On 23 June 2022, an online workshop / ToT for Tajik REAP Technical Consultants (TCs) on access to cleantech finance for MSMEs was conducted by Mr. Amarnath Munnolimath, Senior Project Manager of adelphi, Germany. The purpose of the workshop was to introduce and launch the project activity and the mechanism on access to clean technology finance for MSMEs to REAP TC’s.
The workshop was kicked off with an interactive exercise to understand TC’s experience in supporting MSMEs in access to finance and related challenges for high-cost investments. The result shows (Figure 1) that the main challenges are high interest rates on loans, an unstable (volatile) economic situation correlated with global economic challenges. Similarly, MSMEs are hesitant to attract external investment as a result of risks associated with loss of control over their operations and a reluctance to bear the financial risks. Other challenges were related to a lack of information about available financial schemes and low capacity to apply for investments and to develop attractive offers for investors.
Despite the high interest of beneficiaries and producers in reducing the negative environmental footprint, access to finance remains a major challenge in the transition to sustainable production. This is particularly important for MSMEs, which have less stability than large enterprises and therefore are less interesting to large investors. The REAP project therefore aims to support MSMEs in accessing finance for clean technologies.
The workshop proceeded by defining the term cleantech finance and comparing it with other terms used to describe funding products by financial institutions. This was accompanied by a mapping of the terms used to describe cleantech finance in order to make it easier for TCs and MSMEs to navigate in the market for financing schemes. To strengthen capacities of TC’s in consulting an overview of the criteria considered by investors to identify attractive investment projects was presented. In addition, criteria to be applied when selecting suitable loans by MSMEs were described.
The next section consisted of a step-by-step approach to comparing funding options from a practical point of view for decision-making. It was enhanced with key principles to follow, questions to answer, pros and cons of each type of funding, such as loans, grants and equity.
To bring the topic from the abstract to the real world, examples of high-cost investment projects such as variable frequency drive, biogas plants, solar photovoltaic panels, etc. were presented. A list of local and international financial institutions was shared based on a study of locally available investment schemes. As a conclusion and wrap-up of a workshop session, a clear set of actions for support provided by the project to MSMEs as part of access to finance activity was explained to the REAP consultants.
The workshop was well received by participants, presumably due to the lack of similar capacity development services targeting MSMEs and consultants, which again highlights the need to implement and include actions to build conceptual knowledge on finance and provide guidance on how to move forward in financing transformational change.