Tag: business models

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

A social enterprise is seeking to capture the power of the sun to bring light and economic opportunity to women in Africa. Using a direct-marketing distribution system, it sells solar lamps and lanterns to some of Africa’s remotest communities. Solar Sister (www.solarsister.org), launched in Uganda in 2010, is hoping to do for power generation what mobile phones have done for communication in Africa: make a technological leap to a model of grassroots power generation, rather than waiting for large-scale power schemes to eventually reach the poor and rural.

More than 1.7 billion people around the world have no domestic electricity supply, of which more than 500 million live in sub-Saharan Africa (World Bank).

Solar power is being creatively used in many countries to tackle energy poverty and give women, in particular, viable sources of income. In India, whole villages are already using solar energy and improving their standard of living. Various companies and projects are selling inexpensive solar appliances – from cooking stoves to lanterns and power generators – across the country.

A billion Africans use just four percent of the world’s electricity (The Economist). Energy poverty is already harming further economic growth and development gains. With Africa’s population expected to double to 2 billion by 2050, the gap between people’s needs and the power available is stark: in Nigeria, out of 79 power stations, only 17 are working (The Economist).

A report by the International Finance Corporation called the sub-Saharan solar market the largest in the world – a market of 65 million would-be customers, who could access off-grid lighting over the next five years (IFC). The report anticipated high growth rates of 40 to 50 percent for anyone entering the market, with less than one percent of the market currently being served.

Being able to see at night unleashes a vast range of possibilities, such as being able to work or study later. But for the very poor, lighting is often the most expensive household expense.

As Solar Sister founder Katherine Lucey points out, households “rely on kerosene lanterns and candles for light. They spend up to 40 percent of their family income on energy that is inefficient, insufficient and hazardous. Widespread use of kerosene has an adverse impact on local air quality as well as on global climate change.

“Poor lighting, smoke and rudimentary lanterns are responsible for a large number of infections and burn injuries. Within the household, women are responsible for kerosene purchases and use – in order for new clean energy technology to be adopted at the household level, women have to ‘buy in’ to the technology.”

And this is the challenge: to find an affordable – and sustainable – way to bring electricity and energy to people living in remote and rural areas. These are places that face stark options: to remain off-grid and energy poor, or to abandon their communities and join the many millions across the global South on the march to urban and semi-urban areas in search of income and opportunity.

Lucey says that could be “a recipe for disaster”.

“In a country like Uganda, with a population of 32 million people, it is not possible to have them all move to Kampala to access electricity,” she said. “It would overburden already stretched infrastructure and services and disrupt the social and economic structures of an entire population. In the end, it can challenge the stability of entire nations.”

The Solar Sister direct-marketing model works like this: micro-investment capital of US $500 is invested in one Solar Sister Entrepreneur and she receives a ‘business in a bag’: a start-up kit of inventory, training and marketing resources. As her own boss, she has a strong incentive to succeed. She uses the money to purchase a consignment of lamps or lanterns, which she then sells, encouraging people to replace kerosene lamps with solar lamps: healthier, safer and better for the environment. She is encouraged to use her existing networks of family, friends and neighbours to reach rural and hard-to-reach customers.

The Solar Sister, after succeeding in selling the first consignment of lamps, then receives training in marketing and inventory and business skills. She can then move on to be a team leader and recruit other Solar Sisters. She earns a commission from the lamp sales, which help to improve her ability to pay for healthcare, education and food for her family. She then repays the cash for the lamps and the cycle starts all over again with a new consignment.

The model will sound familiar to many: it is what has built successful marketing machines like the famous all-women’s make-up and beauty products seller Avon (www.avon.com). Or the other famous direct marketing behemoth, Amway (www.amway.co.uk).

The Solar Sister model is heavily dependent on the success of word-of-mouth to grow:

“What we have found is that the women are the best distribution system for bringing new technology to rural households since they sell through their trusted networks of family, friends and neighbours,” Lucey said. “They use the lamps themselves, and then talk passionately about the benefits: the better light, the money they save by not having to buy kerosene, the amount of time their children are able to study, the cleaner air and safer environment for their kids.”

According to Lucey, the business model “brings solar technology right to the women’s doorstep. The Solar Sister business model developed as a grass-roots solution to the gender-based technology gap. Women make up 70 percent of the rural poor, but are often left out ‘in the dark’ when it comes to technology solutions.”

It is still early days for Solar Sister, which has been in operation for just over a year and now has 107 Solar Sister Entrepreneurs working in 10 teams reaching 34 communities in three countries – Uganda, Rwanda and Sudan. Lucey says the goal is to build a network of 1,500 female entrepreneurs in Africa over the next two years, benefiting over 1 million people.

Apart from the business model and the new technology, there is a radical concept at the heart of Solar Sister: to replicate for electricity generation the distributed and rapid growth that has been seen with mobile phones. In just five years, the availability of mobile phones in Africa increased by 550 percent.

“Distributed energy, such as solar, puts the investment in energy generation rather than transmission, and breaks the problem into smaller, achievable, components that do not have to wait for political processes for implementation,” explains Lucey. “It allows for the possibility that people can solve their own problems rather than wait for government or NGOs to come solve their energy problems for them. Distributed solar has the potential to leap-frog the 20th century grid-based solution, much like mobile phones have done in the telecom industry.”

One of the solar lanterns for sale is manufactured by D.Light Design. Their newest lantern model is called Kiran (http://www.dlightdesign.com/products_kiran_global.php). It sells for US $10 and provides up to eight hours of light on a full battery, its manufacturers say. D.Light Design calls it the “$10 Kerosene Killer” because it believes it has the right mix of price and technology to trump the need to use kerosene lanterns. The lantern gives off a white light powerful enough so people can read, study or do domestic tasks. A solar panel sits on top of the lantern, which is shaped like a drinking thermos with a large carry handle on top.

Other solar lamps/lanterns have been burdened by cost, ranging in price from US $15 to US $30: a prohibitive price for many poor people.

The ubiquity of mobile phone payments in Africa has made it much easier to transfer funds back and forth between the entrepreneurs and Solar Sister. And since its launch, Solar Sister has learned how to change and adapt to local conditions.

“These women are the experts in their local communities of what works and what doesn’t,” Lucey said. “Solar Sister Voila (http://www.solarsister.org/voila-uganda) decided to visit the roadside market stalls at night when shopkeepers were burning kerosene lamps for light. She got their instant attention with the high brightness of her solar powered lamps.

“Solar Sister’s mission is to bring more and more women from the veils of smoke, darkness and anonymity to the forefront of a clean energy revolution.”

Published: April 2011

Resources

1) D.light Design: Their lights use LEDs (light emitting diodes) (http://en.wikipedia.org/wiki/LED_lamp) and are four times brighter than a kerosene lantern according to D.Light Design. Website: www.dlightdesign.com

2) Lighting Africa: Lighting Africa, a joint IFC and World Bank program, is helping develop commercial off-grid lighting markets in Sub-Saharan Africa as part of the World Bank Group’s wider efforts to improve access to energy. Lighting Africa is mobilizing the private sector to build sustainable markets to provide safe, affordable, and modern off-grid lighting to 2.5 million people in Africa by 2012 and to 250 million people by 2030. Website: www.lightingafrica.org

3) Solar Lighting for the Base of the Pyramid – Overview of an Emerging Market, a report by the International Finance Corporation finding Africa will be the world’s largest market for solar portable lights by 2015. The report addresses market trends and statistics at a global level with more detailed analysis for the African market. Website: www.lightingafrica.org/market-intelligence/market-trends-assessment.html

4) How We Made It Africa: A website detailing success stories on businesses investing in Africa and how people are making the most of opportunities on the continent. Website: www.howwemadeitinafrica.com

5) Barefoot College: The College is training women to be solar engineers, developing both useful skills and a new income source. So far, Barefoot College itself has solar electrified some 350 villages across India and dozens more in sub-Saharan Africa and even war-torn Afghanistan. Website: www.barefootcollege.org

6) Solar Power Answers is a one-stop-shop for everything to do with solar power. It has a design manual and guides to the complex world of solar power equipment. Website: www.solar-power-answers.co.uk/index.php

7) Sun King solar lantern: The lantern provides 16 hours of light for a day’s charge. Website: www.greenlightplanet.com/ourusers.html

8) ToughStuff has developed a modular range of affordable solar powered energy solutions to the three main power needs of poor consumers in the developing world – lighting, mobile phones and radios. Website: www.toughstuffonline.com

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2023