Its difficult for families to access energy in rural Mozambique. The grid doesn’t reach rural areas. Purchasing solar systems needs a bank loan, but there are few banks, and they usually want guarantees and collateral.
The team at Epsilon had a vision which was to provide high quality solar systems payable over time, to make them affordable. Over the last 12 months we have tested whether the famous PAYGO model from East Africa could work in Mozambique. With this solution customers use mobile money to make daily and weekly payments to use, and then own their own solar systems. The solar systems contain a SIM card which allows us to use a version of mobile phone credit to finance the purchase. Households buy as much or as little credit as they can afford. Once paid they receive a code which activates the system for the day or week that they have purchased. Over time the payments accumulate until they reach the point where they own the system and there are no more payments to be made.
Prior to Epsilon rural families had neither energy nor flexible financial access. No one believed that dual problem of distribution and financing could be solved. Well, we have already sold over 2000 systems from our base in Manica in central Mozambique, showing that there is high demand, and a willingness to pay. Now, on the basis of this success we are seeking the funds to help us expand nationally.
There are 4 million families in rural Mozambique without access. We have taken the first steps to show what’s possible, but we need help to build the distribution and operations scale necessary to allow us to reach 400,000 families. A grant from the ……Foundation would help us build the scale necessary – establish four new branches – to persuade investors to take us further.
The concrete steps to move from local, to regional to national have three elements.
- We need to purchase the systems in advance to sell. This is 50% of our running costs
- We need to build the sales team in the locations where we plan to sell
- We need the systems and support services appropriate to a what is a both a distribution and financing company
We have already created a detailed plan of where, how, and how much. We can demonstrate the demand, and the operational track record that shows we know how to manage costs and minimise losses. But as is often the case with new businesses in less well known places, investors are slow to engage. They seem to always want more that has already been done ... a bigger customer base, longer period of operation, others to go first. This is the funding gap. As investors and operators we have put our own money into this project to prove what is possible. A grant at this stage would help us get to the point where investors are ready to take things forward, at the same time as having a dollar for dollar impact on numbers of families using and then owning clean energy solar systems