US President Barack Obama talks to June Muli, M-Kopa’s head of customer care, during the Global Entrepreneurship Summit in Nairobi in July 2015. Photo: M-Kopa.
Using the pay-as-you-go model popularised by mobile phones, a remarkable Kenyan company, M-Kopa Solar, is providing rent-to-own solar energy products that will help provide cheap solar power to rural homes.
The M-Kopa IV Solar Home System includes a solar panel, control unit, three low-energy LED light bulbs (one of which is a portable, rechargeable torch) and a rechargeable radio. The control unit also has a USB port for charging cellphones. It’s a perfect off-the-grid solar system for Africa, where land-based infrastructure is poor and electricity supply is frequently erratic.
For a deposit of $35, buyers get the system then make 365 daily payments of $0.43 through mobile money system M-Pesa. When it is all paid off, the system belongs to the buyer outright.
M-Kopa has sold about 300,000 units in Kenya, Tanzania, Uganda and Ghana. It sells 500 units a day and it aims to sell 1-million M-Kopa systems by the end of 2017. It employs 650 people in the four countries and a further 1,000 field agents.
This seems like a small number against the backdrop of Africa’s 1.1-billion population, but M-Kopa is a great example of disruption, not in the technology space but at the business model level.
M-Kopa is the brainchild of Jesse Moore, the former MD of a company called Signal Point Partners that worked in the mobile payments space, and Nick Hughes, a former Vodafone executive who worked at its Safaricom subsidiary in Kenya and led the team that developed M-Pesa, the breakthrough technology that has disrupted banking and payments in East Africa. M-Pesa, which sees about $30-million transacted through it every day, has helped drive Kenya’s status as theposter-child for innovationin Africa.
M-Kopa’s founders’ background with mobile payments saw them looking for a way to apply that experience to solve other emerging market problems. Providing solar energy to people at the so-called “bottom of the pyramid” was it.
The M-Kopa system uses three readily available technologies: solar generation and low-energy LED lights, mobile payments like M-Pesa and the so-called internet of things — in this instance, SIM cards embedded in devices the M-Kopa control unit.
M-Kopa’s innovation is to package these technologies and combine them with a payment system. “The technology is there, it’s always been there,” Mooretold mein Nairobi. “It just hasn’t been combined with the affordability proposition we offer our customers. So our innovation isn’t one bit of tech, but it’s the combination of tech into a business model that really looks a lot more like micro finance than anything else.”
He added: “We have a business proposition where millions of people are, literally, burning hundreds of dollars a year on inefficient energy substitutes. It’s not a question of making them invest in some, you know, fishing plan, or a cow, or a different way to make money and taking all those risks. This is just saying, ‘stop spending money on kerosene every day and repurpose your spend for something better’.”
M-Kopa — which calls itself “the world’s leading pay-as-you-go energy provider to off-grid homes” — estimates it has saved $206-million for the 300,000 households and businesses that use its products, while giving them 34 million hours of kerosene-free lighting a month. Notably, it has also processed 5 million mobile payment transactions since it launched.
The M-Kopa IV Solar Home System includes a solar panel, control unit, low-energy LED light bulbs (one of which is a portable torch), a rechargeable radio and USB port for charging cellphones.
M-Kopa were one of the Kenyan start-ups thatPresident Barack Obamainspected when he was in Kenya for the Global Entrepreneurship Summit in Nairobi in July 2015.
Proclaiming “Africa is on the move,” Obamagave a ringing endorsement of Kenya’s vibrant tech scene, saying itsinnovative use of technology waschanging “the way Africa is doing business … that creates incredible opportunities for Africans and for the world. It means more growth and trade that creates jobs in all our countries. It’s good for all of us.”
At the same summit, Kenyan President Uhuru Kenyatta specifically mentioned andpraised the company: “M-Kopa, a new Kenyan innovation, has brought the benefits of solar lighting to hundreds of thousands of rural homes, enabling our children to study after school, relieving our mothers from the burden of fetching firewood and burning kerosene late into the night.”
M-Kopa announced in December it had closed $19-million in financing led by Generation Investment Management, which was founded by former US vice president and green energy proponent Al Gore. The round included new investments by Virgin boss Sir Richard Branson and AOL founder Steve Case.
Moore says one of the challenges with doing something like M-Kopa is educating customers, not just in how to use technology, but how to understand what financing is about.
“Education is a big part,” Moore told me at M-Kopa’s Nairobi’s headquarters, in an interview forCNBC Africa. Behind him 180 call centre operators handled the 500 new customers signed up each day, and queries from existing users. “Most of our customers don’t have a billing relationship, because they are not creditworthy. So we have got to teach them how to do that [as well as] teaching them how to use a solar system — where to put the panel on the roof, not to keep it in a plastic bag because, though that might be good for longevity, it certainly is not good for power — and just getting used to all the ways these technologies work.
“We worry a lot about execution. We worry a ton about customer satisfaction and we want to build an incredible rapport with those customers, so when they have finished paying off their first solar system, they come back and say, ‘great what can I get next?’”
Kopa is the Swahili word for borrow, and M-Kopa plans to allow customers who have paid off their systems to re-mortgage them to buy more M-Kopa components, including a TV set.
Shapshak is editor ofStuff magazineand co-hosts a weekly tech show on CNBC Africa. Based in Johannesburg, hisTED talkon innovation in Africa has had more than 1.4m views.
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