For-profit models are working for clean technologies in Africa

Saturday July 8th, 2017 - Smart Villages

Interview with Steve Andrews,

CEO, NewLight Africa (Heya!)

Location: London, UK and Nairobi, Kenya

“Think of us as the Amazon of rural Africa”

 

After some time in the solar lights business, Steve Andrews asked himself what more his customers could need. He was CEO of SunnyMoney, a company owned by the NGO SolarAid, which he joined in 2010 as chief executive. It was a leader in a region where two-thirds of people cannot access energy, selling 1.3 million solar lanterns in his last three years in Kenya, Uganda and Tanzania. Despite the company’s success, he felt it was expensive to build up a leading brand that people trusted, with a distribution network in rural Africa – Andrews felt that no UK company would devote these resources exclusively to sell solar lights. “In my last job, I started to feel constrained by moving in a non-profit direction, and I felt the market was mature.”

Andrews found his answer in an innovative, for-profit model in the African off-grid sector: customers want access to any product or service which will make their life better – not only in clean energy. NewLight Africa, a distribution company selling “clean technologies”, launched in 2016.

In one blog post introducing the company, Andrews lists what it took to launch the company: raising seed finance (which he blogged as being the “hardest professional challenge of my life”), developing a consumer brand, recruiting a team, finalising launch regions, ordering the products, and “a million other little things which you need to do to get a business off the pages of a PowerPoint deck and into reality”, he writes. He also states that “financing is the real foundation of this industry’.

The top-selling product at NewLight Africa is a solar lantern, which doubles up as a phone charger. This makes sense, because at 30 USD, it will always be more affordable than the next generation of solar-powered products on the market – television, for example. “We’re a last mile seller of whatever our customers want us to sell,” says Andrews, who studied management science at Loughborough University in the UK. “I know this sounds pompous and grandiose, but think of us as the Amazon of rural Africa.”

The team is “learning” about newer technologies, such as the ethanol cookstove. This is another best-selling product at NewLight Africa, its fuel made from sugar cane. “From a consumer perspective, considering the women that the product is targeting, it’s like jumping forward 400 years in terms of ease of cooking,” says Andrews. There were many lessons to learn, he says, in an “immature cookstove sector, with unreliable companies”. The company is currently trading under the name “Heya!”.

NewLight Africa closed its first round of investment in October 2016; Andrews says, “slightly depressingly”, that his job right now is to close the next round by March of next year. Luckily, he adds, he has “really good people running the business now, so it’s going to be fantastically easier than before.” With a core team of 20 staff members, NewLight Africa also employs a team of 40 field sales members, who buy wholesale and work on commission. One example of a colleague he has blogged about is Stella in Bukura, Kenya.

Stella New Light Africa

Whilst clean energy products are an “obvious” first product to sell, the company also sells technical products – again, based on what customers want. “It’s amazingly how often a customer will ask for bluetooth speakers, or smartphones,” says Andrews, an

International Solar Award winner in 2014. “We’re not here to take a principled position on behalf of our customers – we’re here, like any company, to sell their needs. It’s a happy confluence of their needs and our passion – clean energy products, which have an impact on people’s lives.”

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In an early trailer pitching the company to investors , Andrews puts the onus on market opportunity – “this is not about aid or charity”. He explains that firstly, there is a role for non-profits, he says, as SolarAid and SunnyMoney’s work proved. “For example, Kenya is a relatively wealthy country in Africa and is the most advanced when it comes to the adoption of solar lights. In very immature markets, SolarAid and SunnyMoney had huge success in getting the market to a critical mass where people are able to access affordable solar lights and have confidence in the technology.” Provisions for the very poor, living in “vast, arid areas of the country”, is another story. “People will need financial assistance to access decent solutions,” he says. “I’m not sure at anytime in the next ten to twenty years any company is going to be able to commercially sell solar lights, although individual traders might do it. It’ll take a long time.”

He believes that for-profits thus have an important role in the off-grid energy sector in the developing world. “Mobile phones are in every corner of the African continent, and it was not because of charity,” he says. “It was because there was a value chain that incentivised everyone from a multinational like Nokia to a one-woman shopkeeper selling second hand phones and spare parts. It’s only when you have a genuine market that you get the phenomena where mobile phones are everywhere. So, I passionately believe that a primarily market-based solution is required. We can’t hang around for charity to solve this problem”.

Plus, charity can be “fantastically destructive” if done in the wrong way. “The whole market for solar lights in Africa is completely paranoid and terrified of charity coming along, giving away thousands of systems for free and destroying the market, undermining investor confidence, putting people out of jobs. There is a sort of an almost-universal understanding that non-profits have a role to play, but they have to tread carefully. Everybody in our sector understands this.”

NewLight Africa is the third venture that Steve Andrews has run. “I have a few more grey hairs than a lot of people in the industry,” he says. Andrews first bought Whitewater, which he and his wife developed into a direct marketing agency for non-profits. “I always wanted to sell a thing, as opposed to people’s time,” he says. After another company bought the agency in 2007, Andrews finally left in 2010. He and his family moved to Kenya for Solar Aid. Now, he is between the UK and Kenya. “SunnyMoney was my first opportunity to sell something, it was fantastic. I’m still on a pretty steep learning curve, especially these last two years,” he says. “I didn’t got into SolarAid or SunnyMoney thinking I was going to do this. I absolutely still haven’t learn all that I have to learn!”

–Nabeelah Shabbir, @lahnabee