Microfinance Intervention for Financing Solar Cooking Technologies –Financing with Savings, 2011.
Gunjan Gautam
The findings of this analysis are consistent with findings of Kandpal and Mathur(1986).The discount rate has insignificant effect on NPV. When estimations are carried out with interest rates reasonably below the critical interest rates, regardless of the discount ratethe solar cooker generates positive NPV for the user. Use rate and price of the solarcookers significantly affect the NPV. For given interest rate, decrease in either of theseparameters leads to negative NPV.
Further, at lower user rates and prices the user wouldnot be able to pay the loan with savings from use of solar cookers.As in the case of the borrowers, the effect of discount rate for the lending MFIs isinsignificant. However, changes in prices and in use rate have implications on determination of critical interest rate at the time of financing and on the incentive compatibility constraint at the time of payment collection. The decrease in use rate or inthe price of the substituted fuels diminishes the savings for the borrowers and therefore reduces the maximum repayment that MFIs can collect.
