For many of Thomas Duveau’s customers in rural, off-grid communities in Tanzania, buying a solar panel system for their home will be their first big commercial transaction, and probably the largest of their life.
Mobisol’s solar panel systems can cost over $1,000 (£599), which is unaffordable for many sub-Saharan Africans, whose annual income is as little as $1,600. However with a business model that encourages incremental payments over 36 months, offers transparent payment through mobile banking, and encourages residents to use their panels for profit, this energy option is becoming increasingly appealing to farming communities across Kenya, Tanzania and Rwanda.Solar energy provides a cheaper and safer alternative to diesel generators, kerosene lamps and old batteries, but a key barrier to access is cash.
“A solar home system costs money that is not available in cash to the people we sell it to, so you need a microloan,” says Duveau, head of business development at Mobisol.
The cheapest 10 watt solar system can power a small radio, one to three lamps and charge up to two mobile phones for $9 a month. But is that still too expensive? Deveau says there is demand for an even more espensive system.
“With big systems you can charge 10 mobile phones, you can run a TV for a village cinema, you can run a fridge to sell cold beers, you can earn $75-100 a month from this – suddenly your customer can become an entrepreneur.”
Along with the incremental payment and potential to make profit, it is the mobile payment aspect of the system that’s opening doors for users.
“50% of our customers had never used mobile money before, so paying off the mobisol system was their entrypoint. Now they can take part in other commercial transactions or start a savings account.”
Each customer has agreed for Mobisol to store their data, including a credit history, so the company knows exactly how much has been paid towards off.
“Collecting payment by mobile makes the transaction more transparent. Our customers just pay the price of a text message to transfer money as we cover Vodacom’s M-Pesa fee.”
The increasing adoption of mobile money across east Africa has made it easier for other start-ups such as Grundfos Lifelink (GLL) to begin to plug the gap in service provision to the poorest communities.
Across rural Africa, some 50,000 water supply points have failed, representing a waste of US$215-360 million. GLL’s product helps its customers avoid the middleman at the water pump who often takes a cut for himself and triples prices in drought season, says Peter Todbjerg Hansen, managing director of this Danish provider of water management solutions.
“The price has been fixed within the system and you pay cashlessly, so nobody can harass you to pay a higher price.”
The company replaced water pumps with automatic dispensers, allowing families to access water usinfg a key fob to which they have transferred money via text message. GLL’s pilot project reached 75,000 people in Kenya alone (pdf).
But Bill Maurer, director of the Institute for Money, Technology and Financial Inclusion at the University of California, is sceptical about how replicable and scalable businesses like GLL and Mobisol are.
“For those who are in areas where mobile money hasn’t really taken off yet, people are reluctant to put all their faith in new mobile based services – they’re buying water from a local vendor, getting some from a well, and also sending a child to fetch some because they want a diversity of sources.”
“From our research, we learned that if the fees on money transfers start to hurt even a little bit, they’ll turn off.”
Mobile money solutions also pose ethical concerns for businesses – a previous partnership between Safaricom and Equity Bank in Kenya raised the question ‘who owns the customer’s data when you go into partnership with a mobile network?’
“The business is at the mercy of the mobile network. Networks are becoming such important carriers of all kinds of information, a wider debate is needed. At what point do we think of them as a utility? How do we ensure that businesses can earn a profit but there’s adequate consumer protection?”
For now, Mobisol and GLL are looking to introduce their services to other countries in the region by 2015. Their success will depend not just on mobile phone penetration in those communities, but on how willing customers are to put their faith in a new way of making financial transactions.
Mobisol’s solar panel systems can cost over $1,000 (£599), which is unaffordable for many sub-Saharan Africans, whose annual income is as little as $1,600. However with a business model that encourages incremental payments over 36 months, offers transparent payment through mobile banking, and encourages residents to use their panels for profit, this energy option is becoming increasingly appealing to farming communities across Kenya, Tanzania and Rwanda.Solar energy provides a cheaper and safer alternative to diesel generators, kerosene lamps and old batteries, but a key barrier to access is cash.
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| A solar-powered MobiCharger business in Maji ya Chai, Tanzania Photograph: Mobisol |
The cheapest 10 watt solar system can power a small radio, one to three lamps and charge up to two mobile phones for $9 a month. But is that still too expensive? Deveau says there is demand for an even more espensive system.
 |
| A boy studies at night using a solar-powered lamp in Tanzania. Photograph: Mobisol |
Along with the incremental payment and potential to make profit, it is the mobile payment aspect of the system that’s opening doors for users.
“50% of our customers had never used mobile money before, so paying off the mobisol system was their entrypoint. Now they can take part in other commercial transactions or start a savings account.”
Each customer has agreed for Mobisol to store their data, including a credit history, so the company knows exactly how much has been paid towards off.
“Collecting payment by mobile makes the transaction more transparent. Our customers just pay the price of a text message to transfer money as we cover Vodacom’s M-Pesa fee.”
The increasing adoption of mobile money across east Africa has made it easier for other start-ups such as Grundfos Lifelink (GLL) to begin to plug the gap in service provision to the poorest communities.
Across rural Africa, some 50,000 water supply points have failed, representing a waste of US$215-360 million. GLL’s product helps its customers avoid the middleman at the water pump who often takes a cut for himself and triples prices in drought season, says Peter Todbjerg Hansen, managing director of this Danish provider of water management solutions.
“The price has been fixed within the system and you pay cashlessly, so nobody can harass you to pay a higher price.”
 |
| A woman fetches water from a Lifelink dispenser in Kenya. Photograph: Grundfos LifeLink |
But Bill Maurer, director of the Institute for Money, Technology and Financial Inclusion at the University of California, is sceptical about how replicable and scalable businesses like GLL and Mobisol are.
“For those who are in areas where mobile money hasn’t really taken off yet, people are reluctant to put all their faith in new mobile based services – they’re buying water from a local vendor, getting some from a well, and also sending a child to fetch some because they want a diversity of sources.”
“From our research, we learned that if the fees on money transfers start to hurt even a little bit, they’ll turn off.”
Mobile money solutions also pose ethical concerns for businesses – a previous partnership between Safaricom and Equity Bank in Kenya raised the question ‘who owns the customer’s data when you go into partnership with a mobile network?’
“The business is at the mercy of the mobile network. Networks are becoming such important carriers of all kinds of information, a wider debate is needed. At what point do we think of them as a utility? How do we ensure that businesses can earn a profit but there’s adequate consumer protection?”
For now, Mobisol and GLL are looking to introduce their services to other countries in the region by 2015. Their success will depend not just on mobile phone penetration in those communities, but on how willing customers are to put their faith in a new way of making financial transactions.
