Only 31% of people in Africa have access to electricity and in rural areas there is an even more severe lack of access. This is an astounding figure in today’s modern, technology driven world. While the trend has been positive and 25 million people a year got access, electrification barely keeps up with population growth. At the current pace, universal access to clean, reliable and affordable energy for all by 2030, will be difficult to achieve with the predominant traditional on-grid approach. Thanks to significant cost reductions in the production of renewable energy (in particular solar PV) and new technological possibilities, people don’t have to wait to be connected to the grid anymore !
Off-grid, stand alone systems such as portable lights and solar home systems, are increasingly recognized as an essential part of a global strategy to achieve universal energy access. Now, households at the base of the economic pyramid can turn to off-grid solar instead of relying on kerosene, candles, dry cell batteries and other fossil fuel-based sources of power. Getting access to solar can impressively boost quality of life, allowing children to study at nightfall or adults to keep working for example. The typical solar home system can power 3 lights and charge a mobile phone, however it costs around $120, which is too expensive for many people.
Today, thanks to mobile technology and mobile payment systems, a new era of financial services enables access to basic services like electricity.
The Pay-As-You-Go (PAYG) model was first developed in East Africa in order to bring solar-powered electricity to people who had no access to the grid. PAYG is a payment method that allows off-grid customers to buy a solar home system with an initial down payment of 20% of the product price. The rest of the payment can be made daily, weekly or monthly through an SMS based service which will activate the battery as the client pays. Once the payment is complete, the system unlocks for good and the client fully owns the product.
Microcred is a digital finance company focusing on financial inclusion, in Africa and China. Our experience has shown us that financial services and technology can be leveraged to facilitate access to a range of basic services - notably to help people access clean energy. In early 2015, we launched Baobab+, an initiative to bring access to energy to Senegal, Ivory Coast, Mali and Madagascar. Microcred offers traditional loans for our clients or PAYG for non clients to facilitate the purchase of solar lamps or solar home systems.
Through numerous field visits to areas of low electrification, we realized that even though the demand for these new off-grid solar technologies is taking off, consumers need to be assured of the quality and reliability of the product. In order to fix this, we have decided to run social programs in rural schools. Schoolchildren are allowed to bring home a solar lamp for studying and this gives their parents the opportunity to observe concretely the product and its impact.
Another challenge is the payment method: some clients prefer making payments in a store, so we decided to give them the choice between making their payments in a local partner shop or through mobile banking in order to adjust to different needs.
Nowadays, quality products are mainly imported from Asia to Africa, and the next big challenge will be local production, in order to have a real social and environmental impact. Creating more jobs, resulting in local added value and implementing a recycling process is what we want to achieve by end 2017.