Solutions for Scaling up the Adoption of Solar Lighting in Sub-Saharan Africa: Focus on the Financial Barriers
Tutor / director / evaluatorVelo García, Enrique
Document typeMaster thesis
Rights accessRestricted access - author's decision
The primary purpose of this thesis was to identify practical solutions for scaling up the adoption of solar lighting products in Africa. This work was conducted in the context of a consultancy contract for SolarAid/SunnyMoney - East Africa’s only product neutral distributor and specialised retailer of solar lighting products. The focus of the work was on the issue of access to finance from a consumer’s perspective: An off-grid household in rural Africa may spend large sums on kerosene on a daily basis but would struggle to collect the sum necessary for the purchase of a quality solar light. The main obstacle to making the switch to solar lighting is the high upfront cost required. This highlights the need for end-user finance solutions to enable low-income households to purchase a solar light. An analysis of the commercially available fee-for-service solutions was conducted: The most prominent solutions, such as MKopa, Simpa Networks and Azuri technologies, were found to use pay-as-you-go technology and mobile money as the basis of a rent-to-own service. The main finding from this analysis was that such distribution models are more akin to the modus operandi of a service provider (a power utility) or a financial institution than that of a product retailer: The relationship with the costumer extends for 12 to 36 months and investments are recovered over an extended period of time. In search of ways of implementing a rent-to-own model that was more in phase with the strategy and needs of SolarAid/SunnyMoney, a set of trials were conducted in Western Kenya. The first of these trials aimed to sell and entry-level product in 4 instalments. The initial response to this rent-to-own scheme was outstanding, as 115 out of the 180 parents reached during the trial (or almost 65%) expressed their interest. After one week, 75% of the 421 selected participants to the scheme had submitted the initial payment. If the remaining three weekly payments are completed in time and the programme runs smoothly, it will be the proof that a pay-as-you-go enabled entry level light could work. It was concluded that a pay-as-you-go enabled entry-level product could possibly allow SunnyMoney to massively increase the product uptake during its school campaigns. And selling mid-range products in 4 to 6 instalments could allow customers with a low-income to climb up the energy ladder. There are currently no PAYG-enabled products with the right characteristics available in the market but some product manufacturers have started to look in that direction.