Selling Solar Like Cellphones
December 31, 2015 10:06 AM Subscribe
It's a headline on a Bloomberg article. Their typical audience isn't going to react to that with "oh that's awful!" so much as "how genius! I didn't think that's possible!"
It's actually a pretty feel-good story over all. I was waiting for the other shoe to drop, but it looks like some foreign investors found a decent way to make money while helping out and improving lives. It didn't even have a total stink of "poor Africa" voyeurism all over it.
posted by explosion at 10:30 AM on December 31, 2015 [4 favorites]
It's actually a pretty feel-good story over all. I was waiting for the other shoe to drop, but it looks like some foreign investors found a decent way to make money while helping out and improving lives. It didn't even have a total stink of "poor Africa" voyeurism all over it.
posted by explosion at 10:30 AM on December 31, 2015 [4 favorites]
Basically, to explain this:
1) "solar company making a profit on poor Africans" meant to show that creative business models can generate profit from people that are often written off as irrelevant customers. Utilities haven't been able to effectively serve those communities, and so there's a perception that they're not customers. M-Kopa's point is that the right business model can generate profit from low income communities.
2) M-Kopa is a finance company that leases the hardware to the customer until it's paid off, and then they own it. That's the innovation in the business model -- solving access to energy using novel access to finance.
posted by nickrussell at 10:34 AM on December 31, 2015 [6 favorites]
1) "solar company making a profit on poor Africans" meant to show that creative business models can generate profit from people that are often written off as irrelevant customers. Utilities haven't been able to effectively serve those communities, and so there's a perception that they're not customers. M-Kopa's point is that the right business model can generate profit from low income communities.
2) M-Kopa is a finance company that leases the hardware to the customer until it's paid off, and then they own it. That's the innovation in the business model -- solving access to energy using novel access to finance.
posted by nickrussell at 10:34 AM on December 31, 2015 [6 favorites]
What a really terribly framed article. I get it - they're trying to capitalize on the idea of poor Africans and the irony of poor Africans actually being the market for a profitable market, when actually this is just an interesting extension of an already pretty common set of techniques that work well in the developing world - microfinance, pay-as-you-go, and leapfrogging technology - and it seems to be working.
Market innovation happening in the developing world is interesting in its own right, and fairly common. It doesn't need a misleading headline to draw people in or tell a compelling story. And, this isn't a unique story. Presenting it like this ignores all the people working in inventive ways to make money and provide necessary services to people throughout the developing world.
posted by ChuraChura at 10:36 AM on December 31, 2015 [8 favorites]
Market innovation happening in the developing world is interesting in its own right, and fairly common. It doesn't need a misleading headline to draw people in or tell a compelling story. And, this isn't a unique story. Presenting it like this ignores all the people working in inventive ways to make money and provide necessary services to people throughout the developing world.
posted by ChuraChura at 10:36 AM on December 31, 2015 [8 favorites]
Microgrids and distributed renewables for developing world applications are fascinating opportunities. You can see advances in technology that we should be making in the developed world at work in the everyday lives of people. A key example could be the ubiquity of cell phones in regions without a grid infrastructure for landlines. Distributing solar to charge phones is a great step forward; not having to burn kerosene or walk to a charging facility would be of great benefit.
Interestingly, we have a testbed for these types of microgrids and distributed renewables right here in the States: Alaska.
posted by Existential Dread at 10:58 AM on December 31, 2015 [2 favorites]
Interestingly, we have a testbed for these types of microgrids and distributed renewables right here in the States: Alaska.
posted by Existential Dread at 10:58 AM on December 31, 2015 [2 favorites]
A very notable tidbit buried in the article: Electronic micropayments are ubiquitous in Kenya, which places them well ahead of the curve.
posted by schmod at 11:05 AM on December 31, 2015 [4 favorites]
posted by schmod at 11:05 AM on December 31, 2015 [4 favorites]
I'm torn.
I think it's neat that the people are getting access to electricity in what I presume is an affordable way and that the business doing it are able to make a sustainable profit using a rent-to-own model.
On the other hand, I believe that the government should be providing affordable access to utilities. $0.45/day from populations making $2/day seems like a huge chunk and probably out of reach for most. This is skimming off the top layer to some extent and leaving the really poor even further behind.
On the third hand, I'm glad at least some people are getting electricity and the company doesn't seem to be predatory.
posted by Mental Wimp at 11:07 AM on December 31, 2015 [3 favorites]
I think it's neat that the people are getting access to electricity in what I presume is an affordable way and that the business doing it are able to make a sustainable profit using a rent-to-own model.
On the other hand, I believe that the government should be providing affordable access to utilities. $0.45/day from populations making $2/day seems like a huge chunk and probably out of reach for most. This is skimming off the top layer to some extent and leaving the really poor even further behind.
On the third hand, I'm glad at least some people are getting electricity and the company doesn't seem to be predatory.
posted by Mental Wimp at 11:07 AM on December 31, 2015 [3 favorites]
One of the guys I work with in Cote d'Ivoire has a lucrative third income (after cocoa/rubber farming and working for the research project) because he bought our project's old solar panels and a small car battery at a pretty low cost, and now charges people about 25 cents an hour to charge their cell phone batteries.
It'd be great if the government could provide utilities, but there just isn't a functioning national grid in a lot of Kenya, and the cost of getting that extensive national grid and then a nationalized power source is currently pretty prohibitive. It'd be interesting to see if they could provide subsidies, though, for solar panel use.
posted by ChuraChura at 11:11 AM on December 31, 2015 [5 favorites]
It'd be great if the government could provide utilities, but there just isn't a functioning national grid in a lot of Kenya, and the cost of getting that extensive national grid and then a nationalized power source is currently pretty prohibitive. It'd be interesting to see if they could provide subsidies, though, for solar panel use.
posted by ChuraChura at 11:11 AM on December 31, 2015 [5 favorites]
On the other hand, I believe that the government should be providing affordable access to utilities.
Not all utilities in the US are public, by a long shot, and there has been a back and forth between public and private ownership for many decades, along with other models including cooperatives. There has been privatization in Europe as well, though with a lot of national and sectoral variation.
I agree with ChuraChura -- terrible headline and framing for an interesting but not exceptional story.
posted by Dip Flash at 11:31 AM on December 31, 2015 [1 favorite]
Not all utilities in the US are public, by a long shot, and there has been a back and forth between public and private ownership for many decades, along with other models including cooperatives. There has been privatization in Europe as well, though with a lot of national and sectoral variation.
I agree with ChuraChura -- terrible headline and framing for an interesting but not exceptional story.
posted by Dip Flash at 11:31 AM on December 31, 2015 [1 favorite]
I guess the question is, are the the customer benefiting by an equal or greater amount than they are paying? If so, I have no qualms about the profit.
posted by blue_beetle at 12:24 PM on December 31, 2015
posted by blue_beetle at 12:24 PM on December 31, 2015
I guess the question is, are the the customer benefiting by an equal or greater amount than they are paying? If so, I have no qualms about the profit.
Why would a customer engage in a transaction in which he is not benefiting by a greater amount than he is paying?
posted by esprit de l'escalier at 12:44 PM on December 31, 2015
Why would a customer engage in a transaction in which he is not benefiting by a greater amount than he is paying?
posted by esprit de l'escalier at 12:44 PM on December 31, 2015
Why would a customer engage in a transaction in which he is not benefiting by a greater amount than he is paying?
Marketing?
posted by history_denier at 1:10 PM on December 31, 2015 [1 favorite]
Marketing?
posted by history_denier at 1:10 PM on December 31, 2015 [1 favorite]
Mental Wimp and others:
from TFA: According to a 2014 survey, an average off-grid household in Kenya spends about 75¢ a day on energy, or $272 a year—$164 on kerosene, $36 on charging their mobile phone, and $72 on batteries. M-Kopa estimates a customer saves about $750 over the first four years by switching to its basic solar kit.
Sure, the estimates are from M-Kopa, but if the survey is accurate, the $.45/day is less than they're currently paying, and they have paid it off after the first year.
posted by booooooze at 1:15 PM on December 31, 2015 [2 favorites]
from TFA: According to a 2014 survey, an average off-grid household in Kenya spends about 75¢ a day on energy, or $272 a year—$164 on kerosene, $36 on charging their mobile phone, and $72 on batteries. M-Kopa estimates a customer saves about $750 over the first four years by switching to its basic solar kit.
Sure, the estimates are from M-Kopa, but if the survey is accurate, the $.45/day is less than they're currently paying, and they have paid it off after the first year.
posted by booooooze at 1:15 PM on December 31, 2015 [2 favorites]
Marketing?
Seems fair to me: Business tries to sell their product, customer decides for himself.
In this particular case, I'm not sure what happens if the customer stops paying besides the battery not working anymore. If that's all that happens, then the most the customer is out is the initial $35 since they probably aren't going to keep funding a losing business.
There are no guarantees in business. Just as they could lose their investment, they also get to keep all of the profits no matter how large. They don't owe M-Kopa anything besides the $200.
posted by esprit de l'escalier at 1:21 PM on December 31, 2015
Seems fair to me: Business tries to sell their product, customer decides for himself.
In this particular case, I'm not sure what happens if the customer stops paying besides the battery not working anymore. If that's all that happens, then the most the customer is out is the initial $35 since they probably aren't going to keep funding a losing business.
There are no guarantees in business. Just as they could lose their investment, they also get to keep all of the profits no matter how large. They don't owe M-Kopa anything besides the $200.
posted by esprit de l'escalier at 1:21 PM on December 31, 2015
Somewhat relevant to this, I thought it was worth pointing people to the Waka Waka solar light:
http://www.waka-waka.com
This is a really neat gadget that works great as a gift, not only for for utility but also for awareness, and even charity. Waka Waka means 'shine bright' in Swahili and is the name given to this solar powered light and USB mobile phone charger. Leave it in the sun for a few hours and it'll be fully charged, and when you need it it can A) provide bright lighting and B) USB power for charging cell phones. It has a neat mechanical design that allows the light to be propped up (or even hung overhead) to provide the best lighting. Buy ONE and your purchase then funds another one going to the third world, where it replaces a kerosene lamp and helps kids get educated (study at night), helps women get out of poverty (no time and money wasted purchasing lamp fuel) and provides a power source for the mobile electronics that have become their connection to the world. There are other gadgets like this, but this one is really well designed and has a mission behind it.
The batteries are low-self-discharge lithium, so it works great as an emergency light (or emergency power source for your cell phone). I've taken one out of the closet after 6 months and it was still fully charged.
Besides the charitable case described above (buy one, give one), they also have been fielding them in large numbers to various third-world countries (see website above for details). I don't know if anyone has been deploying the product via a financing mechanism like in the OPP, but it seems that they should -- it's a cheaper product and VERY robust.
posted by intermod at 1:21 PM on December 31, 2015 [2 favorites]
http://www.waka-waka.com
This is a really neat gadget that works great as a gift, not only for for utility but also for awareness, and even charity. Waka Waka means 'shine bright' in Swahili and is the name given to this solar powered light and USB mobile phone charger. Leave it in the sun for a few hours and it'll be fully charged, and when you need it it can A) provide bright lighting and B) USB power for charging cell phones. It has a neat mechanical design that allows the light to be propped up (or even hung overhead) to provide the best lighting. Buy ONE and your purchase then funds another one going to the third world, where it replaces a kerosene lamp and helps kids get educated (study at night), helps women get out of poverty (no time and money wasted purchasing lamp fuel) and provides a power source for the mobile electronics that have become their connection to the world. There are other gadgets like this, but this one is really well designed and has a mission behind it.
The batteries are low-self-discharge lithium, so it works great as an emergency light (or emergency power source for your cell phone). I've taken one out of the closet after 6 months and it was still fully charged.
Besides the charitable case described above (buy one, give one), they also have been fielding them in large numbers to various third-world countries (see website above for details). I don't know if anyone has been deploying the product via a financing mechanism like in the OPP, but it seems that they should -- it's a cheaper product and VERY robust.
posted by intermod at 1:21 PM on December 31, 2015 [2 favorites]
A very notable tidbit buried in the article: Electronic micropayments are ubiquitous in Kenya, which places them well ahead of the curve.
In fact M-Pesa, the leading micropayment platform of choice in Africa, was invented by Kenyans - a fact most Kenyans are very proud of. M-Pesa dominates the payments market there to an astonishing degree. It's a very interesting story and I highly recommend looking it up if you're curious
posted by smoke at 3:08 PM on December 31, 2015 [3 favorites]
In fact M-Pesa, the leading micropayment platform of choice in Africa, was invented by Kenyans - a fact most Kenyans are very proud of. M-Pesa dominates the payments market there to an astonishing degree. It's a very interesting story and I highly recommend looking it up if you're curious
posted by smoke at 3:08 PM on December 31, 2015 [3 favorites]
Considering that, as mentioned, the M-Kopa system is basically a finance system that coincidentally is also a generator, it is worth mentioning the book Portfolios of the Poor.
tl;dr version: things cost money. especially if you're poor, you need all that money up front each time. banks usually ignore the poor, therefore you're borrowing from loan sharks and the like a lot.
The great thing about the M-Kopa system is that suddenly there's collateral to borrow against; the normally proportionally high administrative costs of microloans are reduced to whatever the data rate for SIM cards is in Kenya. This is GENIUS.
posted by ivan ivanych samovar at 4:37 PM on December 31, 2015
tl;dr version: things cost money. especially if you're poor, you need all that money up front each time. banks usually ignore the poor, therefore you're borrowing from loan sharks and the like a lot.
The great thing about the M-Kopa system is that suddenly there's collateral to borrow against; the normally proportionally high administrative costs of microloans are reduced to whatever the data rate for SIM cards is in Kenya. This is GENIUS.
posted by ivan ivanych samovar at 4:37 PM on December 31, 2015
This is skimming off the top layer to some extent and leaving the really poor even further behind.
Except it isn't:
posted by flabdablet at 5:16 AM on January 1, 2016 [2 favorites]
Except it isn't:
The technology M-Kopa wants to replace is ancient: kerosene. Many of the lamps used in Kenya would be recognizable to the Romans—small flames flickering in the wind, emitting an acrid smoke that burns the eyes, irritates the throat, and slowly turns walls and ceilings black. It’s also expensive. According to a 2014 survey, an average off-grid household in Kenya spends about 75¢ a day on energy, or $272 a year—$164 on kerosene, $36 on charging their mobile phone, and $72 on batteries. M-Kopa estimates a customer saves about $750 over the first four years by switching to its basic solar kit.This is win-win for lighting consumers and M-Kopa, though it will gut the small local businesses currently selling kerosene, batteries and charging services.
posted by flabdablet at 5:16 AM on January 1, 2016 [2 favorites]
Why would a customer engage in a transaction in which he is not benefiting by a greater amount than he is paying?
Marketing?
This is such nonsense. Are Kenyans not capable of determining how to spend their money. Do they need approval from first world folks who obviously know how things should be done?
posted by 2N2222 at 12:14 PM on January 1, 2016 [2 favorites]
Marketing?
This is such nonsense. Are Kenyans not capable of determining how to spend their money. Do they need approval from first world folks who obviously know how things should be done?
posted by 2N2222 at 12:14 PM on January 1, 2016 [2 favorites]
This is win-win for lighting consumers and M-Kopa, though it will gut the small local businesses currently selling kerosene, batteries and charging services.
I was referring to those that can't afford kerosene, but your point that for those who can, this is a big benefit not only economically but also healthwise.
posted by Mental Wimp at 10:37 AM on January 4, 2016
I was referring to those that can't afford kerosene, but your point that for those who can, this is a big benefit not only economically but also healthwise.
posted by Mental Wimp at 10:37 AM on January 4, 2016
M-Kopa costs less than kerosene, so there will be some people who could not previously afford any lighting who can afford M-Kopa.
I agree with you that there ought to be government support for providing lighting to people unable to afford it. The fact that M-Kopa can provide lighting that works well enough to compete commercially, at lower cost than previously feasible, also means that any given quantity of government dollars allocated to providing lighting to the poor will end up helping more people.
Apart from effects on existing kerosene lighting and charging suppliers, I can't see a reasonable objection to this.
posted by flabdablet at 4:59 PM on January 4, 2016
I agree with you that there ought to be government support for providing lighting to people unable to afford it. The fact that M-Kopa can provide lighting that works well enough to compete commercially, at lower cost than previously feasible, also means that any given quantity of government dollars allocated to providing lighting to the poor will end up helping more people.
Apart from effects on existing kerosene lighting and charging suppliers, I can't see a reasonable objection to this.
posted by flabdablet at 4:59 PM on January 4, 2016
Agree. Net good. Won't let the perfect be its enemy.
posted by Mental Wimp at 10:47 AM on January 5, 2016
posted by Mental Wimp at 10:47 AM on January 5, 2016
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Once they go public, of course, I expect it all to rapidly go down the drain.
posted by sharp pointy objects at 10:21 AM on December 31, 2015 [7 favorites]