In 2013, we launched the M4D Utilities Innovation Fund (formerly MECS) to test and scale the use of mobile to improve or increase access to energy and water services. With the support of the UK Government, GBP 2.4 million in Seed and Market Validation Grants was awarded to 13 organisations in 11 countries across Africa and Asia.
Today we launch our Case Study series on lessons learned from these 13 projects. A core output of the Innovation Fund is the lessons and evidence base developed throughout the grant timeline that can inform the players in the ecosystem, with the aim of growing and scaling the sector to the next level of maturity. Mobile-enabled products and services for water and energy delivery, and the business models that support them, have developed significantly since we started this journey. It is our intention that by making these lessons public we will continue to accelerate the sector.
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Scaling Pay-as-you-go Solar in Uganda
The first Case Study in our series focuses on Fenix International, a US based company, with offices in East Africa. Fenix designs, manufactures and distributes ReadyPay Solar; a mobile payment-enabled solar panel, smart battery system and appliances, such as LED lighting, radio and mobile phone chargers, which empower off-grid residents with convenient, affordable access to clean electricity.
In December 2013, Fenix was awarded a GBP 350,000 Market Validation grant to scale up ReadyPay Solar in Uganda, through a partnership with MTN Uganda. The key objectives were to:
– Gain insights about scaling the Pay-as-you-go (PAYG) solar model in Uganda with particular reference to demand for five product variants
– Ascertain the most effective marketing channels
– Understand the trade-offs of using mobile money for payment collection and
– Assess the mutual benefits of partnering with a mobile network operator (MNO).
Through this grant, Fenix has verified that there is significant latent demand in Uganda for solar energy systems that can be activated through flexible financing. Indeed, a validation of the company’s success was their achievement, in January 2015, of closing USD 12.6 million in Series B funding and working capital financing to accelerate production in order to provide their products to even more communities in Africa.
The value of partnerships: Fenix and MTN Uganda
The deepening partnership between Fenix and MTN Uganda was a key part of the project’s success, and some valuable lessons were learned along the way as the partnership developed. Fenix partnered with MTN Uganda in 2011 with the launch of the ReadySet – a non-PAYG model. In 2014, under the grant project, Fenix and MTN Uganda integrated PAYG into their ReadyPay solar units to provide convenient, flexible financing to low income customers. The results of the partnership were hugely valuable for both parties:
For Fenix: Lease-to-own PAYG created demand beyond Fenix’s expectations with 13,000 systems sold in 2014
These impressive sales figures prove the value of co-branding with mobile network operators. In the past, solar has been viewed suspiciously in Uganda due to low quality products and unethical practices by vendors. For Fenix, the association with the MTN brand was instrumental in gaining consumer trust and creating pull. MTN also provides Fenix with bill payment capability through mobile money, favourable connectivity rates, call centre technology, and access to its brick and mortar sales channel, contributing to sales of ReadyPay Solar units over double Fenix’s projections.
For MTN: Fenix became the third largest bill pay account by transaction volume for MTN Uganda; Fenix customers are very active users of mobile money:
Fenix’s customers made over 100,000 mobile money transactions in 2014, and over 10% of their 13,000 customers were new to MTN Mobile Money, registering for accounts when they purchased the ReadyPay Solar system. Moreover, Fenix customers’ mobile money accounts are among the most active in the country.
MTN identified two barriers to adoption and frequent use of mobile money: people not needing it (relevance) and people not knowing how to use it (training). The ReadyPay Solar naturally solves the first problem by providing subscribers with a regular use for mobile money. When a ReadyPay Solar customer does not have MTN Mobile Money, an account is created for them. Fenix addresses the second hurdle by employing personnel that teach customers how to use mobile money to make the first (down) payment. New subscriber acquisition, revenue generation, brand loyalty and stickiness are some of the many ways in which MTN benefited from partnering with Fenix in this project.
Connecting off-grid homes to the internet
Post-grant, Fenix and MTN Uganda’s partnership has gone from strength to strength, and since last month the organisations have started providing customers with affordable access to the internet through free MTN Shyne phones. The phone comes with 100MB of free data and supports Facebook and other features, such as FM Radio, a torch and dual SIM functionality. Now customers benefit from clean solar power, as well as access to the internet; expanding the offering for the customer.
To understand how Fenix reached this milestone and read more valuable insights from the project, click here for the full Case Study.
In the coming weeks and months we’ll be publishing more Case Studies to share insights from the other Phase 1 grantees. Follow the series by signing up to our blog and please share your views on any of these findings by contacting us at [email protected]