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As BRAC continues piloting and scaling up its own products and services targeted at the world’s poorest, it’s useful to see and learn from a growing cadre of others doing the same.
It seems with each passing year, the challenge of delivering quality, in-demand products and services to the world’s poorest households attracts more capital, more ideas, and more entrepreneurs. As BRAC continues piloting and scaling up its own products and services targeted at the world’s poorest, it’s useful to see and learn from a growing cadre of others doing the same.
Last month, I had the opportunity to attend the MIT Legatum Center’s Annual Conference on “Entrepreneurship in the Developing World.” Designed to promote the intersection and incorporation of entrepreneurial thinking in development work, the Conference chose Nick Hughes, Founder of M-PESA (Kenya’s incredibly successful mobile banking network), as its keynote speaker.
Having transformed Kenya’s banking system with the creation of M-PESA, Hughes has a reputation for merging entrepreneurship and technology. However, Hughes highlighted that it is not just about using technology, but instead “about how technology is used to solve a real-world problem.” BRAC USA’s President & CEO Susan Davis recently highlighted this same important distinction in her Harvard Business Review article “Can Technology End Poverty?”
With that distinction in mind, Hughes told the audience how he arrived at his newest venture, M-KOPA Solar.
Step one, determine the problem: Currently, “about 80 percent of Kenyan households rely on kerosene for lighting because they aren’t linked to the national electricity grid, which doesn’t reach many rural communities and requires a connection fee of at least 35,000 shillings ($412 USD).” As a result, most Kenyans are spending 50 shillings a day on kerosene, an expensive and unsafe alternative.
Step two, use available technology to practically address the problem: M-KOPA Solar provides electricity for personal residences at a price that, by most calculations, will be cheaper than daily expenditures on kerosene.
How it works: M-KOPA customers receive a four-watt rooftop solar panel, a control box, and three lamps for a down payment of 2,500 shillings ($30 USD). Once this payment is made, customers pay 40 shillings a day through M-PESA until their solar panel is paid off (16,900 shillings total or about $199 USD). In other words, after the initial down payment, customers are paying less per day to light their homes than with kerosene, and after 360 daily payments, own a solar electricity system expected to last roughly 10 years.
In just two short years of operations, M-KOPA has proved to be a reliable product with 97 percent of customers recommending the service to their families and friends, and in the past month alone, the service has grown from 10,000 to 15,000 customers. Just as M-PESA addressed the widespread lack of financial services to the poor, M-KOPA Solar may provide a pathway for addressing the fact that roughly 1.4 billion people worldwide lack access to electricity.
BRAC Solar was founded in 1998 with a similar social purpose—to provide safer, cleaner, more reliable electricity to people in off-the-grid rural areas. While it tried at first to use a similar payment model—providing solar-powered lighting systems on credit—it found that its target customers at the very bottom of the socio-economic ladder were not able to pay them back reliably enough.
Instead, BRAC Solar shifted into providing solar lighting systems to the poorest free of charge while diversifying its product and consumer base into urban markets. There it could find wealthier, paying customers, including businesses and government offices, from whom revenues could subsidize solar lighting systems given to the poorest for free.
Along the same lines, bKash, launched in 2011, has enabled BRAC Bank to provide financial services to those previously deemed “unbankable,” including the poorest and most vulnerable members of society. In Bangladesh for every 2 people, there is 1 mobile phone. So, while 7 out of 8 people remain out of banking service, plenty still have access to a mobile phone. bKash now provides mobile banking services to these individuals through 30,000 agents, and 2.2 million users and counting.