Lessons learned from Introducing PAYG solar products in Benin.
A drop in the ocean
In the West African country of Benin, most people are not connected to the grid, so they rely on dirty kerosene or expensive batteries for their lighting needs. Reason enough for GSMA's Mobile for Development Utilities Innovation Fund to finance a project called Bright Lights for Benin, aiming to introduce pay as you go (PAYG) solar in the country. PAYG means that the customer pays weekly installments until the lantern is fully paid for. If he doesn’t pay the installments, the lamp will be switched off from a central location.
The project was implemented by SNV Development Organisation, who brought solar lamp producer Sunking, importer Aress, PAYG platform provider Angaza and mobile network operator MTN to tackle the challenge together. The idea behind involving MTN was to leverage their extensive network of sales agents which extends well into the heart of Benin’s rural areas and use their ‘mobile money’ service for payments.
In September 2016 we wrote a blog about the project, describing how a pilot was conducted with 16 MTN agents, selling 170 lanterns until September2016. You could call it a drop in the ocean. What happened after that?
Adapting the offer
In fact, not much happened for several months after the pilot. A larger group of mobile agents was trained and they had wanted to start selling straight away. However, not enough solar lamps were available to ride on the wave of their enthusiasm.
While waiting for a new shipload of solar lamps, we took a close look at the evaluation of the pilot. Several customers had been hesitant to buy solar lamps because their weekly payments exceeded the costs for kerosene and batteries. We decided to reshape the solar offer. A new PAYG model was developed, with weekly instalments no higher than the average amount spent on kerosene and mobile charging. Payments would stop when the total purchase amount was reached.
Learning by doing
In November 2016 over 2.200 solar lamps finally arrived in Benin, and a group of 177 mobile agents were trained by SNV. Sales commenced on December 10th and it was an enormous success. Within eleven days over 600 lamps were sold, demonstrating that demand was indeed high. Then, on December 21, this eleven day flurry of sales came to an abrupt standstill when problems struck the online mobile paying platform: existing customers could not pay and new customers couldn’t sign up.
One of the sales agents later reflected, ”After the training I was so motivated. I started selling non-stop. But then angry customers kept coming back, telling me, “I bought this lamp, but I can’t pay and now it is locked for usage.” So I had to call the platform provider time and time again, and this was keeping me from doing business.” Luckily, MTN and Angaza managed to quickly resolve the issue and on January 3, sales started once more.
After the restart sales picked up again and our local SNV staff ventured out into the fields, reassuring agents that the system was really working this time. Most MTN sales agents regained confidence and got back in business. Not that it was easy for them, competition was flooding the villages with tempting low cost alternatives of low quality. People buy them because they are cheap, but experiencing low quality products destroys consumer confidence. Our agents made an effort to explain that our lamps are of a certified quality standard.
From then on, product sales had its ups and downs. The downs were all attributable to lack of stock. Many agents had completely sold their lamps, while others still had stock left. MTN is now refining their distribution by differentiating levels of stock between agents. Last mile distribution isn’t an easy game, if it were, triggering the market wouldn’t be necessary.
By the end of July, 4,700 new products arrived and MTN supported the agents by advertising on the local radio, leading to an uptake in sales. The project, which ended in August this year, initially aimed to sell 9,000 lamps. At a later stage this has been revised to 2,500 sold end of August and 6,000 sold at the end of 2017. As the graph above shows, end of August a total of 2,700 lamps were sold, of which almost 90% with PAYG. This is below target, but at the end of the day, it is not about lamps sold during the project but about developing a sustainable and growing market for solar lamps.
Will Benin light up beyond our stay?
The lessons that we have learned during the initial phase of market building are manifold. For one, there is a real need for solar lamps, and that users are satisfied. These users report several benefits; less danger from flammable kerosene, savings on made on the purchase of batteries and kerosene, time to work and study has increased and people feel safer walking around the villages at night.
The new phenomenon of PAYG in Benin has been readily adopted after the installments were lowered, although roughly one third of buyers occasionally has difficulties paying on time. For customers living on less than a euro per day, a fixed weekly fee of 1.5 euro is quite an amount. Some of them never mastered reading and writing, so how can they even read text message reminding them to pay?
Most hurdles turned out to be on the supply side. At times, agents were out of stock and temporary technical problems with the mobile platform affected sales as well.
To claim that we have ignited the market may be a bit of a stretch, but we sure brought some light to Benin. Parties who can shape the market sat around the table and together addressed the many pitfalls of selling a new product in a new area. The project has finished, but the companies involved will continue improving their services in the remote areas of Benin. Next to small solar lamps, ARESS has now started to sell solar home systems. Hopefully moving forward until there are Bright Lights in all of Benin. In the meantime SNV will continue in their quest to lighten up all solar markets.
A female Solar Lamp user at Ifangni village said; “I used to pay 4 batteries at 150 francs each day. After a monthly estimate, I found myself at 4,500 francs a month. Whereas with the solar lamp, I have not had to spend money since the purchase of the lamp at 25,000 francs”
Also, a male Solar Lamp user at Ifangni village said: Previously we used batteries, fuel and even electricity, and I paid a lot more than what I pay today. I paid 6,000 francs for electricity and today I pay 1,800 francs. I bought 4 lamps at home and now I even turn off the electricity and turn on the solar lamp”
User from Ifangni village during the qualitative: “The lamp I bought for my father has presented many problems. Indeed, after the purchase I had to wait 4 days for the lamp to start because of a network problem. Sometimes even to make a payment there are network problems and we have to wait until the next day to receive the code”.