Shedding light on selling solar in Africa

Akoji John: Hi, my name is Akoji John, Impact Manager at Bopinc.

Patrick Guyer: Hey, Akoji! And I'm Patrick Guyer, Impact Measurement and Insights Lead at Bopinc. Akoji, how you doing today?

Akoji John: Ah, I'm doing well, Patrick, how are you doing?

Patrick Guyer: Yeah. Great. So glad that we could, uh, chat about this today.

Akoji John: Mm-hmm Patrick Guyer: So today on the podcast, well, let me just start by saying we're both using our phones and our laptops to connect today. And I'm curious when you're working at home Akoji, how do you charge your devices?

Akoji John: Yeah, so, uh, I think for me, it's a, is a hybrid, but mostly I do use the solar home systems to power my phone. Uh

Patrick Guyer: mm-hmm ,

Akoji John: You know, there's this issue of, uh, having a reliable, uh, power here in Nigeria. So if I must, if I must be reached by you or if I must work remotely, then obviously I have to have a backup, which is more like the solar home system. Yep.

And as, as we speak, my phone is connected to one.

Patrick Guyer: Okay. All right.

Akoji John: Yeah.

Patrick Guyer: So it sounds like reliability of the electrical supply is a concern for you and the solar home system helps you with that. What are some of the other benefits of having a solar home system for somebody like you, uh, living and, and working in urban Nigeria.

Akoji John: Yeah. You know, uh, aside that, that reliability, there's a lot of noise pollution around here. You have, uh, within the neighborhood, you see everyone turning up generator. So the noise pollution is high here. So using solar tend to take you off that. Uh, so it's that reduction in noise pollution.

Patrick Guyer: Mm-hmm.

Akoji John: Uh, aside that, uh, maybe savings as well. So I don't need to spend so much on purchasing fuel. So with the solar system, I could still stay connected. And lastly, having that nice time with my family in the evening is very important. So as long as the solar power is on, uh, without even, uh, the generator on, I will still have time to share lovely memories with my kids. Yeah.

Patrick Guyer: Nice. And that is important.

Akoji John: Yeah.

Patrick Guyer: And that's also a great introduction to our topic today, which is talking about solar home systems and specifically the business side of marketing and distributing these systems in hard to reach communities across Africa. So Akoji build on this, if, if you like, but my understanding is the basic problem is that there are lots and lots of people across Africa and Asia who live and work in places with either no electrical grid or very unreliable electricity supply.

Akoji John: You know, and according to the United Nations, uh, about 750 million people, worldwide lack access to electricity. Uh, most of them, uh, according to that report, uh, are based in Sub-Saharan Africa. We are making, uh, some progress in reducing that number, but you know, uh, that's a bit slow. Uh, the good news is that people are embracing renewable home energy solutions.

These are both more sustainable and also, uh, more cost effective than electricity generated by burning fossil fuel. Solar home systems can be a great solution for low income consumers across Africa. The problem is, uh, how do you actually distribute and sell distance to consumers at the last mile? [LOUD BUZZER]

Patrick Guyer: That was the jargon alarm. Let's break down what the last mile really means for listeners who might not be familiar with that.

Akoji John: Mm yeah. Okay. So basically, uh, it's the last leg of, uh, the journey goods need to travel, to reach the consumer who live [00:04:00] in places that are hard to reach. Uh, you could imagine that that could be rural places with poor road, uh, or it could be an urban community, uh, that is no well connected with the rest of the city.

We see that that's, uh, people who live at the end of this last leg of a distribution journey are living at the last mile. Yeah. That's a simple definition.

Patrick Guyer: Yeah. Okay. That makes sense. Thanks a lot for that explaining Akoji. So back to our topic for today, we'd like to explore what these solar home systems really are. Uh, what kind of models are out there and also how they're sold and how low income consumers can actually buy them.

Akoji John: All right. Let's get an answer from an entrepreneur who is actually in the business of selling, uh, solar home systems. Alviol General Trading sells solar home systems and order durable goods to low income consumers in Ethiopia.

Uh, we caught up with the marketing manager Frezer Abebe, in Addis Ababa.. And I think he has a loss to say.

Frezer Abebe: Hi, I'm the marketing manager for Alviol General Trading.

Patrick Guyer: Bopinc works with Alviol General Trading through its role in the Innovations Against Poverty Challenge Fund. We asked Frezer about the solar home systems Alviol sells.

Frezer Abebe: We are engaged in importing solar home systems, and we distribute them in Addis Ababa and other parts of Ethiopia. Yeah. A solar, uh, home system is, um, a system that is powered by solar power and actually, uh, has three different parts of it. It has light. It has a sound system and it has a charging system. So all this is in one package and we call it solar home system. Um, our product is a 10 watt, uh, solar home system, uh, it runs for at least 10 hours with full charge with all the lights.

We have three lights in it included, so that makes it different and torch light and radio is included in the system. So that makes it different. Um, there are, uh, USB cables along with the package and it helps to charge at least 10 different kinds of phones.

Patrick Guyer: Then to find out more about how low income consumers actually buy solar home systems. We turn to a colleague who's worked extensively on this topic.

Auke Douma: So my name is, uh, Auke Douma and at Bopinc, I work as an Inclusive Innovator. You see, you see that in quite a lot of these products, people who buy it in installments. Um, for instance, the project we were doing in Ethiopia, it's quite common that consumers buy it through an MFI [LOUD BUZZER]

of course, uh, when MFI stands for is, is an a microfinance institution. So typically their role is a stakeholder is basically , as a consumer, you would be interested in buying a solar product from an agent that has visited your house or has shown you, uh, the product at a, at a sales demo in your town.

Um, as a consumer, I, I might be interested to buy this. Um, but I don't have all the money up front. I don't have $50 to buy the solar, uh, home product. Um, so instead I, I go to this MFI office, um, and I tell the microcredit institution, Hey, I would like to buy this product. They look into my financial history and see if I'm credit worthy of buying, uh, buying the product.

Let's say I'm a farmer and I had a, a few, uh, a good few years of harvest. I could show them that they have, I'm credible enough and they basically allow me to pay or they finance the product upfront and I pay them back over time. That's, that's their role, roughly speaking, that means that they would, um, pay an upfront installment or a first sort of down payment.

And then throughout their year, they would pay the rest of the product off in, in, in a few batches and a few installments. The downsides there obviously are that there's a, there's an interest rate, which ranges a bit from say 18 to 25%, uh, based on the MFIs that we've spoken to, uh, which is quite quite a steep, uh, interest rate.

And that's also, I think why, why pay-as-you-go products could be a bit more interesting because they, they could sort of circumvent I guess a bit of the, the interest rate or a bit of the risk might lie with the actual, uh, reseller or the supplier of the solar, uh, product. But hopefully they can do with, uh, with a lower, uh, a lower margin than those MFIs.

Patrick Guyer: We asked Auke to tell us more about how pay-as-you-go works as an alternative to buying solar systems on credit .

Auke Douma: With the pay-as-you-go product, it's actually quite interesting because there's actually a little system built inside the product that actually, uh, monitors, whether you pay your transactions, if you don't, the party that sells you, the, uh, solar panel can actually, uh, um, temporarily freeze your product, meaning that you can't use it anymore.

Patrick Guyer: But what about the marketing of these systems? I asked our colleague Hiwot Shimeles, Impact Manager at Bopinc, how entrepreneurs drum up business for solar home systems in a market like Ethiopia.

Hiwot Shimeles: Recently, we went along with Alviol General Trading to an event they put on in a rural town outside of Addis.

Patrick Guyer: So Hiwot, what are we hearing in this clip?

Hiwot Shimeles: Well, the Alviol team warms up the crowd with some exciting music and they have different models of solar home systems on display. And then one of the sales representatives gives a demonstration of the latest solar home systems.

Patrick Guyer: Do customers actually buy solar home systems on the spot?

Hiwot Shimeles: Not often. Uh, solar home systems are a big investment for most low income. These events are really about raising awareness. People might buy a system later on from a [00:10:00] customer service agent working for an MFI in their village.

Patrick Guyer: And what do MFIs offer customers in rural Ethiopia?

Hiwot Shimeles: Customers can choose an repayment plan or a monthly installment repayment. Many of them choose an annual plan because their income from farming comes only at a harvest time. However, the interest rates charged by the MFIs can be high as much as 24% in some cases.

Patrick Guyer: And Hiwot, did the crowd seem interested in what Alviol was selling?

Hiwot Shimeles: Yes, they did. Uh, but buyers had some concerns. I spoke to one man who wanted to buy a second solar home system because the one he has doesn't supply enough power for his home. He was interested in the models on display, but said it was expensive for his budget. And there are many people in his community had problems in the past with poor quality solar systems that breakdown easily. And solar providers that do not deliver good after sales maintenance.

Patrick Guyer: So Akoji in this dispatch from Ethiopia, we saw that a lot of people are already using solar home systems, but that there can be issues with things like cost and reliability. Let's come back to that in a minute, but first I'm curious, what are some of the other ways that companies are getting solar home systems out there to consumers?

Akoji John: Hmm. That's an interesting question Patrick. Well, one model Bopinc has worked with here in Nigeria is training sales agents. Usually, uh, we have this network of women, uh, who we train to sell solar as well as financial services to help pay for them through projects like D2D Pro we recruited women sales agents who already sell consumer goods and worked with them to develop the skills they need to sell more expensive durables, like, uh, solar home systems.

Patrick Guyer: Okay. And so what would be the contribution of Bopinc to a project like D2D Pro?

Akoji John: I would say a lot. , uh, like, uh, in this project. Uh, and in a similar one called, uh, Lighting the Last Mile.

Patrick Guyer: Oh yeah I remember that one. It was supported by USAID and the Resilient Africa Network.

Akoji John: Uh-huh.-

We worked with partners to develop and roll out training for sales agents on practical things like attracting new customers and managing finances, as well as using digital payment platforms and offerings or financial services to help low income consumers afford and pay for durable goods like solar home systems. For the sales agent, this can be a lucrative field to get into and a chance to increase, uh, their income.

Patrick Guyer: Okay. And what kinds of reach have we had in projects like D2D Pro and Lighting the Last Mile?

Akoji John: In just these two projects, uh, Bopinc contributed to training 353 sales agents and managers in 17 companies that sell solar home systems. And this number is across nine African countries.

You are listening to the Low-How, from Bopinc.

Patrick Guyer: Akoji, this sounds in the bigger picture, like it has the potential to be a win-win-win, right? So customers get clean energy. We're able to scale renewable electricity solutions. And also sales agents have a chance to make a living. How does this work in practice?

Akoji John: Yes. I agree with you. It's a win-win-win, but again, there are still lots of challenges here, Patrick, for one thing, not all solar home systems are created equally. Uh, some are low quality and maintenance and repairs can be difficult to arrange, especially in rural, uh, areas, for mainly low income, uh, consumers.

Solar home systems on credits and may run into repayment issues, especially on loans with higher interest rates or take, uh, pay-as-you-go model for instance. Uh, if customers can't make a payment, then the distributor can switch off, uh, their solar systems. And there's also the question of roles of government and public entities in providing electricity. Uh, solar home systems can help households a lot, but many feel that public authorities still have a responsibility to expand and improve their electricity grid for the benefit of all.

Patrick Guyer: And those are some very real challenges. Now we already heard from Auke about pay-as-you-go as one payment modality, that may be a better option for some low income customers. Now let's hear from Godfrey Katiambo, a Bopinc Impact Officer focused on marketing and distribution, about how home solar technology is evolving to become more efficient and more reliable. And also how solar home systems fit into the bigger picture of last mile electrification in Africa.

Godfrey Katiambo: The technology has evolved quite a lot for the past 10 years. The companies, as they came into the market the solar systems but also in terms of the technology, especially on the energy storage side, that's the battery side. Initially the systems came with the lead acid batteries, uh, and, uh, the lead acid batteries, uh, because of their shorter lifespan. Cause they have, uh, uh, fewer charge cycles.

They were not as robust enough and they did not provide the kind of reliability or robustness that some of the user segments brought and this as, uh, the market, it, it had a shake on the consumer confidence in the products, because most products could not last more than two years, like, uh, with lead acid batteries.

Most of them, some of them could not go even as far as three months. And it really shook the confidence of customers in [00:16:00] the solar products. But the, uh, the past five years has have been, uh, quite a boost with the, the cheaper lithium battery options and advanced lithium battery technologies creating more options, uh, smaller batteries, more reliable and longer lasting energy storage.

The state has a big role to play. Uh, but I think, uh, the state, again also, uh, taking the example of Kenya, which is, which is a leader in the renewable energy industry and electrification, we also, the state has to get priorities, right. And, uh, this, and by priorities, I mean, the steps has to open up. They fail and be diversified in their thinking, uh, about energy access and energy provision. So, uh, in this sense, rural electrification, last mile electrification, as we have seen in Kenya is just one of the ways of taking electricity to the, to the underserved communities. But it should not be the only way or did not be the most funded.

We, I think there's need and a case for a multi-pronged approach, which should involve, uh, solar home systems, mini-grids, uh, microgrids and then the main grid electrification.

Patrick Guyer: So Akoji, I think we've heard some really important things in this episode so far about the possibilities, as well as the challenges of solar home systems and different ways of marketing and distributing them. And we're also hearing about some exciting developments in the field. Uh, I'm curious, what are some of the key takeaways for you Akoji?

Akoji John: Yeah, an interesting question, Patrick, I think it's clear that a solar home system explosion is well on way, and there is a lot of good that we can do to help Africa connect to clean energy using this technology. As we heard from Godfrey, the technology has improved a lot and there are more efficient and reliable model on the market now. And we are even seeing new innovations in, in ways for low income consumers to buy this technology.

Patrick Guyer: I was just reading an article about a nice example of this, a company selling solar home systems in Indonesia that accepts non-cash payments from customers. So for example, people could give the company simple, handy crafts that they've made, and then the company can monetize that by selling those to, to tourists or other customers.

Now, maybe that's not a model that's applicable everywhere, but it's nice to see some creative ideas at work in this sector. I also wanted to come back to the sales agents that Bobin has worked with in projects like D2D Pro and Lighting the Last Mile. So sales agents, especially women agents who actually go out to rural communities and sell solar as well as other durable goods, what do you feel like we're learning about working with them most effectively?

Akoji John: A lot. Uh, I will say, I think there are some simple but important lessons to take away from this project. Uh, one is to recruit sales agents who have a lot of drive and determination. It's good practice to look, uh, for agents that are already successful at selling other kinds of consumer goods.

For example, in the trainings, we need to address hard skills like, uh, money management and customer development, as well as soft skills like motivation self-confidence, both of these are really important for being a successful sales agent. Training of agents to work with, uh, mobile technology for processing payments, uh, managing pay as you go payment is also super important.

Mm-hmm lastly helping sales agents build network among themselves. Uh, can help them stay motivated and support each other and cementing bonds and sharing contacts during training is very key.

Patrick Guyer: Then to go back to marketing, we also asked Auke what he thinks is emerging as best practice for marketing solar home systems. Let's listen to what he had to say.

Auke Douma: Yeah, very interesting question. And, and, uh, I don't think there's one, uh, one single single answer. Uh, but let me, let me, let me give it a try. I think, on, on, on the marketing front, there's there's one big realization I had while I was in Ethiopia. It's really nice to see that it's no longer about creating awareness, explaining people what solar products are and what they can do.

People are aware of this. Having said all of this, I think in terms of marketing you'll see that the marketing will head into more niches and be more specific. Uh, we are the most quality brand. We are the most expensive and the best brand. We are relatively affordable and basic. So I think there's, there's gonna be more differentiation in the marketing of these types of products.

Patrick Guyer: Uh, Akoji before we wrap up, I'm curious what you think the future is for solar home systems and for the sales agents who sell them, what are, what do you expect to see in the next few years?

Akoji John: Yeah, with the way, uh, that sector is going, uh, things are moving very fast and for the, uh, sales agent I see them also having opportunity if they position themselves well to not just sell solar home systems alone, but also sell, uh, farm equipment that's possibly utilize solar power. Uh mm-hmm like solar, dryers and the rest of them, and then possibly, uh, even solar ovens. I, I expect that to come on board with the way the sector is going. And so for any sales agent that will position his or herself, uh, with the right, uh, customer acquisition at this point, Boom, will have excess income in the, in the times to come and generally for the sector, I would need to see a lot happening aside just the solar home systems. I need to see us using our solar [hair] clippers. Now I need to see us using even our solar phones. yeah. So a lot of that. Yeah.

Patrick Guyer: Interesting. And, hey, speaking of phones, uh, how's your battery holding?

Akoji John: Ah, yeah. So, um, as we are talking, I'm also looking, I think the sun is out today, so happy I won't be off . Yeah.

Patrick Guyer: So be able to charge it up after?

Akoji John: We I'll be able to charge yeah. Of course. Yeah.

Patrick Guyer: Very good. Very good. Hey Akoji thank you so much for sharing your thoughts with us on this today. It's been great talking solar lighting with you.

Akoji John: Yeah. Thanks for having me. Uh, nice having you. To us. Well, yeah.

Patrick Guyer: Great. Thank you. And a big, thanks also to Auke Douma, Godfrey Katiambo, Hiwot Shimeles, Marine Buisson, Nick van der Velde and Frezer Abebe. And thank you to all of our listeners out there. Please be sure to have a look at the notes from this episode to learn more about Bopinc's work with distributors of solar home systems and link outs to materials about those projects, as well as some of the recent developments in the sector that we've mentioned in our conversation today.

And be sure to join us next time for the next episode of the low, how, when we get into some real toilet talk about providing sanitation services to low income urban residents. Talk to you next time.

Akoji John: Thanks for joining us for this episode of the low. How, if you like what you heard, leave us a comment and give us a review. Wherever you get your podcast.

Sumaiya Bushra: The low, how is brought to youby Bopinc. Learn more about us by visiting Bopinc.org and be sure to check out extra info and links about what you heard today in the episode notes. Thanks for listening!