Note: This post is originally authored by Community Energy Malawi with support from the University of Strathclyde.
Community Energy Malawi (CEM) and The University of Strathclyde, with support from the Scottish Government, have identified that there is a need for affordable solar renewable energy solutions for productive use business owners in off-grid rural locations. This work package is inline with CEM’s goal number 2 of ‘promoting energy access for the last mile’.
The work described here explores a trial of pay-as-you-go renewable energy systems with the payments achieved through mobile money, therefore removing the capital barrier for rural business owners in Malawi.
To identify suitable business owners for the trial, in November 2016 CEM conducted Productive Use of Electricity (PUE) feasibility studies in Dowa and Dedza (Chiluzi and Njonja villages) districts.
From these studies, it was revealed that 80% of the business owners were willing to engage in PUE activities. The most common appliance the community wanted was a fridge. However, other aspirations were identified, such as:
- maize milling
- chicken incubation
- shop lighting
- and phone charging
Out of the 80% who showed interest in establishing a business using electricity upon provision of electricity, 75% of the entrepreneurs showed interest to be paying for the electricity.
Business owners at Chiluzi Trading Centre were identified for the trial because of two combining aspects:
- the absence of electricity at Chiluzi Trading Centre
- the willingness to pay for electricity of entrepreneurs upon provision of electricity
The systems have been provided on a rent-to-own basis, where entrepreneurs are paying monthly installments while using the systems and will own them after paying off.
A schedule of system costs and repayment was developed, ensuring the payment plan is achievable for the business owner. The type of systems were shared with prospective beneficiaries to help them make informed choices. The type of systems that have been provided are Shop lighting and phone charging, Barbershop and phone charging and Refrigeration.
What the Community says
The project has inspired the community such that the demand has overwhelmed supply. CEM plan to utilise this potential as business opportunity for CEM Trading, thus investing the profits from the trial back into more systems for the community.
Another interesting issue arose during the sensitisation meeting. People wondered as to when similar initiatives will be available targeting homes. Their reasoning being that they cannot have electricity just for the businesses when their houses are in the dark. A quote from one entrepreneur:
“… we face a huge challenge with lighting our homes, maybe we should be allowed to install the systems at our homes or maybe you should bring similar initiative targeting our homes”
Feedback from the Entrepreneurs…
The people were also interested to know the procedures that would be followed in replacing key components like batteries. Again CEM trading will explore this opportunity. CEM trading will act as a technical adviser for the community, purchasing the items on their behalf. This also includes the issues of maintenance. Everything to do with money will have to be covered by entrepreneurs themselves. To ensure that entrepreneurs do not face an issue of onetime cost on buying equipment’s i.e. batteries or need for maintenance, entrepreneurs will be trained on how to come up with sustainable financial models which will assist them in saving money over a long term.
The progress registered so far is positive and indicating that outcomes will be achieved. CEM will use this trial as stepping stone in organising other interventions under CEM trading. It is also most likely that this activity will feed into the energy hub feasibility studies underway.