Lighting up rural Africa

Sameer Hajee, CEO of Nuru Energy, reveals how social entrepreneurship is helping to shed light on the global problem of energy poverty

N began five years ago with a simple notion: to build a sustainable, scalable solution to displace the kerosene that more than 2 billion people worldwide still burn to generate light.

Study after study has found the world’s poorest spend upwards of 25 per cent of their income on kerosene, at a cost of $17bn a year in Africa alone. Many of these studies also clearly outline the difficulties inherent in changing this practice. A 1991 study looking at the potential of photovoltaic technology in Rwanda cited high investment costs, unavailability of credit, and maintenance and repair problems as hurdles to its  widespread use. Last year, a study of the off-grid lighting market in Africa found similar barriers to its scalability. Progress, it appears, has been slow.

Kerosene is an unsafe, expensive and environmentally unfriendly means of  generating light. Yet 90 per cent of Africa’s rural poor still use it. To better understand why, our team did something radical – we asked them. We lived in a village in the Republic of Rwanda for two months, observing and asking questions, and came away with a far clearer grasp of the problem.

We learned that kerosene is portable, reliable and can be bought in increments: villagers can buy as little or as much as the cash they have in their pockets. We also saw that in households with a daily income of less than $2, kerosene was primarily used as a source of lighting to carry out fixed tasks.

By comparison, other lighting options in the market – such as solar lamps and home solar lighting systems – had prohibitive upfront costs. These ranged from $8 to $10 for the cheapest, high-quality solar lamp to more than $100 for a home solar system. Even pre-paid home solar systems require a $15 or more upfront fee, and a fixed daily $0.50 fee. While these products are aimed at the poorest market segments, the  unfortunate reality is that the associated costs can make them unaffordable.

Our aim was to create a solution from the ground up; one that mimicked the appeal of kerosene, but that was cleaner and more affordable. By helping the world’s poorest to spend less on energy, those savings could then be leveraged to help lift them out of poverty. The solution had to make both economic sense, and also fit within the culture these households were used to and valued.

Our answer was the Nuru Light, a portable, rechargeable light source that could be used alone for most household tasks, but could also link into other Nuru Lights to create a chain. This Lego-like chain could then be used to illuminate larger areas. We also created ‘snap on’ accessories, such as a mobile phone charging device and an LED bulb, which turned the Nuru Light into a very bright room light. These accessories were cheap as they didn’t need their own internal batteries and, like the Nuru Light itself, could be purchased as and when a household had the money to do so.

To create a reliable source of energy generation, we looked at human rather than solar power. Not only is it a free source of power, but it is available anywhere, at any time. Using pedal-based technology to tap into the human energy available in these villages could, we thought, be a game-changing solution.

Not everyone agreed with the idea of pedal power. Some potential donors we have approached see it as an archaic technology, with one asking: “How would it look if we, as Europeans, funded Africans to pedal for their power? Something we wouldn’t ask our fellow countrymen to do?” As a result, the current version of our off-grid generator also includes a solar panel as a back-up option.

To tackle the issue of affordability, we reviewed two successful business models. The first was from the telecoms industry. Given the explosive growth of mobile phones in rural markets, operators have clearly met the challenge of affordability. Their model is to build infrastructure,  and generate income through talk-time rather than by high margins on handsets. We also examined models that used collaborative consumption as a means to slash the cost for individual users, such as Netflix and Zipcar. In both cases you don’t purchase the end product – movies and cars respectively – you just pay to use it when you need it.

The result was standalone pedal generators, located centrally and owned and operated by village-level entrepreneurs, or VLEs. These entrepreneurs don’t take a margin on the Nuru Lights they sell to consumers, but do earn a small profit when they recharge the lights. This model cut the upfront cost for users, who then pay as and when they choose to recharge their lights. We knew we were on to something.

Today, we have more than 1,200 VLEs across East Africa, but this scale-up has not been linear. When we realised that we couldn’t earn a profit on the initial sales of the rechargeable Nuru Light, we instead decided to take what we called a  microfranchise fee from our VLEs. With 80 VLEs, this was feasible. With 1,200, we had to think again. Now, each of our pedal generators is mobile-money enabled. It’s the perfect way to transact with our  entrepreneurs in often-remote villages.

To further boost market penetration, our VLEs have also started selling the lights at below-cost, knowing they can recoup the loss through recharge revenue. Our social lenders cover the full cost of  delivering the lights to the VLEs, and  wait to see their investment repaid from  a portion of the recharge revenue.

Innovation starts from the grassroots. Five years ago, our technology and business model could not have worked. But today, as we combine both old and new technology, we have a fighting chance of alleviating energy poverty, once and for all.

About the writer

Sameer Hajee is the CEO of Nuru Energy, an award-winning social enterprise that seeks to solve the global problem of energy poverty. An authority on rural energy provision through micro-enterprise, he was named Social Entrepreneur of the Year (Africa) in 2012 by the Schwab Foundation and the World Economic Forum. To learn more, click here.