M-KOPA Solar-Technology and Partnership for Sustainable Finance

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EXCERPTS

ORIGIN OF M-KOPA SOLAR

In the year 2010, Hughes resigned from Vodafone and started a mobile technology venture firm called Single Point Partners (SPP) with technical experts from the mobile and banking industries. One of these experts, Jesse Moore (Moore) , was among those who joined Hughes, alongside Gautam Ivatury (Ivatury) and Chad Larson (Larson). SPP incubated several projects including a pilot in Kenya providing micro-finance facilities by mobile phone. The project was named Jipange KuSave . Initially, the concept was tested among a section of the population for acceptability, affordability, flexibility, and reliability of repayment. The results were positive. But due to some regulatory constraints, the concept could not be implemented on a commercial basis. In African countries, it was estimated that around 110 million populations did not have access to an electricity connection . In Kenya alone, it was estimated that around 80 percent of the rural households relied on kerosene to meet their lighting requirements . They were not connected to the national electricity grid which costed around $410 (KSh 35,000) . As on February 2014, the electrification rate in Kenya was 23%. It was estimated that still around 6.2 million households in Kenya did not have access to a proper electricity connection ..

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DEVELOPING A BUSINESS MODEL AROUND AN IDEA

With the support of grants and equity investment provided by the Shell Foundation (UK), DOEN Foundation (NL) and dob equity (NL), SPP endeavored to test the concept of M-KOPA Solar. The funding during the initial and pilot stage when the business model was getting formulated was valuable. This gave SPP the flexibility to test the project “Getting innovative flexible money early on is good,…” said Moore, Managing Director, M-KOPA Solar . The business model became a reality when SPP associated with leading technology partners Safaricom, Eseye Limited (Eseye), and d.light Energy Private Limited (d.light) ..

OPERATIONAL FRAMEWORK

After successfully completing the trailing phase, M-KOPA Solar launched its commercial operations in June 2012. Since the commencement of its business, the customer base of M-KOPA grew rapidly, reaching 100,000 by the end of September 2014. The business was growing by 1000 new customers per week . M-KOPA Solar’s success attracted investors in a big way ..

ANALYZING AND UNDERSTANDING CUSTOMERS FOR A BETTER BUSINESS MODEL

M-KOPAnet, which was the back-end of M-KOPA Solar, processed various customer data. And this helped M-KOPA Solar to further refine its business model...

IMPROVING LIVES

M-KOPA Solar had a significant impact on the social and economic lives of the people “I saw it can save you a lot of money, it’s improved my life, for now I don’t use kerosene anymore – I have my own light, and it’s bright” said John Kibet, a customer of M-KOPA Solar . The provision for lighting during night time improved the quality of life of the customers..

OVERCOMING CHALLENGES AND BUILDING ON THE FUTURE

The success of M-KOPA Solar depended on its ability to overcome challenges. Keeping the costs low was one of the major challenges for the company. It found it difficult to find hardware at low costs. The development of necessary M2M technology accounted for the major portion of the cost in designing its business model. During the year 2013-14, the development of a simple M2M integration cost around $13 (KSh 1100) to $15 (KSh 1300) . The reduction in the cost of M2M technologies could provide for designing better and simpler business models. ..

EXHIBITS

Exhibit-I: About M-PESA

Exhibit II:M-KOPA Solar Sustainable Finance Model

Exhibit-III: List of Investors

Exhibit-IV: Product Specifications of M-KOPA Solar

Exhibit-V: Payment Plans

Exhibit-VI: Impact of M-KOPA Solar