS capacity building training programs. Focused Group Discussions between the Department of Energy and senior officials of financial institutions on financing energy efficiency projects in support of the Philippine Energy Efficiency and Conservation Roadmap 2017-2040.

SCP AND GREEN FINANCE ADVOCACY

ACTIVITY COVERAGE DATE

SCP Advocacy Briefing for Officers of the Myanmar Bankers Association (MBA)

Introduction of the SCP concept and its relevance to banks; training needs of banks on green finance

Jan. 22, 2016

Executive Briefing on Green Finance for Directors and Officials of the Central Bank of Myanmar

Advocacy campaign to trigger dialogues on the enactment of policies that would encourage banks to mainstream green financing in their lending operations

Jan. 23, 2016

Advocacy Briefing on SCP and Green Finance

CAPACITY BUILDING FOR BANKS

ACTIVITY COVERAGE DATE

The Green Project Finance1.0 Training for 39 loan officers/managers from 22 government and private-member banks MBA

Introduction to Green Project Finance, Green Credit Cycle, Loan Evaluation and Green Credit Scoring System

June 20-24, 2016

The Green Project Finance 2.0 Training for 36 asst. managers/managers from 25 government and private member banks of MBA

Hands-on application of the principles learned under Green Project Finance 1.0 using case studies evaluated/appraised and packaged by the participants and presented to a simulated Credit Committee.

Sept. 12-16, 2016

The Green Project Finance 3.0 Training for 36 asst. managers/managers from 25 government and private member banks of MBA

Development and marketing of green products and services using the Business Model Canvas

Nov. 7-11, 2016

Green Bankers Certification Course

CAPACITY BUILDING FOR SMEs

ACTIVITY COVERAGE DATE

The SME Competency Training for 50 members of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) and Myanmar Industries Association (MIA)

• Understanding SME Financial Needs: Do You Really Need to Borrow

• Understanding, Choosing and Securing the Right Source of Funding

• What do Banks Look Into in Financing SME Projects

• Being a Responsible Borrower: Enterprise Planning and Business Plan Preparation

• Introduction to Green Finance

May 11-12, 2017

SME Competency Training Program

GREEN FINANCING

SCHEMES AND SUPPORT MECHANISMS

MOVING FORWARD TO ADVANCE SME GREEN FINANCE

Main contact of the member companies and the LGUs

Provide list of potential loan availees

Assist in marketing the financing program to program beneficiaries

Provide inventory of acceptable technologies

Provide information on current developments and trends in

environmental requirements for European market

Conduct promotional activities such as briefings

Evaluate projects

Provide credit financing

Provide technical advisory assistance

Support investment req’ts of SMART Cebu Project

Conduct SCP Awareness Briefings and SME Access to Finance Forums

Undertake linkage building, training and advocacy on SCP and Green Investments

Provide coaching and advisory services

Coordinate with ECCP in identifying clients interested to avail of the services of ADFIAP

Assist in marketing Green Financing

Hold deals flow/matching activities where clients can present proposals for possible financing

BUILDING PARTNERSHIPS

TO OVERCOME VARIOUS CHALLENGES:

THE SMART-CEBU CASE

BUILDING PARTNERSHIPS

TO OVERCOME VARIOUS CHALLENGES:

THE HEMS CASE

PHILIPPINE NATIONAL BANK

INSTITUTE OF INTEGRATED ELECTRICAL ENGINEERS OF THE PHILIPPINES, INC. (IIEE)

ASSOCIATION OF DEVELOPMENT FINANCING INSTITUTIONS IN ASIA AND THE PACIFIC

ROEL FOODS CORP. (Food processing to shift to high efficiency motors)

MULTILATERAL AND BILATERAL

FUNDING AGENCIES

DEVELOPMENT BANK OR STATE BANK SOURCES MEDIUM-TO-LONG TERM

FUNDING

DEVELOPMENT BANK OR STATE BANK ACCREDITED

COMMERCIAL BANKS

SCP PROJECT OF SME

AS A LONG-TERM FINANCING SOLUTION

COMMERCIAL BANKS

SCP PROJECT OF SME

DEVELOPMENT BANK OR STATE BANK

STAND-ALONE FINANCING

STAND-ALONE FINANCING

CO-FINANCING

TO PROMOTE DOMESTIC FINANCING

LOCAL

GOVERNMENT

PRIVATE

BANKS DFIs

COOPs/

CHAMBERS

THE SURETY FUND (Guarantee lending to MSMEs)

CREDIT SURETY FUND CONCEPT

• A Memorandum of Agreement is executed among donors

• The fund is deposited with and managed by a Trustee Bank

• An Oversight Committee formulates guarantee and

investment policies

• Loans granted to individual members of participating coops/

chambers by banks can be rediscounted by the Central Bank

AS A RISK GUARANTEE MECHANISM

ORGANIZATIONAL SUPPORT

Creation of an Environmental Consultation and Financing Unit in Financial Institutions to provide advisory and consultation services to SMEs with green projects and offer demand-driven green financing products and services.

TO ADDRESS ASYMMETRIC INFORMATION AND LACK OF “BANKABLE”SME PROJECTS

An ESCO can help put the pieces together:

Identify, evaluate and propose energy-saving opportunities

Develop engineering designs and specifications

Manage the project from design to installation to monitoring

Train the staff and provide maintenance services

Guarantee that savings will cover all project costs

1

2

3

4

5

6

Arrange for financing;

Fixed repayment

Performance Guarantee

Shared Savings Model

Fixed repayment Performance Guarantee

Performance & Credit risk

Credit risk Performance risk

CLIENT

ESCO Banks/FIs

Banks/FIs ESCO

CLIENT

Guaranteed Savings Model

HOLISTIC FINANCING MODEL

ENABLING SME

ACCESS TO GREEN

FINANCE

ADVOCACY

&

AWARENESS

BUY-IN

NETWORKING

CAPACITY

BUILDING

GREEN PRODUCTS

AND SERVICES

MATCHING AND

FINANCIAL CLOSURE

FINANCIAL INSTITUTIONS/

FUND SOURCES

SMALL AND MEDIUM

ENTERPRISES

NATIONAL/LOCAL

GOVERNMENT

INDUSTRY ASSOCIATIONS

AND CHAMBERS

POLICY MAKERS

ENERGY SERVICE

COMPANIES

CENTRAL BANK BANKERS

ASSOCIATIONS

IN SUMMARY…..

Glenn Croston,

StartingUpGreen.com

The Future is

Green

Let’s all help save our one Earth!

www.adfiap.org