Sparks

The leapfrog generation in Africa

 By Jim McClelland

Africa is more than just big, it is huge: the continent is larger than the US, China, India and most of Europe combined. Its potential is great; but challenges are significant — not least the vast areas and enormous numbers unreached by the electricity grid…

According to Dr Richard Munang, Africa Regional Climate Change Coordinator, United Nations Environment Programme (UNEP), about two out of every three people in Africa (65 percent) lack access to clean energy for cooking and lighting, so resort to unclean biomass and kerosene-based sources. Reports from The Africa Progress Panel show an associated cost to both their health and finances, he reveals:
“Energy deficits may also be holding back progress in child health. Some 60 percent of the fridges used to store vaccines in Africa lack access to a reliable source of energy, leading to high levels of wastage and higher delivery costs.”

“Cumulatively, unclean sources also cost Africa’s poor living on less than $2.50 daily up to 20 times more, an estimated $10 billion annually, compared to rich households connected to the grid in developed countries.”

Demand for more sustainable solutions is understandably high and the market is responding with innovation. MTN, Africa’s largest telecom company, has announced it is extending its partnership with energy and financial services firm Fenix International to launch pay-to-own off-grid solar in Zambia. Switching to solar not only allows families to illuminate their homes with LED lights up to 10 times brighter than kerosene lamps, but to mitigate associated health risks, too, explains CEO of Fenix, Lyndsay Handler:
“Access to solar is not just an energy issue; it’s also a health issue. Off-grid families face consequences from kerosene fumes and associated fine particulate matter, and kerosene ingestion is one of the leading causes of childhood poisoning in emerging markets. Families are also at risk from devastating house fires due to open flames.”

Fenix International is a venture-backed technology company and its flagship product, ReadyPay Power, provides customers with an expandable, pay-to-own home solar system, financed through affordable installments over Mobile Money. Fenix is already the largest provider of such solutions in Uganda.

Fenix International's ReadyPay solar system (fenixintl.com)

Figures from Fenix suggest approximately 15 million Zambians live without access to the electrical grid, representing 80 percent of the total population and 95 percent of rural residents. With backing from the Swedish Embassy and US Agency for International Development (USAID), Fenix expects to reach 850,000 rural Zambians by 2020.
The Swedish Embassy in Zambia, is committing nearly $3 million through 2020, as part of the Power Africa: Beyond the Grid Fund Zambia (BGFZ) initiative. The additional $750,000 USAID support comes from its Scaling Off-Grid Energy: Grand Challenge for Development global partnership.
With rates priced to match current energy spending on kerosene and phone charging, households make installments of as little as $0.20 per day via MTN Mobile Money until they have paid in full. The plan is flexible, including options to pause repayment for a short period if customers are experiencing unforeseen financial difficulty.
Fenix uses these continuous micro-payments to generate a credit score, enabling valued customers to upgrade systems by adding accessories like lights and radios, plus unlocking greater battery output, as their energy needs and budgets grow. Fenix also plans to offer additional financial services such as education loans in future.
Fenix and MTN are by no means the only players in what is proving a fast-emerging market on the African continent. Frontrunner M-Kopa is already working with mobile payments pioneer M-Pesa in Kenya, a country said to “lead the world in mobile money.” Cost of tech combined with customer affordability is key to growth, says Dr Munang:
“In addition to the 80 percent drop in the cost of solar panels over the past seven years, availability of marketable business models based on flexible payments is further lowering the barrier. As a result, industry executives have estimated a 60-100 percent annual growth in the number of solar home systems. And performance of notable leaders in this arena is testament. Furthermore, as the target market already pays $100-$140 per year for unclean sources, the financial model seems very sustainable.”

Prospects are looking strong for the continent, as a whole, he concludes:
“Africa has the advantage of leapfrogging in both mobile communications and off-grid electricity. To connect Africa’s low-density, low-baseload areas could cost up to $2000 per grid connection. So, off-grid, which is mostly clean, becomes the most economical strategy to expand access to remote, rural Africa where up to 80 percent lack electricity.”
In effect, customers pay significantly less for better, cleaner, safer light. As such, fintech and cleantech together promise to boost financial inclusivity for the unbanked and at the same time bring green power access to the grid-unconnected — the leapfrog generation.

READ MORE: Energy in Africa by Abo (Abo.net)

about the author
Jim McClelland
Editor + journalist for supplements to The Times + Sunday Times, also quoted in Guardian, Sunday Telegraph. I blog for such as GE + Gap. Active on social media. Specialisms include Sustainability.