CASE STUDY: KENYA’S SOLAR LIGHTING ENTREPRENEURS Lighting Africa, Kenya CASE STUDY : KENYA’S SOLAR LIGHTING ENTREPRENEURS Program Overview was estimated to be 12.6 percent by 20144. Consequently, most of the off-grid population relies on off-grid solutions like solar, In particular, women find it more difficult to access financing because of lack of collateral and most of their sales are on O ver the past several years, Kenya has launched a number of biomass, and kerosene for their energy needs. Nearly three billion credit—which ties up their working capital—hence scaling up their initiatives to address its electricity shortfall. But power supply1 people in the world rely on traditional biomass based fuels and businesses is a challenge. Over time, the market had also been continues to be unreliable in many parts of the country, acting women and children are affected disproportionally.5 70 percent flooded with substandard products, thereby eroding consumer as an impediment to economic growth. Kenya therefore is of households in Africa and 68 percent in Kenya, rely on wood- confidence in solar products. Low consumer awareness, access looking to expand its renewable energy resources, including solar based biomass.6 and linkages with credible suppliers in the solar value chain also energy2. present a gap for the last-mile female entrepreneurs. Women disproportionately bear adverse health effects of using kerosene and biomass energy sources, with approximately four To ease the power situation in Africa, the World Bank and IFC jointly launched the Lighting Africa program, with the aim of million people dying every year from household air pollution7. Gender-Smart Solutions providing modern lighting and energy products by 2030 to 250 When it comes to looking for energy resources, women bear the According to the members in the LME program, over 80 percent million people who currently live off the grid. The program has burden of unpaid work, with women and girls spending up to 20 of their customers at the household level are women consumers. focused on raising the quality standards of energy products hours a week fetching firewood.8 Identifying and nurturing the women’s market is therefore a through policy, working with suppliers to rid the market of Ensuring that the solar market value chain reaches consumers at success factor for Lighting Africa Kenya. However, this new focus substandard products, opening up markets for wholesale bottom of the pyramid calls for innovative and inclusive solutions requires creative marketing and expertise in order to unlock this and retail distributors and creating market linkages for micro- since solar energy retail penetration in Kenya is estimated at unique market opportunity. This includes among other solutions entrepreneurs and small enterprises. 21 percent nationwide.9 While key components of the Lighting working with women entrepreneurs to access micro loans to Africa Kenya program included building capacity for wholesale purchase solar products, often through village loan and saving Realizing that women can serve an important role in achieving and retailers, challenges that made it difficult to open markets groups. this goal3, the Lighting Africa Kenya program engaged the non-governmental organization Practical Action, to design an further down the supply chain needed to be tackled. The main Providing relevant business training and technology to women innovative business model to ensure that women were included barriers to deepening the reach are limited access to financing, will enable them to participate as actors in the renewable energy in the solar energy value chain as consumers and entrepreneurs— linkages with credible suppliers for last-mile entrepreneurs and technology value chain as energy entrepreneurs. Lighting Africa the Last Mile Entrepreneurs Program (LMEs). business management skills critical to running a sustainable Kenya designed the LME program with the aim of strengthening energy business. women-owned energy enterprises by linking them with suppliers Challenges 4 http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=KE and financiers and supporting them with training so as to open up the market at the bottom of the pyramid and meet household Over 70 percent of the population in Sub-Saharan Africa has 5 http://documents.worldbank.org/curated/en/829971468333310498/pdf/ energy needs. WPS5800.pdf no access to electricity. In Kenya, more than 30 percent of the 6 https://siteresources.worldbank.org/EXTAFRREGTOPENERGY/ population has no access to the energy grid and rural electrification Resources/717305-1266613906108/BiomassEnergyPaper_WEB_Zoomed75. pdf 1 http://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?locations=KE 7 http://www.energia.org/cms/wp-content/uploads/2016/10/euei_brochure_ gender_web.pdf 2 http://www.ke.undp.org/content/kenya/en/home/library/environment_ energy/environmental-sustainability--renewable-energy-and-sustainable-l. 8 http://www.ke.undp.org/content/kenya/en/home/library/environment_ html energy/environmental-sustainability--renewable-energy-and-sustainable-l. html 3 http://www.ifc.org/wps/wcm/connect/efc71c24-b75d-45fd-8d6c- 73a4d2a6d04b/4141_Gender_Case_Study_LightingAsia1.pdf?MOD=AJPERES 9 https://www.lightingafrica.org/country/kenya/ Access to finance is critical for distributors and consumers at the and as such, winning customer trust is a prerequisite to meeting base of the pyramid without which consumers especially, would the needs of consumers and boosting the businesses of last- otherwise be unable to meet upfront costs. Lighting Africa Kenya mile women energy entrepreneurs. By linking women energy works with Microfinance Institutions (MFIs) in a mutually beneficial entrepreneurs with certified suppliers, Lighting Africa Kenya has partnership where it supports MFIs to make market linkages and ensured that quality products reach the bottom of the pyramid encourages them to provide financing to women groups. and that entrepreneurs build confidence and trust with the consumers. To implement the training component of the program, Lighting Africa Kenya engaged Practical Action and jointly developed a Increasing market access: Women make the majority of decisions tailor-made training and mentorship program for women in the on household energy supply and use. In addition, they create solar energy business. The program recruited 400 self-employed demand for renewable energy products, including solar products, women and conducted training across the country. The training as last mile solutions. Opening up the market at a micro level by focused on capacity building in business management skills, empowering women entrepreneurs and getting good-quality with modules in sales and marketing, communications, record products to the bottom of the pyramid is critical in addressing the keeping, employee-productivity management and agency- energy gap at the household level. based empowerment. For the mentoring phase, high-potential Last mile distribution by women entrepreneurs: In this entrepreneurs in the solar energy sector were selected and case study, we found out that most consumers in this market paired up with business mentors to build on the training with a segment do not have the funds to buy solar products upfront focus on results. in a single transaction. There is also an affordability gap—the In addition, Lighting Africa Kenya mobilized its associates for difference between what consumers would like to have and exhibitions where the women sampled Lighting Africa’s quality what they are able to pay for. They therefore require flexible verified products and networked with suppliers of these products, payment terms that would enable households to climb up the BRIDGING THE ACCESS TO FINANCE GAP—INNOVATIVE BEST thereby creating linkages with reliable suppliers. This also allowed energy ladder. Women entrepreneurs work with this consumer PRACTICES IN HELPING WOMEN AT GRASSROOTS LEVEL women energy entrepreneurs gain better access to the market base to help them with financial planning and support access to networks. through self-help groups where women can access funds. In Mombasa, Caroline Wanja shares a shop with her husband, from where she runs her solar business while her husband operates a Women economic empowerment: A survey of women The Business Case—Benefits of Focusing who were using off-grid solar products in regions covered by mobile technology business. Caroline uses the shop as a base to market her products and to volunteer her time and expertise to on Women Entrepreneurs Lighting Africa Kenya’s LME program found that the women save at least $10 a month—money that would have been spent support women form savings and credit self-help groups. Women entrepreneurs like her routinely do this as these groups are a key on kerosene, with debilitating health impacts over time. With market for solar products. The groups motivate women to save and The program has identified a wide pool of women solar these savings, they are able to operate their microbusinesses borrow funds to purchase solar lighting products. entrepreneurs at the micro-level. The program initially planned to and pay off debts accrued from the purchase of solar target a maximum of 200 last-mile entrepreneurs, but it increased products, especially solar lanterns. As women energy PODCASTING—INNOVATIVE APPROACHES TO the goal to 400 to accommodate demand. entrepreneurs earn more income, they reinvest in their BUSINESS MENTORING The program is now helping build capacity for the entrepreneurs families, improving opportunities for better livelihood for the Practical Action, the Lighting Africa Kenya LMEs program partner, in skills development, markets access, and access to credit—the entire family. came up with podcasting as an effective way to reach over 200 key challenges to unlocking the grassroots solar market. Improved capabilities: Prior to the training and women entrepreneurs across the country, in addition to the Increasing penetration of quality products: According to studies mentorship offered to the women, they lacked basic business network of mentors. Given Kenya’s extensive mobile network carried out by Lighting Africa Kenya only five percent of retail skills that would improve the way they operated their coverage, high smart phones penetration, and high use of social outlets in rural areas (where they are most needed) stock solar businesses. As a result of the training, the women gained media, this proved to be a very effective mechanism to deliver products. This has been a major challenge with solar products, better marketing techniques and enhanced skills in record messaging and tips on business management. keeping. This enabled them to better track business performance in line with sales movement. CONTACT INFORMATION What IFC partners say IFC After conducting the needs assessment, it was clear that we could not give LMEs a standard business development training — we Delta Center, Upperhill had to be more innovative as their needs were unique. We found that female entrepreneurs at this level lacked confidence and +254 20 2937200 business skills such as record keeping and sales and marketing. akabugi@ifc.org They also did not take a long-term view of their businesses, so we had to assist in creating a vision for them. www.IFC.org/gender Lydia Muchiri @WBG_Gender Lead Trainer, Practical Action What entrepreneurs say There is a big market for solar products. I sell a minimum of 50 units a month and 80 percent of my customers are women. I have seen many women graduate and come back for more or better products over time. Consumers are becoming more aware and are appreciative of high-quality products. My biggest challenge is capital, as I’m not able to scale up even when I have a sizeable pipeline. My customers are low-end users who mostly buy on credit, hence most of my capital is tied up all the time. Rose Wanjiku Ng’ang’a Solar Entrepreneur, Mombasa What IFC says The Lighting Africa Kenya program realized that products were not reaching the grassroots and that we needed to deepen the supply chain. Challenges ranged from waning consumer trust due to substandard products and lack of capital. We designed a program that partnered with the right stakeholders, so as to open up the right channels for unlocking a viable market at the bottom of the pyramid. With standards in place and improved technology, women entrepreneurs will be the solution to penetrating the base of the pyramid and reaching more consumers. The LME program is working to bridge the existing gap and unlock this market. Nana Asamoah-Manu Program Lead, Lighting Africa Kenya