In May 2021, GSMA launched the GSMA Innovation Fund for Digital Urban Services with support from the UK Foreign, Commonwealth & Development Office (FCDO). The fund was open to start-ups and early-stage companies providing essential urban utility services who leverage digital innovations to make these services more accessible, reliable, sustainable and affordable. Successful organisations were awarded between £100,000 and £250,000 in grant funding and were provided with technical assistance. Pitches were received from 335 organisations in 43 countries across Africa, South Asia and Southeast Asia, and from these, a cohort of nine organisations were selected. This blog series summarises the key learnings from the grant period.
Koolboks provides pay-as-you-go (PAYG) solar-powered refrigeration solutions. Koolboks’ innovative product uses ice, as well as batteries, to convert the power of the sun into cooling. Thanks to this, they’re cutting the cost of off-grid refrigeration by 40%. Koolboks are able to offer their freezers on a lease-to-own basis, with a locking device embedded within the compressor linking the payments and cooling. Customers can make affordable weekly or monthly installments through the PAYG model bringing their solution within reach of customers who wouldn’t otherwise not afford the upfront costs or access to loans.
An estimated 85 million Nigerians, more than 40% of the population, do not have access to grid electricity. Even where people have access to the grid, power is unreliable and backup diesel generators are ubiquitous. Nigeria’s installed diesel generator set capacity exceeds the power generation capacity of the country’s grid, but these generators are both more expensive for customers and harmful to the environment.
The Food and Agriculture Organization of the United Nations (FAO) estimates that across African countries, post-harvest losses could be worth up to $4 billion and enough to feed 48 million people. Meanwhile, the effects of organic waste on the environment are catastrophic. Globally, organic waste is the highest single waste category by volume and accounts for 44% of municipal solid waste globally, with food waste accounting for a large proportion of this. Food waste also accounts for 6-10% of global GHG emissions, not including on-farm waste. In Nigeria, up to 40% of all food produced is wasted due to challenges such as inadequate infrastructure for transportation and storage.
Purpose of the grant and key outcomes
GSMA supported the scale up of Koolboks initial pilot program in Ijora market to other fish market traders within Lagos and other peri-urban areas. This included the procurement, assembly, distribution and installation of 140 solar freezers in the country. GSMA also supported market outreach through market activations to ensure adoption of the freezer.
The Koolboks freezer features several add-ons when compared to regular freezers such as ice-pack technology supported by a lithium-ion battery. The freezer also has dual usage with freezing and cooling capabilities, thickened insulation and a pedestal providing extra battery capacity providing continuous refrigeration of up to four days. The Koolboks freezer has other features that enable users to improve their day-to-day activities such as LED light bulbs and USB ports which further enable small businesses to conduct business also during the night- this increases the number of hours that they can keep their businesses running.
The key grant outcomes cover Koolboks freezers’ adoption and both their economic and environmental benefits:
- By the end of the grant, Koolboks freezers had 140 users within Lagos and other peri-urban areas. 76% of the customers were women.
- Nearly 9 in 10 Koolboks customers attributed an improvement in their quality of life to the freezers. The freezers enabled the traders to increase their income and reduce wastage. Before Koolboks, 70% of fish traders stated that their produce had gone to waste due to poor cooling solutions and unreliable power supply. At project closure, 87% of traders reported a waste reduction.
- 85% of users of the freezer reported an increase in income generated from their businesses as a result of having a sustainable cooling solution.
- 14% of the customers gained new access to solar power. Nearly half stated that their electricity supply was inconsistent and unstable while two-thirds of customers experience power disruptions daily or disruptions that last for more than 6 hours during the week.
- Koolboks partnered with Orange Energies to expand their offering to 12 African countries. Through their digital platform, Orange will market and distribute Koolboks’ freezers in new markets and has already launched the activities in the Democratic Republic of Congo. They are also in initial engagements with other mobile operators across the continent.
Key learnings from the grant
Digital technologies, such as PAYG, are widening access to energy solutions. Koolboks offers freezers through the PAYG model, allowing customers to lease them and make affordable payments over time. As a productive use appliance bringing extra income to businesses, the burden of payment is reduced. Incorporating IoT monitoring ensures that customers were diligent in making timely payments to avoid locking and hence decreasing the default rates. Combined with a comprehensive know-your-customer (KYC) system, the PAYG model enabled Koolboks to achieve a low portfolio at risk of (~3%).
IoT has also enabled Koolboks to explore innovative financing mechanisms. In 2023, they partnered with Untapped Global, a lender financing tech-enabled companies by leveraging IoT tracking on income-generating assets. Koolboks and other PAYG companies can secure funding from financial institutions by collateralising receivables leveraging IoT-enabled digital granular payment data and asset tracking.
Understanding the target market was key. Most small-scale fish traders are women. Koolboks ensured that their marketing campaigns were geared towards them by deploying targeted marketing strategies such as radio jingles that mainly addressed women, featured testimonials from female customers and also held women empowerment trainings.
The carbon credit market is offering more opportunities to the cooling sector. Solar freezers are helping tackle climate change by offsetting the emissions of greenhouse gases. In most markets where Koolboks is present, power is unreliable and traders often rely on backup diesel generators which produce carbon emissions. Koolboks, in partnership with Carbon Clear which is a data-driven carbon credit marketplace, is exploring climate finance through the issuance of carbon-avoidance credits. The voluntary carbon market, where credits are generated and bought by companies or individuals to offset carbon impacts, has been gaining momentum despite credibility challenges. Renewable energy companies can benefit immensely from this growth in climate finance.
Next steps and scaling
During the grant, Koolboks raised over $13 million including a recent €1.5 million grant secured from Beyond the Grid Fund for Africa. This grant will assist Koolboks to enter the Ugandan market and expand their business operations. Looking forward, Koolboks is planning to raise $18 million in equity and debt in the coming months to accelerate their market expansion plans in Nigeria, Kenya and Uganda.
Koolboks also partnered with Fan Milk Danone Nigeria (a Danone Company) to improve their operations in Africa, ensuring the preservation of dairy products at the last mile. Through this partnership, they plan to pilot 300 solar-powered freezers in Lagos, Nigeria.
As part of Koolboks’ plans to expand their operations and make their freezers more affordable, Koolboks is setting up a local assembly plant in Nigeria. The “mini-assembly” will have an 8,000-unit capacity, with grander plans of having a 72,000-unit capacity assembly plant, operational in mid-2025. Local production will reduce the unit cost for a freezer and lower import duties for parts compared to finished goods. They also expect to better respond to local demand and reduce lead times.
This initiative is currently funded by UK International Development from the UK Government and is supported by the GSMA and its members.
