SELCO-SEWA: Linking energy services with affordable financing^*

Hande first met with Jayshree Vyas, managing director of Ahmedabad-based SEWA Bank, in 2004. Founded as a trade union in 1971, SEWA, or the Self-Employed Women’s Association, provided a range of services to self-employed women who earned their livings performing low-paying, unskilled labor, from agriculture to rag picking to construction. The association created SEWA Bank in 1974 as a cooperative financial institution. The bank’s mission was to provide financial services for women engaged in the unorganized sector, a population that had traditionally been overlooked by most financial institutions.

SELCO’s model of linking sustainable energy with affordable financing schemes seemed an ideal fit for SEWA Bank. From the outset, Hande and Vyas saw great potential to develop an innovative partnership that combined the complementary capabilities of the two organizations. After their initial meeting, Hande and Vyas decided to have a SEWA Bank team of 16 members, including staff and board, visit SELCO in Bangalore in September 2004.

At the meeting, SEWA’s team agreed to fund and find solar lighting entrepreneurs who would provide lights to street vendors (see street vendors section for further description of the system).

Following the initial visit, the senior management of SELCO-India visited the field offices of SEWA Bank. Hande and his colleagues met a range of SEWA Bank’s clients and those of other organizations under the SEWA umbrella. These visits convinced SELCO management that SEWA’s clients had varied needs. For example, the home-based workers needed focused lighting for their tasks, while street vendors needed diffused lighting. SELCO management also became aware of the immediate need for energy services other than solar. Based on these observations, SEWA and SELCO initiated a joint energy program that included other services beyond lighting, such as cook stoves and food dehydrators.

In January 2006, SELCO and SEWA Bank deepened their partnership with the launch of the Urja program. The collaboration provides funding for staff training, technology development and financing for end-users and potential entrepreneurs. SEWA created financing instruments that provided lower interest rate loans to end users of SELCO’s energy products. While SEWA would normally charge 17 percent interest for a period of 12 to 18 months, SELCO products are financed at between 5 and 10 percent for a period of 15 to 36 months. As it had done in training local bank managers in their home region, SELCO created a customer service team and established an Ahmedabad-based service center in the SEWA bank building. This was an important step in the development of SELCO as it expanded the company beyond its immediate base in Karnataka.

* Section based on information from SELCO India and SEWA Bank: Innovations in Linking Sustainable Energy and Development Finance by Richard D. Hansen, 2007.