Founded in 2010, Solar Sister is an energy company that promotes access to affordable solar lamps and small solar systems in communities in Sub-Saharan Africa. Using an Avon-style distribution system, Solar Sister builds and extends the supply chain through women’s rural networks by providing women with a “business in a bag”: a start-up kit of inventory, training and marketing support.
Arc Finance talks with Katherine Lucey, CEO of Solar Sister, about the process Solar Sister uses to support rural women to become micro-entrepreneurs and how it enables rural women to earn an income in a flexible way, doing as much or little as their circumstances and preferences dictate. Due to the pioneering work of Solar Sister, renewable energy gets to even the most remote villages, women are empowered and supporters are satisfied. In this extract, Katherine discusses, among other things, village level cash management, the importance of mobile, and learning to let her entrepreneurs set their own pace.
Arc Finance: So, the “Solar Sisters” are women entrepreneurs who are out there in rural communities selling small solar lanterns … is that right?
Katherine Lucey: Yes, that’s pretty much it. But the difference with Solar Sister is that the entrepreneur sells right in her own community. We have a few who get around a little more – travel and sell – but really, most of them sell to people that they know personally or at least know of. They’re typically not selling to strangers – it’s through their church group or people they’ve known their whole lives. So there is a level of trust. In a lot of cases, we’re working with women who are part of a women’s group collective, where there’s a special amount of trust. So the selling happens in the context of community bonds and relationships and networks. Solar Sisters are available to sell the little ten-dollar lamp to the widow with six kids who maybe sells oranges on the side of the road, or something like that. She’ll buy a lamp for her home and she’ll come up with that ten dollars.
I think the reason women buy solar is because women totally get the value of the clean, safe, no-cost solar light: once you buy the equipment you get light for free. They’re the ones who live with the consequences of kerosene. They’re the ones who go to market to buy the kerosene and fill up the coca cola bottle and come home and pour it into those tiny little tin cans. They’re the ones who get burned when it spills as they go to light it. They’re the ones whose children get burned and sometimes accidentally drink the kerosene. The women do not love kerosene, so when they see the lamp, they get it right away.
AF: How do your clients afford your lanterns?
KL: When people think about the market for the unelectrified, they think it’s little widows with no money. But that’s the base, base, base, base of the pyramid. There’s also a step up from that. You have many families where someone is working, or are subsistence farmers. The big key is, so many subsistence farmers or productive farmers have only a seasonal crop. They’ll make USD $200 when they sell their coffee and then they won’t have any money again for the next six months. So they’re at the dollar-a-day type level of income, but it’s all bunched up.
The seasonal businesses at first drove me crazy, but then I realized that’s just the way it is. It’s like Macy’s, which makes 95% of its sales between Thanksgiving and Christmas. It’s the same with this kind of entrepreneur: if she’s up in that coffee area, she knows she’s going to make all of her sales in the month of February during the harvest. She knows that, and now because we know that – after a couple seasons of seeing this happen – we’re able to stock her up right before then and make sure she has access to plenty of inventory to take advantage of her cash flow – and we then keep her stocks really low for the rest of the year. Because she is a local entrepreneur, she knows her market well. She knows exactly when somebody has sold a goat, and that’s the day she’ll go visit. It’s that level of intimacy that makes it work.
AF: And in terms of steady incomes in tiny amounts – we sometimes have this kind of one-dimensional idea of who can pay cash and when. There’s so much genius behind the way in which people do these transactions – the way in which someone can live on a small, inconsistent income, but somehow pool together these greater sums of money if they want something badly enough.
KL: Absolutely. When we’re working in really poor areas, women will form their own group and do a sort of merry-go-round financing: they’ll buy one lamp a week by pooling all their money, and then go around the circle until everybody has one. They have formed a kind of a savings and credit blend: depending on where you are in the circle, you’re either paying layaway or you’ve gotten it on credit.
There was one entrepreneur who got two chickens for a lamp, and then she took the chickens to Kampala and sold them. She actually sold them for more than the value of the lamp – so she arbitraged it. If the entrepreneurs do extend credit, and we really discourage it, what tends to happen is they extend credit to, say, their brother-in-law, and he makes 5 out of 6 payments but then they never get that sixth payment. There’s just no amount of leverage that we can do – or even they can do – to get that last payment. But it’s all self-monitored, we’re not monitoring it for them, they’re just doing it themselves.
AF: From your vantage point, with solar lanterns, how big of a deal is mobile phone charging capacity in overall demand?
KL: The fact that the lamps charge phones is huge. People will sit in the dark to talk on their telephone. It’s the phone charging that is the killer app of solar, frankly.
AF: Aside from the demand for mobile charging, just from an operations point of view, could there be a Solar Sister without mobile phones?
KL: I don’t think so. I mean the fact is that our communications with the women is all by mobile phone, and about one third of the payments come in by mobile. It’s my goal to move that to be more like 100%, although the mobile money payment system in Uganda still needs to advance a little bit.
Mobile payment was formed for IOU money, not for business transactions, so the level of data tracking and stuff like that from the mobile company is not yet quite developed enough to really support what I want it to do. I’ll give you an example of the problems we have with it – and this has to be solved before we totally scale this up. When a woman makes a mobile payment, my thought was: this is awesome because she simply sends from her phone to our phone. We have a transaction database of how we got this amount of money on this date from this phone number. Basically using this approach I know it belongs to, let’s say “Sally.” But the problem is, if instead of sending the mobile money from her phone she goes to the mobile money kiosk and has them send us the money from their phone, then I get this money in and I have no idea who sent it. So there’s a little work that needs to be done on that.
AF: You mentioned the population densities in rural areas where you can wind up with a 10,000-person market for an entrepreneur. Are there certain areas where it would or would not work on the basis of population density?
KL: The Solar Sister model is so simple and so straightforward and so flexible: you can have a Solar Sister who sells two lamps a month, which totally doesn’t work from a business perspective – if you’re trying to look at it from a profitability perspective – but from her perspective, it does work. And we have some entrepreneurs where all they want to do is make three dollars a month because they have a three-dollar-a-month payment on school fees that they’ve not been able to close any other way. They’ll sell their three lamps – or whatever it takes to get that amount of money – and then they won’t sell anymore. They could, but they’ve met their need and that’s all they want to do. And you know what? That’s okay. It gets back to the seasonality thing: as long as we have that built-in and we know not to stock her up with ten lamps if all she’s going to sell is two, then that’s fine. Even the one who sells only two lamps, it may be that half the reason she’s a Solar Sister entrepreneur is because she wants that sense of belonging.
AF: So when it comes down to it, is it fair to say, that at least in some cases, that the focus for you is more on the “Sister” part and less on the “Solar”?
KL: Yes, that’s exactly right, we focus on the “Sister” part. If you listen to these testimonials, I mean it’s just amazing! They’re like, “Oh you’ve changed my life, I love you,” you know? And you feel oh that’s so sweet, that’s amazing, and then you look at the sales records and this woman sold only five lamps… but somehow we changed her life!
To learn more about Solar Sister, see our case study on this organization.