Nick Sireau is applying the insights of modern consumer marketing to solve the basic energy needs of the rural poor in Africa. Nick’s idea is to trail blaze new consumer norms for customers who are off the electricity grid: A trusted sales force, low price and high-quality products, and good customer service. In opposition to the aid- and technology-driven approaches which see end users merely as beneficiaries, Nick is changing this paradigm by developing a novel citizen-driven supply and distribution chain for clean energy products, viewing people as consumers rather than passive recipients of help.
A nova ideia
To really address the energy needs of the poor, the supply and distribution of products needs to be fundamentally reoriented to the end user. Nick is developing a citizen-driven consumer approach which is based on the ability to find the right salespeople to deliver the right products, using the right processes. By focusing on the consumer power of impoverished rural Africans, rather than on the technology that they lack, Nick is creating an effective and constantly evolving distribution mechanism for products that are in demand by paying customers.
Nick has created SunnyMoney, the first micro-franchise brand of clean energy products for the rural poor in Africa. Nick realized that most distribution mechanisms in Africa do not reach people because they fail to understand how to sell to their customers in the local environment. SunnyMoney’s model focuses on identifying the best salespeople for the consumer group in question: Those who inspire the confidence of customers in both the products and the service. Franchisees come from local communities and are selected by their neighbors and peers following an election campaign, which secures the loyalty of the customer base and ensures that the franchisee is ethical, entrepreneurial, and will be committed to the work. By circumventing the need for conventional sales and distribution channels and tapping into the best sales force possible, SunnyMoney avoids being limited by the constraints of third-party distributors or bureaucratic aid agencies. This local distribution model also provides franchisees with the opportunity to improve their independence and standard of living through a reliable source of increased income, thereby creating a sustainable economic approach to address development needs.
To reorient the demand side of the value chain, Nick is creating a strong brand identity focused on the benefits to the end customer rather than on the advantages of any particular product or technology. Recognizing that a successful brand will provide incentives that “pull” customers in rather than “push” them to any particular product, Nick and his team have developed a strict set of governance rules for franchisees in order to establish and protect the reputation of high-quality and affordable energy solutions.
Central to the consumer-facing model is the commitment to develop and source the most appropriate products to meet customer need, rather than finding great products and then introducing them to communities. For example, SunnyMoney found that a significant unmet need for rural villagers was to be able to light the area immediately above the door and outside their homes, as if the village home had access to electricity from the grid, so SunnyMoney is developing a product to meet this demand. All products are constantly re-evaluated to be maximally suited to the target populations they are designed for—they must be inexpensive, simple, robust, useful, and easy to maintain.
Nick’s approach to the supply of energy converts a need into a demand: While solar solutions may seem to be the perfect solution to energy needs in Africa, many communities remain unaware of the possibilities and unable to access affordable products. By activating a trusted local sales force a market is created, with customers for the products and a feedback mechanism (through the franchisee) about what products are the most appropriate. This approach exemplifies an ethical distribution system which is geared toward end user needs. This model has the potential to change the way markets reach the bottom of the pyramid for a vast range of products beyond solar, which empowers the end user over any other part of the supply chain.
There are many organizations producing and distributing clean energy technologies in Africa, often wedded to a particular technology or energy source. Rather than delivering on the promise of the technology, they have created an unsustainable system reliant on handouts, which has failed to provide mechanisms for product maintenance or consumer feedback. Especially in the context of scarcity of resources, the system is vulnerable to market distortions, corruption, and power politics. The technological solutions have therefore failed to achieve significant reach as a variety of distribution and supply mechanisms have failed to get the appropriate technology to the right people. Nick developed his approach by understanding the failures of this market and responding to genuine customer needs.
Many citizen organizations (COs) distribute solar equipment for free, which both undermines the development of scalable market-based solutions (as people have no reason to buy solar products), and prevents the natural feedback loop of finding the most appropriate products for the communities concerned. Some COs have taken the route of acting as third-party distributors for energy products (especially solar), buying products in bulk and selling them on through their own networks. This approach is restricted by the limitations of these organizations themselves—it relies on their own growth strategies to reach any scale. For-profit outfits working through third-party distributors are unable to control the price, meaning the retail price is beyond the means of most potential customers.
Few other options for distributing products remain. With a complete lack of infrastructure and stable distribution networks across many African countries, most goods remain produced and sold within local communities. Very few goods are distributed on a national scale, let alone further across the continent, which has so far prevented solar and other renewable energy generation mechanisms reaching those who could use them. Part of the result is that the market fails to support the evolution of the right kinds of products. Much of solar power production has focussed on large-scale power generation to power a community. The cost of such equipment remains out of reach of many poor, rural communities. In addition, many of the products available are not suited to the needs of those on the ground—large and highly technical equipment is not easily transported, and there is a lack of local knowledge to maintain it. Without an appropriate supply and distribution chain, the market fails to develop the right products.
Underlying these problems is one key issue: None of these mechanisms are helping to develop a mainstream economy which is viable and scalable and gives individuals the opportunity to earn a reliable income, while supporting the wider economic development of their communities. Solutions so far have isolated the issue of energy needs from other key development issues. People not only need clean and affordable energy, but they need a mechanism to distribute it which can both scale up and support wider development.
Nick’s strategy to redesign the supply and distribution channels for clean energy products focuses on three aspects: Finding the right sales force to distribute products, developing the appropriate processes, and then codifying the model to make it appropriate for further spread to other areas and industries. Nick is continually evolving his model of how he delivers in each of these three areas, determined to constantly re-evaluate every step of the process by testing ideas and trying something else if they don’t work.
The original strategy involved training a number of micro entrepreneurs who would go on to sell SolarAid’s goods. This proved problematic—from a large initial pool of interested trainees, few completed the training course, even fewer went on to actually sell SolarAid goods, and very few were able to sell them successfully. For such a large investment there were minimal positive results. It was this initial challenge which brought Nick to realize that they key to the success of SolarAid would lie in developing a distribution channel that worked on the ground. The micro-franchising idea grew out of this analysis.
The central idea behind Nick’s franchise model is identifying the right people from within local communities. SunnyMoney believes that franchisees need to be both ethical and entrepreneurial, and have the respect of their potential customers. The best way to find this out is to let the potential customers decide, while also ensuring a significant level of commitment from potential franchisees before they can access any training. Following a demonstration of SolarAid products to a rural community, interested potential franchisees are required to run a week long election campaign in the community. The entire community votes on who they trust to be the local SunnyMoney franchisee, so by winning an election the franchisee demonstrates that they already have a customer base. To encourage gender balance and female involvement in the process men must vote on behalf of women and vice versa. Election winners are then interviewed in detail to select the most appropriate candidates from the community-selected pool. The winner of the election must also be approved by the local chief of police and tribal leaders before they are allowed to begin the week-long training course. There are currently 179 franchisees in Malawi and 20 in Kenya.
Once loyal and committed franchisees are found, the business model is designed to ensure them a comfortable and sustainable source of income. As long as they sell 50 products a month the franchisee will be able to live comfortably off the franchise sales without the need for additional income. Once the local market has been saturated with starter goods (i.e. it is estimated that there will be a 10 percent reduction in sales of the core solar products each year), ongoing income is provided through the sale of the rechargeable batteries which are needed for the solar systems and need to be replaced approximately every year. In addition, gaps are left between communities when assigning franchises to a geographical location in order to allow individual franchisees to take on more territory if they are successful. In addition, SunnyMoney franchisees are entitled to be part of a social security scheme, whereby a proportion of their profits are paid into a fund that will support them in times of ill health or political instability. SolarAid is now partnering with MFIs to offer credit to franchisees and customers, and is also thinking about working with others to offer formal micro-insurance. To keep people within the franchise network incentivized there are opportunities available for increased responsibility within the network. SunnyMoney is currently experimenting with the idea of having the best franchisees grow their own sales force in order to expand faster. Nick is also exploring the option of helping franchisees create fixed shops for their products, following feedback from franchisees that this would help them increase sales. By providing opportunities for franchisees to earn a reliable income the SolarAid model is helping to build an approach to development that is economically and socially sustainable.
Besides a solid community-led franchise model, Nick recognized that a further aspect of the success of the SunnyMoney brand is quality control: The name SunnyMoney stands for high-quality and affordable energy solutions, and therefore a range of mechanisms are in place to establish and protect this reputation. The brand name was chosen after research with consumers that suggested the name SolarAid had negative connotations due to the term “aid,” and instead SunnyMoney focuses on a positive economic situation (i.e. it is not a reference to finance arrangements). There are a strict set of rules governing the standards franchisees must adhere to: All goods come with a one-year warranty which must be honored; franchisees may not sell other goods along with SunnyMoney goods so as not to damage the brand by being associated with inferior products; franchisees must adhere to the official retail price; and they may only sell in their allocated area. SolarAid has also been working with Transparency International to develop a strong anti-corruption policy to ensure that bribes are not taken so the integrity of the SunnyMoney brand is not compromised. As soon as a sale is made it is transferred via MPESA (a mobile phone-based money transfer system), so a franchisee’s income can be tracked and the amount of cash they carry at any time is limited. Nick is also developing an in depth staff recruitment process to help him identify the very best candidates for every position. Following problematic experiences with bad hires in the past, Nick is adamant that SolarAid only employs the most committed and talented individuals. He is currently introducing a recruitment process called Top Grading to investigate each candidate in great depth, rather than the traditional process of competency-based interviews. The process involves a series of longer interviews based on life history and personal characteristics as much as work experience, giving Nick a greater insight into the people who will run SolarAid operations. By taking the best practises of sophisticated consumer companies Nick ensures brand integrity and the consistency of service to customers.
Nick describes SolarAid as “product agnostic”: Their role is not to develop products and then persuade people that they need them, but to focus on the need and find the best technology available. In practise, many of SolarAid’s own designs are innovative, but they will happily buy and distribute other goods if this makes social and economic sense. Paramount is customer benefit and not any particular product or energy source. Learning from franchisees about what kind of products are in demand and remaining competitive in terms of the range and quality of goods offered is seen as central to the success of the franchise network. Once a successful and reliable distribution channel is established, it can and should be used for a range of goods which improve the quality of life of the rural poor in Africa.
The most important aspect of the entire model is not the details as they stand at any particular point, but the commitment to continually experiment with the best ways to recruit, train, and incentivize salespeople; how they will sell; what they will sell; how transparency will be maintained; and what the customer follow up will be. In each of these areas SolarAid stands for innovative ideas and ways of working which will develop differently in different geographies and as customers’ demands develop.
SolarAid has undergone the extensive Gold Standard accreditation process for carbon credits, meaning that SolarAid receives one carbon credit for every 10 products used each year. During the accreditation process SolarAid had the opportunity to thoroughly scrutinize all its activities to prove the social and environmental effects of its work. As product sales rise, the income from carbon credits will enable further investment into expansion. In January 2010, SolarAid was awarded its first carbon credits by the Gold Standard—the first time the Gold Standard had ever issued carbon credits for sub-Saharan Africa. SolarAid also has a branch of operations which installs conventional macro-solar panels in schools and other community business. This is a significant but declining part of overall operations which cross-subsidises the residential micro-solar distribution.
Nick’s approach to scale is to focus on expanding market share in existing locations and perfecting the model over the next few years, before moving to other areas. The model that is currently working best in Kenya (in both rural and urban areas) first needs to be fully rolled out to the other three countries where SolarAid is operational (Malawi, Tanzania, and Zambia). A pilot in Latin America at invitation of Avina is not core to SolarAid’s own activity, but will demonstrate the viability of the concept in different contexts. Nick is currently raising £1.2M (US$2M) in loan finance (half of which has already been secured from a range of social investors) to be able to invest in increased production of goods, as demand from franchisees for more products far outstrips supply. Once the model is optimized and market share is increased in East Africa, Nick will develop the expansion strategy for the rest of Africa, Asia, and possibly Latin America. Nick’s overall objective is to work with others to codify and popularise micro-franchise approaches like that developed at SolarAid, as a means to fostering the significant scaling of product distribution to alleviate poverty. Nick is also working with a leading South African expert on microfranchising on collating and codifying the learning on—micro-franchising—in a book for practitioners in other geographies and sectors. In addition, he is seeking out the right networks within social entrepreneurship to popularize this approach to doing business: His aim is that in 10 years micro-franchising is as common a practise as microfinance is today. Nick’s work is gaining momentum through his openness to incorporating the ideas of others and his increasing range of partnerships.
Nick was influenced by growing up in an entrepreneurial family in France and the U.K., spending weekends doing door-to-door advertizing for his parent’s business, and doing name generation activities over the kitchen table. Early in his career Nick began working for faith-based development organizations, following a strong personal faith and a desire to be involved in socially conscious work. He gained experience of working in developing countries in Africa and became increasingly disillusioned with what he saw as the failures of traditional development approaches. He worked as the Director of Communications of a large organization for five years, where he set up, led a new team, and led a re-brand of the organisation. While working, he completed a Ph.D. on the “Making Poverty History” campaign which helped him form his own ideas about the direction development work should take.
Apart from the intrapreneurial work Nick was leading inside development organizations, he also set up an organization tackling another problem. When he found out that his sons were suffering from Alkaptonuria (AKU), an extremely rare genetic disease causing serious health problems, Nick observed that such very rare “orphan” diseases, which have a prevalence of less than 1 in 10,000 of population, lack the patient-base to generate either the economic incentives to find cures, or the professional incentives for doctors to become experts in them. Nick founded the AKU Society in 2003 with an AKU sufferer. It has created a community of interest around the illness, identifying and connecting all those with AKU in the U.K., facilitating new diagnoses, creating a body of evidence for research, and funding medical researchers for a cure. Leading innovation in this field, Nick is now replicating the AKU Society in France, and has built a model which can be applied to a large number of other orphan diseases. Driven by the personal relationship with the issue, he created a platform which has widely benefitted many other people. The AKU Society now has full-time staff that handle the day to day running of all activities.
Having honed his entrepreneurial skills with the AKU Society, Nick began looking for an opportunity to develop his own ideas in the area of development. He developed a relationship with Solar Century (i.e. a respected U.K.-based solar energy company) who wanted someone to develop an organization to bring solar power to developing countries. Nick began working on this project but soon realized that SolarAid needed to take an entirely different approach from one technology-focused if it was going to have any social impact. His approach to developing his ideas is to be a “one man market research machine” and his work is an ongoing project in understanding the problems he is tackling. Rather than focusing on solar energy, he realized that the issue was the nature of the distribution system rather than the technology, which led him to develop SolarAid as it exists today. It was this process of trial and error which led to the micro-franchise network, which changes the nature of the work and opens up a range of possibilities beyond solar. His focus on best practise and his ever-evolving model has seen Nick emerge as a thought leader in the field of micro-franchising and development.