Several years ago I was working for an NGO that invested a sum of money in buying some household solar products to sell on to rural consumers. The benefits were compelling: reduced environmental impact due to using clean energy instead of kerosene and candles, less smoke inhalation, bright light for mums to breastfeed their kids and, once the relatively small initial investment had been covered, free light for as long as the units lasted. Even better – the company who sold us the units told us that we could encourage “village entrepreneurs” to buy sets of products and sell on for a small profit. What a great model!
So we set out to identify these entrepreneurs, but without much luck. Hardly surprising though, because apart from a little of the traditional village “sensitisations” there was no marketing for the products (a few branded caps and t-shirts were promised but never materialised). As realisation dawned about how poorly equipped the NGO was to handle sales, in my mind I tried to imagine an equivalent scenario back in the UK. Joe Bloggs, the local geezer down the pub is flogging his latest wares – this amazing new-fangled technology, which his mates have barely heard of and never seen working, promises to massively reduce fuel bills. The cost? Approximately one month’s salary. Hmmm – not sure I would be rushing to part with my hard earned cash! And in rural Africa, few people have savings and would have to take out a loan to buy the kit.
The sad end to this tale was a stock room full of unsold products. The moral of the story? I think there are several. Firstly, any NGO wishing to improve the lives of the poor should start with a needs based analysis. Pretty obvious stuff but it is easy to get carried away with our western tendency to go for nifty, tech solutions. The success of the advertising campaigns are testament to this and companies selling solar products aimed at developing countries have been high profile and award winning. “Your £5 will enable a child in Africa to lift himself out of poverty because he had enough light to do his homework every night”.
Then there is the whole question of financing – I don’t have the time nor the expertise to get into the microcredit debate here, but you have to ask yourself whether it is a good idea to encourage people who are living a “hand to mouth” existence to take out loans. Interest rates in Malawi for microloans can be over 100% APR. Perhaps it depends what those loans are for, but the solar products / microloan combination certainly makes me think of double glazing salesmen offering credit. Better surely to encourage and develop a savings culture?
The biggest point of learning for me was that introducing a new product to a market needs a business approach. Investment in promotion is required, distribution and logistics need to be considered, not to mention stock management, sales, cashflows, etc., etc.. NGOs are not equipped with these commercial capacities; they lie firmly in the private sector domain.
So why would a renewables company sell quantities of their products to NGOs to onsell? Surely if they were serious about their products reaching the target BOP consumers they would use the same savvy business approach that won them all the donor support back in the western world. I would expect them to be partnering with large companies who have the infrastructure to handle the volumes of products needed to make the proposition viable, not pitching for small fry in the NGO communities and risking more embarrassing piles of unsold stock and wasted donor funding. I guess the BOP consumers may benefit in the long run though - they will probably end up receiving heavily subsidised or even free handouts of the products!
Add a Comment