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Tuesday, 15 July 2014

ESME grant enables solar light distributor to become key player in the Kenyan off grid market

Mibawa Supplies Limited is a Kenyan enterprise working to provide solar products to customers who cannot afford the high upfront costs associated with ‘one-off’ payment products. Selling the IndiGo product from Azuri Technologies a cost-effective pay-as-you-go alternative they are working to scale –up their distribution outlets and expand their reach across Kenya.

There is a solid solar technology network operating in Kenya. All products on offer have defining qualities that enable customers to choose which characteristics, power outputs and financial requirements are most suited to their needs. Due to the rapidly expanding nature of this sector, marketing has become a very important component in the business plans for many solar enterprises. Some of the most unique factors seen in the market today include pay-as-you go payment methods, which enable customers to pay for energy as they use it.

Since receiving the first installment of their ESME grant, Mibawa have doubled the number of outlets and increased their staff head count to 15. The focus for the funds to date has been on marketing, increasing their visibility and also training staff to become technical advisors. They have also hired a marketing manager, produced radio adverts and used targeted advertising campaigns to increase awareness and knowledge of the benefits of their product of choice: the IndiGo solar system from Azuri that combines mobile phone and solar technology allowing customers to buy scratch cards to pay for their energy, just as they would for their mobile phones.

Besides creating a smart marketing strategy, an important factor in their success is the price of the IndiGo product, coupled with the repayment procedure. The deposit required for the IndiGo model is USD $151 (13,300KES) considerably cheaper than other models available. They also have a different repayment options, the repayments can be spread over 20 months or 80 weeks, where customers repay USD $1.5 (KES 140) per week through scratch cards top-ups. The initial deposit required of USD $17 (1,500KES) is also smaller than others on the market. Once the total sum has been paid, a small unlock fee of 600KES is required (USD $7) after which customers can own the light without any further payments.

To date, Mibawa Supplies Limited has sold 7000 units and now works to achieve a monthly sales target of 500 models. Looking forward, Mibawa wish to further increase their sales, and have been benefiting from a GIZ programme which links trained entrepreneurs to enterprises looking to scale-up. This initiative has permitted Mibawa Supplies to grow their staff team in both a quick and low cost manner.

"We have been very impressed with the progress that Mibawa has made to date and are confident that they will continue to succeed in this growing sector” says Martin Theuri, GVEP Business Mentor. The remaining ESME funding will assist Mibawa scale-up from the current customer base of 7,000 to over 10,000 as revenues from sales will be re-invested into the business and assist in sustainable growth.

An Independent Evaluation Committee has approved the disbursement of the last 30% of funds which the team plan to use for expansion in other regions. GVEP will continue to support Mibawa in an advisory and monitory capacity as they continue to grow.

ESME is an initiative that aims to support Energy SME Development in sub-Saharan Africa to foster local private entrepreneurship and invest in the provision of energy services in remote, un-served or under-served regions.

Posted by Meghan Smith