While the Africa Enterprise Challenge Fund’s REACT Household Solar window is open, we’ll be looking at the solar opportunities and issues in each of the target countries. First, we look at Malawi:
Malawi is a country struggling with energy issues on a national scale whilst simultaneously a prime candidate for the uptake of solar powered energy. Currently, 89% of energy generated in the country is from biomass wood fuel; this unreliable resource means that the 8% of national population who do have access to electricity suffer rolling blackouts which are a great harm to micro and macroeconomic activities. 83% of the population live in rural areas and only 1% of this demographic have any access to electric grids which establishes them as prime potential consumers for Solar Home System (SHS) products and services. There is also a strong natural capacity in the country for solar technology; research has shown the majority of the country is favourable through appropriate levels of sunlight, especially in rural areas.
To date there has also been success in the solar industry through the implementation of mobile and pico-solar systems (such as lanterns) and solar water pumping systems . However there is also great opportunity for innovation regarding ongoing barriers to solar technology uptake in the value chain; notably the sustainability of technology and the high cost of capital purchases and spare equipment. In Malawi, there is also a significant issue regarding an imbalance in gender equality in employment; most women in rural areas have been found to dedicate a disproportionate amount of time to domestic work compared to male workers which leaves them with much less time to partake in productive employment or income generating activities.
The figures regarding solar uptake in Malawi make for favourable reading; to date, 142,917 solar lighting products alone have been sold; reaching an estimated 115,000 households and helping 720,000 people gain access to clean lighting . This uptake has also directly correlated with abandonment of kerosene fuelled technology ; 75% of solar users during a study in Malawi reported that they stopped using kerosene totally. This would suggest that the solar products have directly replaced the dirty-fuel status quo, rather than taking up a role as complementary appliances as is often found throughout sub-Saharan Africa.
The success of solar uptake has also created a range of socio-economic benefits where it is recorded. Specifically, the increase in overall time that lighting can be utilised on a daily level had already enabled improved opportunities for personal and professional development. Schools have reported higher attendance and enrolment in areas where increase solar uptake is recorded in Malawi7 and children directly benefit from the ability to study later into the evenings; the time spent on homework in areas that have experienced solar uptake in Malawi has risen from 1.7 to 3 hours.
The success of solar uptake in Malawi has been facilitated through capital cost reductions and financing. This is important in the wider context of the poverty which exists in Malawi; 99% of the rural population live below the $1.25 daily wage poverty line, and the average monthly income is just $43USD compared to $191 in Zambia (another AECF-REACT target country). Financing has been vital. As an example SunnyMoney, an organisation with a financing model for solar products in Malawi, allows pay-as-you-go billing for customers for as little as $1 per month; they have so far reported 0% default rates within their business model which suggests their success is sustainable and scalable. The economic impact of this has also been clearly reported; expenditure on solar lighting has fallen from 12% to as low as 5% since the uptake of solar technology.
Despite these successes, there continues to be several challenges for the solar industry to overcome; some of which are reflective of wider challenges in the developing world and some of which appear to be unique to Malawi. Perhaps unsurprisingly in a country where rural dwellers suffer such widespread poverty, the largest issue to uptake appears to be the capital cost required and the unshakeable negative reputation this has created. Regardless of the actual cost-benefit that solar technology can deliver it is clear that it is not making in-roads where the poorest of the poor are concerned; income levels in Malawi negatively correlate with ownership of solar products. The motivations behind this have been studied and the cost is a clear negative for non-users of the technology; 65% of non-users said that short-term affordability was an issue, with a further 40% saying they did not have enough money to adopt solar and 57% reporting that it was simply too expensive regardless of their income.
Away from the issue of cost, another barrier would appear to be poor messaging from the pro-solar platform resulting in little awareness regarding the benefits that solar uptake can bring for health, finances and social improvements. Regarding health, a study within Malawi and elsewhere found that only 34% of kerosene lamp users in Malawi reported that they were aware of the negative health issues that are associated with kerosene lamp use; this is in comparison to 43% in Kenya and 60% in Uganda. An issue with regards to this poor communication would appear to be the vehicle that the information regarding the benefits of solar energy is delivered; it has been found that only 16% of rural consumers heard information about solar energy through the radio whereas 90% discovered such information through word of mouth10. If this statistic could be improved to communicate such information through reliable channels that are present in rural areas then it is entirely possible that the negative perception of cost and remiss misinformation regarding health hazards associated with kerosene products could be reversed.
Given the context of energy poverty and economic poverty in Malawi, it is clear that there is both a great need and a great potential for establishment of solar technology throughout the rural areas of the country. Populations in these areas will greatly benefit economically, socially and through improved health as the status-quo and overreliance on kerosene products is replaced with cleaner alternatives. The solution is clear and so are most of the obstacles; there is a better alternative, but the message is not being heard by enough people and more needs to be done to ensure that the technology and its inherent benefits are understood by those on lower incomes. The trend of uptake is positive and likely to continue; especially as innovation and entrepreneurship in the solar industry continues to boom and spread throughout the country; providing Malawi with a bright future.
The AECF REACT Household Solar Funding Window
The Renewable Energy and Adaption to Climate Technologies Household Solar (REACT-HS) Fund is set to give a jolt of energy to the solar industries of Malawi, Zambia, Zimbabwe and Sierra Leone. Its aim is to help innovative and transformational business models to adapt to target markets in order to help people access electricity through off-grid stand-alone solar household systems (SHS). The REACT HS competition is being run by AECF, with funding from the United Kingdom government and competition management provided by Coffey International Development Europe.
Applicants will be able to apply for funding for their whole business or for specific products or services they offer. Funds can also be utilised for business-to-business learning across grantees through online platforms, grantee networks, face-to-face meetings and other instruments. Applicants may also apply for funding regarding Technical Assistance (TA) through specific start-up business TA and TA to support.
We are running a series of Market Engagement Events in the four target countries on the following dates:
Malawi 5th June 2017, Protea Mariott Hotel
Sierra Leone 7th June 2017, Lagoonda Mamba Point Hotel
Zambia 7th June 2017, Radisson Blu Hotel
Zimbabwe 9th June 2017, Bronte Garden Hotel
To attend, please send RVSP including your name and organisation to [email protected].
More information on the window and how to apply is located here:
https://www.aecfafrica.org/competitions/react-window
