Reeep Annual
Report 2022
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Innovative Clean Energy Finance for Cambodian Farmers

A blended finance approach providing affordable loans to Cambodian farmers to purchase clean energy technology

In 2021, Cambodia had an estimated population of 16.6 million people, including 10 million people in rural areas. The country’s agricultural sector, which employs 37% of the Cambodian labour force, is highly dependent on monsoon rains and the annual flooding of the Tonle Sap Lake and therefore extremely vulnerable to climate change as well as dam building projects upstream on the Mekong River. In recent years Cambodian farms have had difficulty competing internationally, partly because grid electricity is expensive, unreliable and not universally accessible.

Clean energy technology offers a reliable and affordable alternative, but the absence of flexible finance instruments for renewable energy technology investments coupled with low levels of end-user knowledge and trust in renewable energy caused low-adoption rates across the country for decades.

The Clean Energy Revolving Fund (CERF) was created by Nexus for Development to tackle this challenge. The innovative financial model began with an initial investment from REEEP with support from the Austrian Government and the Blue Moon Fund. It ran from 2016 to 2019 and offered affordable loans to farmers and small and medium agri-businesses (SMAs) for the purchase of clean energy technologies which increase farmers’ productivity, resilience and regional competitiveness by helping them to manage electricity costs and contribute to climate change mitigation. This in turn reduced CO2 emissions, encouraged an early shift away from fossil fuel-based energy, and increased food processing productivity.

How it worked

CERF’s financing conditions were truly innovative in the Cambodian context, as financial institutions previously only provided SMAs and farmers with expensive and fully collateralized loans (usually with land titles serving as the preferred form of collateral). CERF provided SMAs and farmers with unique and flexible financial terms (whereby both loan tenors and repayment schedules were structured to fit agricultural cycles), accompanied by technical assistance and capacity building. The renewable energy technology was used as collateral, and low financing fees were charged.

This dynamic mechanism allowed the fund to learn, adapt and respond quickly to agricultural market realities, and the results exemplify these successes. CERF borrowers or farmers reported that they would not have made the RE investments without CERF, while technology providers, who had previously struggled to match their offer with a financial product, highlighted CERF’s role as trust brokers with their target clients.

When given access to renewable and affordable energy technologies, CERF SMAs and farmers significantly reduced on farm and agricultural processing costs and improved the resiliency of their businesses. CERF enabled SMAs and farmers to capitalise on energy cost savings by reinvesting this as funding to scale their businesses. As the payback period of RE investments for SMAs and farmers was typically realised within three to five years, businesses could expect to see further growth in the medium and long-term.


The results

Over the three-year project life, CERF provided 15 loans with a value of approximately $250,000. These loans enabled the installation of 85.76 kilowatts of solar energy and produced 115,264 kWh of clean energy, which is equivalent to a reduction of 168 tonnes of CO2e pollution each year.

On average, SMAs saved $3,200 per year by switching to the CERF-financed renewable energy source, making a significant difference in their business. The fund focused on productive use of renewable energy for agriculture (PURE), with most loans used to purchase solar-powered water pumps and small on- and off-grid solar for SMAs growing fruit, vegetables and pepper and livestock farms. CERF loans funded up to 90% of the technology cost, with the remainder co-financed by the investees.

By providing flexible financing terms, CERF encouraged an early shift away from fossil fuel-based energy and increased food processing productivity, helping producers, processors, and distributors to compete in the regional economy.

To share learnings from managing CERF, the project implementation partners produced a handbook which provides background on the history of the design and set-up of CERF, CERF due diligence processes, lessons learnt, case studies, and to objectively review the challenges that were met in managing CERF.

Farmers in a longan farm. Credit: Jeremy Meek for Nexus for Development

Interview with Nexus Development

Michelle Lowery, Communications Manager, Nexus for Development

How did working together with REEEP help the fund succeed?

The fund wouldn’t have been possible without the financial investment and strategic support of REEEP, it allowed us to drive the pilot forward and aid farmers in Cambodia to make the pivot to sustainable, clean energy. REEEP also brought their expertise in advancing market readiness for clean energy solutions in emerging markets to the investment committee, which enabled us to make joint strategic decisions on the most appropriate allocation of funds.

Nexus for Development created the Clean Energy Revolving Fund (CERF), to provide affordable, unsecured loans to small and medium-sized agrifood businesses to enable them to purchase clean energy technologies, primarily solar-powered water pumps and small on- and off-grid solar systems.

Our belief is that the best way to deliver value for the funders and end users is through a blended partnership approach. This approach allows us to address the most pressing needs facing our partners in the field and ensures that investor funds are being directed to where they will deliver the most impact. By working together with Renewable Energy and Energy Efficiency Partnership (REEEP), the Austrian Government and the Blue Moon Fund we were able to prove this approach is a success.

In your opinion, what were the main strengths of the fund and its benefits for SMEs?

We were able to launch an initiative that was regionally unique, bringing to the clean energy market an innovative concept based on a blended finance approach.

Through our approach, we could offer unsecured loans and flexible repayment terms adapted to the needs of farmers. CERF addressed a financing gap in the market that MFIs and commercial banks did not have an interest in, to support SMAs, who are often without financing alternatives because of limited credit history and/ or collateral.

We also found that the most effective way to connect with SMAs was through technology providers who were able to promote the use of solar technology through user campaigns and demos. However, until CERF the effectiveness of their campaigns was low as they were not able to then provide fit-for-purpose financial solutions. Nexus was able to help facilitate this and act as an intermediary between the technology providers and the SMAs while also looking at viable financial solutions.

How did the fund contribute to advancing Nexus’ overall strategy on providing affordable loans for clean energy in agriculture, and how did it influence the Pioneer Facility?

It’s been a positive circular contribution, the money repaid by SMAs is being fed into the Pioneer Facility so we can support the growth of other businesses working in the clean energy, water or waste management space in Southeast Asia.

From a greater strategic point of view, it allows us to show that this demo approach works in emerging markets. Our strength at Nexus lies within being able to pioneer new things and test these prior to scale, which is vital for us to do as an NGO, we need to prove that things work.

The Pioneer Facility is another pilot fund that blends development financing with foundations and impact investors and thanks to CERF, supported by REEEP, we have demonstrable evidence this works with our target markets and businesses.

Were there any unanticipated positive outcomes?

There are two unanticipated outcomes that really stand out to us. Firstly, the project really allowed us to explore and deepen relationships with technology providers in the clean energy space. Sourcing potential projects in frontier markets such as Cambodia involves many steps and high due diligence costs. As a financial intermediary, Nexus had to take on the additional role of an advisor and trust broker between business and technology providers. This allows us to expand our network for potential future investment opportunities.

The second unanticipated positive outcome is focused on the business owners in Cambodia. Most businesses are not registered entities and have no financial records. This makes it difficult for them to apply for loans with traditional financial institutions or to attract other investments. The due diligence process of applying for a CERF loan prepares these businesses to apply for future loans and build a credit history that can be supported by the documentation they prepared by working with us. We’re proud to be able to help upskill businesses so they can succeed in the next stage of their development.


Find out more about how the fund works, its success, and its impact on local markets, the environment and the farmers’ lives.