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 the poster-child for innovation in 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.