Unlocking rural electricity with a text message in Nigeria

Tuesday December 20th, 2016 - Smart Villages

Interview with Nir Marom

Co-founder, Lumos Global

Location: Israel

“Time is the most expensive resource for an entrepreneur”

On the same day that Nir Marom’s company won a tender—he spent about seven years working in on-grid solar energy—he came across an article about people living off kerosene or candles, spending 50 cents a day. “I thought, for 50 cents I can get 4 kilowatts per hour. Of course real life is a bit more complicated than that, and off-grid is a huge project, but it made my partner and I think about how to do it in a cost-effective way.”

Marom’s co-founder, David Vortmann, comes from a telecoms background; both bring their individual experience in ensuring Lumos Global leapfrogs the grid as a distributed utility, and innovates in mobile payment. “I immediately went to the people that I knew in Africa with this idea”, explains Marom. Lumos originally started in Conakry, Guinea, but it wasn’t to be. “We integrated with a mobile operator there and sent systems, when Ebola struck…” Launched in late 2013, the Dutch company runs all its production from Nigeria, where 90 million people are not connected to the grid. “Even then, the grid is there for only two hours a day, so often people are using Lumos and the grid”, he says. Lumos operates in villages such as Pampegwa in Kaduna State, and Toto in Nasarawa State.

For Marom, time is the most expensive resource as an entrepreneur. “You do diligence better than any VC, so we spent a few months visiting mobile operators and potential customers”. Their partnership with MTN, Nigeria’s largest mobile network, is testament to this, a feat which was no easy deal, according to Marom. With MTN’s 60 million subscribers, Lumos is continuing to realise the potential ahead—potential which is greater than any competitor or startup around. “It’s not about reinventing a search engine when Google is out there”, he laughs. “It’s about a handful of startups operating in a different territory; the potential is a thousand times bigger than the startups. Our advantage is that this is such an open market; in on-grid there is no different offering. Here there is IP, and the offerings are vastly different”.

After Lumos moved from R&D to scale manufacturing, integration with the mobile operator was another challenge. “You can go with an off-the-shelf Chinese product and get to market in no time, but then you lose some advantages—for example, does your product include billing or not, and if so, do you rely on mobile money? Because then you need to integrate. We do airtime billing, which is very complex to do, and thus work in a place like Nigeria where there is effectively no mobile money. So, a lot of software back-end development is needed. We thought it was important to develop our hardware ourselves”.

Customers pick up the indoor unit from the mobile operator store, which is rented for a low price. From here, a customer will send an SMS to unlock the electricity to power a day’s light lights, television, fan, or radio. The product is charged on six hours of sunlight. The lease-to-own basis means that after 1500 days of use, the unit belongs to the customer. “We’re not actively selling to customers, we learn about them by chance”, says Marom, of the customers who use Lumos Global. “A hospital manager will come to our store and find a product. One quarter of our systems are used by small businesses, such as pharmacies who can extend their business hours, or small fruit stands, and institutions like schools, mosques, churches and hospitals”.

Financially, Lumos is secure, with partners including the Power Africa initiative from the US, and a $15 million loan from the Overseas Private Investment Company (OPIC), whereby 100,000 more systems are being rolled out. Marom calls it a vote of confidence. “They finance the systems alongside us. In Nigeria there are another 20 or 30 million small businesses with no grid access. As a small business you always need to deal with taking it slowly and not spreading yourselves too thin—but we’ll have some announcements soon.”

About Lumos Global

—Nabeelah Shabbir, @lahnabee