Posts Tagged ‘rural africa’

Introduction to rural household energy consumption behaviour in East Africa (1 of 3 parts)

The following is extracted from a six month study during 2012 on household energy consumption behaviour in rural Kenya and Rwanda among the lower income demographic, that led to an understanding of some of barriers hampering the sales of client’s solar products in this market. This first part is an overview of household financial management in conditions irregular and unpredictable income streams from a variety of sources. The 2nd and 3rd part will focus on fuel usage and consumption behaviours for cooking and for lighting separately. Users sampled for this study were selected based on varying fuel consumption patterns, ranging from a single homestead to a rural hotel catering for more than 12 hours a day.

Aspirational ownership and tangible evidence of savings in prepaid purchase model of solar panel, as seen in Chuka, Kenya (Photo: Niti Bhan, February 2012)

Rural Kenyans are not very different from rural Filipinos or Malawians or Indians when it comes to the way they manage their daily household expenses. Similarities in decision making, in purchasing patterns and in observed consumer behaviour, all stem from the same underlying need to plan and manage on irregular incomes from a variety of multiple sources in harsh environments of scarcity and uncertainty. The underlying driver is always to stretch the limited shilling, rupee or peso to the maximum while keeping one’s head above water.

With the exception of the salaried schoolteacher, who managed on fixed amounts of cash paid predictably on a calender schedule, the rest juggled an irregular cash flow against required expenses, attempting to minimize the differences over calender time and as a planning mechanism across the natural year’s seasons of abundance and scarcity. Even cash croppers like Mama Grace, who received end month payments from the tea factory, coped with the significant difference in the quality and quantity of tea harvested during the wet and the dry seasons with a variance of as much as 300% between high and low payments.

Rural homesteads manage their household finances rather like a “portfolio of investments” that mature over varying times such as cow’s milk which can be sold daily for cash, while a chicken takes less time than a field of maize to be ready for harvest and sale. Thus decisions are made based on timing of the expense and the choice of ‘investment’ to liquidate on what was ‘ready’ as well as the amount of cash required. For example, in Kilala livestock market it is a known fact that livestock prices always drop in January as its time for first term school fees and everybody needs to sell to raise the necessary cash. Similarly, major purchases or cash outlays are planned for known times of abundance such as right after the seasonal harvest.

Unlike those on a fixed salary who are able to plan ahead, those on irregular incomes need greater control and flexibility over the timing – that is the frequency and the periodicity; and well the amount – in cash or kind; of their cash flow, as a planning mechanism for financial management. In fact, the greater the span of control the customer has over their time and money, as articulated above, the greater the success of a business model or payment plan. This is why prepaid airtime is the preferred model for 96% of the African continent’s 700 million mobile phone users and also why kerosene has been so hard to dislodge. It can be purchased by cash amount (say 40 Kes worth) or quantity (half a litre or 5 litres) on demand or in bulk, and then frugally used for as long as possible, allowing consumers control over their “time” and “money” with great flexibility.

Observations on household fuel and energy use reflect these purchasing patterns and consumer behaviour. Cooking and then lighting are the most important needs, and the two elements of time and money as discussed above, show up in the form of duration and location. While duration of use has a direct relationship to the amount of time and money required, location has a critical bearing on behaviour in rural Kenya as will be seen in forthcoming posts.

 

Part One: Introduction to Household Energy Consumption Behaviour Study in East Africa (2012)
Part Two: Cooking
Part Three: Lighting & Concluding Remarks

Lowering the barriers to effective communication is the key to sustainable development

KnowledgeOne of the challenges that we discovered during our multistakeholder workshop in The Hague a few years ago was that people tended to fall back on their expertise when faced with the discomfort of empathizing with farmer’s needs. Particularly so when the farmers in question were from Africa, and not from their own regions.

Our design visualization team – Jam visualdenken – captured one element of how this barrier manifested. Experts talked a lot about “Knowledge” being the key to effective agriculture value chain development, and how it was critical to transfer as much of it as possible. It became this big thing shoved at the ‘global South’, with little thought given to how it would be transferred, much less how relevant and appropriate the “knowledge” would be. A silver bullet, or a panacea.

Today I came across this article from Zimbabwe – “Limitations of using documents & reports to share knowledge in Africa” and I could immediately perceive the author’s deep understanding and empathy of their own local context and needs. Here’s a snippet:

While African communities have learnt from each other for generations, the conventional way of trying to spread knowledge through case studies is not yielding sustainable results.

There is an assumption that technical people can get into a community, work with local people, document their successes and share success stories with other communities, leading to adoption of best practices.

This notion misses a thorough understanding of how communities learn from each other. Almost all rural African communities rely on collective sense-making through very patient conversations, observations and learning by doing.

This led me down the rabbit hole of the authoring organization‘s website, where I came across a blog worth following for their deep understanding of the African agricultural landscape and the information needs of the farmers. Here are two selected blogposts from their site:

From farmers and traders to knowledge artisans

[… ]motor mechanics and metal fabrication are now part of the informal sector.  Previously locked in formal systems, these skills are now being unpacked and applied in informal markets.  This is leading to the integration of indigenous knowledge systems into formal knowledge sharing pathways. 

Since indigenous knowledge is more customer-oriented, it results in the production of needs-based products, tailor-made to meet the needs of diverse customers.  For example, ploughs and hoes are made as per customer requirements unlike the previous mass production ethos in the formal sector which had little consideration for existing draught power dynamics in different farming communities.
[…]
Technology and digital tools do not know empathy and why it is important.

Why some approaches and technologies are not moving beyond early adopters

A lot can be learnt from remarkable ways through which African socio-cultural systems generated and shared knowledge. There were reliable conduits for sharing knowledge from one age group to another, one gender to another and one society to another.  Besides respected knowledge brokers, each community had sense making tools linking different communities of practice. Some of these methods and tools included rituals, idioms, metaphors, stories and various forms of apprenticeship.
[…]
This is exactly what our modern knowledge systems lack. We have not cultivated proper ways of sharing the rich information/knowledge from schools, colleges and university curricular into diverse African communities.  There is an expectation that this knowledge can be shared by students after graduating. However, a lot of what can be useful in communities is either forgotten or misapplied.  More than 70% of ordinary Africans who function through their own languages, values and norms have no way of meshing what they know with the formal education system.  In most cases, their cultural values are still considered barriers to academic knowledge which is being confused with modernization.

Unless we develop verifiable ways through which knowledge is questioned, shared, rejected and value-added, it remains stuck within various communities of practice.  Such knowledge will have less developmental impact than anticipated. Academics continue to be locked in their systems, speaking to each other while farmers and rural communities continue holding onto what they know works. As if that is not enough, the language used for crafting policies in most African countries is not suitable for use by the majority but for lawyers and judiciary systems who can interpret it.

Priorities for an internet on the mobile platform for Africa’s prepaid economy

Something that Gustav Praekelt said in the news about access to no-cost information being a basic human right at the Mobile Web Africa caught my attention. There is still a gaping void in services accessible to and customized for the needs of the mass majority of mobile phone owners in the world. The next billion has come online but there’s potential for a few billion more. Five years ago I said,

Imho, we’re in a transitional phase here when it comes to this next generation world wide web of humanity, on many levels, as the ways and means of access online adapts and reshapes itself to the shifts taking place globally

1. Technological – from PC boxes to handheld devices – the other billion will demonstrably be requiring entirely different solutions and platforms for access due to environmental, infrastructural and other conditions

2. Social – from ‘people like us’ to ‘whole wide world’ – from those who were computer literate, educated and had resources to buy a computer and connection to virtually anyone who can make a phone call

3. Economic – from ‘models for consumption’ to ‘models for production’ – business models are already changing as the original models based on consumption of infotainment and bandwidth are better suited for those with purchasing power, its a given that the next billion’s patterns of purchase will differ significantly from the first billion’s.

Marketing of data services is the next holy grail for Sub Saharan Africa’s telcom providers. As undersea cables increase bandwidth and lower the cost of access, there’s a huge opportunity for laying down the foundation of a mobile web, particularly for the African market.

What distinguishes this market distinctly is that its primarily prepaid or pay as you go transaction models, that is, anywhere from 90% to 96% of the mobile subscriber base is not on a contract of any kind.

The data based business models for mobile operators have evolved in the cutting edge of Western Europe’s old, established and vibrant GSM market.  Its fitting that today, 3rd December 2012 is the 20th anniversary of the very first SMS sent, and I notice why it took so long for text messaging to get a foothold:

One factor in the slow takeup of SMS was that operators were slow to set up charging systems, especially for prepaid subscribers, 

 Given that 5 years on, its Google, a search engine website on the original internet, that’s seeking to lower the barriers to access for the next few billions with albeit in conjunction with an operator:

Google has reportedly launched a service in the Philippines that lets people there access certain websites on their phones without having to pay their operator for mobile data.

The service, named Free Zone, provides free access to any site that the user visits via Google Search, as well as various services from the company such as Gmail, Google+ and, of course, Search. The Philippines is only the first of several territories in which Google intends to launch the service.

According to Reuters, the service was launched in conjunction with local operator Globe Telecom, and targets those who have ‘featurephones’ rather than smartphones. Featurephones usually have cut-down browsers these days, although their functionality is more geared towards basic voice and text.

“It’s aimed at the next billion users of the internet, many of whom will be in emerging markets and encounter the internet first on a mobile phone, without ever owning a PC,” Google product manager AbdelKarim Mardini was quoted as saying.

 Their experience will show whether cost of access alone is the only hurdle to be crossed. Not only will things change from country to country, since telco’s all have their own business models such as in the Phillippines where your credit for text and voice expires in 24 hours at the lowest price points.

Its a known fact that the vast majority of the n00bs online are arriving via their very first ICT device, a mobile phone but there’s a paucity of relevant content, hence the popularity of social networks. User generated content that’s relevant is provided by their choices on Twitter or friends and family on Facebook. Its simply another way to communicate and share information and conduct commerce.

Similarly, while donor funded programs attempt a variety of ICT4D initiatives that remain stuck at pilot stage unable to scale, unknown startups can and do become popular in unexpected locations.

This is not to say there has not been progress in the past 5 years towards a mobile web for the BoP, or rather, for prepaid customers who might be rural – the vast majority of the new mobile phone users in this same period. Growth has come from somewhere, as Airtel will inform you.

But given the rapid pace of device and service adoption at the basic level of voice and sms in these 5 years, the concurrent development of a platform for exchange of value – information, goods, commodities, services, barter, trade et al – similar to but not the same as our existing internet usage – has yet to materialize.

If it did, it could be one way to bridge the gap between the formal and the informal, just the way the mobile phone business models themselves are, under the aegis of the operators. 

Deconstructing the solar lighting market hype

Nairobi solar lantern shop, July 12th 2012

The Economist’s Q3 2012 Technology Quarterly has a paean on the promise of solar lanterns replacing nasty, stinky kerosene once and for all. Of note is the careful mention of MKopa, a Nairobi based startup founded by Nick Hughes of MPesa fame, until now conducting pilot tests in stealth mode. But the rest of the article is still the usual rehash of the immense promise of solar lighting to finally get rid of that incumbent fossil fuel, something social enterprises like d.light have been attempting to fulfill for some 4 or 5 years now.

Why isn’t anyone asking what’s taking so long for this mythical promise to bear fruit? I’d like to start by deconstructing the article and identifying the implicit underlying assumptions that tend to trip the promise keepers.

As previously happened with mobile phones, solar lighting is falling in price, improving in quality and benefiting from new business models that make it more accessible and affordable to those at the bottom of the pyramid. And its spread is sustainable because it is being driven by market forces, not charity.

Show me the case study of a successful example of this product becoming a sustainable business proposition. Every company mentioned in the article is either in pilot testing new business models or talking about their performance and brightness, even while distributing via NGOs. If this is a consumer product business for patient capital then why aren’t the Chinese brands waiting (or mentioned, for that matter)?

Phones spread quickly because they provided a substitute for travel and poor infrastructure, helped traders find better prices and boosted entrepreneurship. For a fisherman or a farmer, buying a mobile phone made sense because it paid for itself within a few months. The economic case for solar lighting is even clearer: buying a lamp that charges in the sun during the day, and then produces light at night, can eliminate spending on the kerosene that fuels conventional lamps.

 The economic case might be clearer but the reality is far more complex than that. Lets compare the market entry strategies of mobile manufacturers in their pioneering heydays and the solar lantern makers. Where is the user research and consumer insight on existing household energy usage and purchasing patterns that might shed a light on this ongoing multi-year promise?

The mobile phone is a personal asset. Most people put aside bits and bobs of cash towards their purchase of their phone. It belongs to them and there is prideful ownership and status involved with models and brands.

The solar lantern is not a personal asset. It belongs to and will be used by the entire household. There may be more than one adult earning member of such households. The decision making involved is one of group dynamics, never as simple or easy as that of an individual purchase.

Eliminating spending on kerosene is not the same as generating income by the way of the phone.

Additionally, the phone has become a ‘must have’ and is aspirational, in addition to connecting you instantly to your social network. Small and portable solar lanterns are not yet status symbols nor aspirational in anyway, given that much of the marketing communication places emphasis on saving money on kerosene. Whooptydoo, says the subsistence farmer whose dreams might include TV sets and radios, to be added over time, in modular fashion, to the solar home system.

In an informal test of solar lights carried out by The Economist in Africa, users grumbled about the soapy quality of light and lantern-style design. But the company has won plaudits for its other models: its largest lamp, the S250, was included by the British Museum in its “History of the World in 100 Objects” exhibition as the 100th object. .

I mean, really, The Economist? That is weaselling out of accurate consumer feedback isn’t it, if you state that users (the people who are going to sustain the businesses remember by purchasing the devices) don’t like the lanterns but hey, look, the British Museum likes it. Remember the design awards granted to the LifeStraw? Look at what happens to them:

 Carefully hidden away in case someone comes to check up on the beneficiaries of generous charity. When asked why it wasn’t in daily use, the response was that it was far too difficult and took too much time when it was easier to pour a 20 cent bottle of purifier into a bucket.

The article ends with a product that’s a concept developed in a studio. Who is hoping and how that this designer device will magically obtain a viable business plan with effective distribution and sales? The Economist might have been better off focusing on MKopa and Eight19’s efforts to experiment with new pay as you go business models, though I can already see their solution’s limitations particularly in the Kenyan market’s context. They could have talked about Econet Solar or Angaza or MeraGao in India, in the same vein of experimental business models instead of defaulting to the hopeful batteries and museum pieces that will grace the dusty shelves of retail outlets.

Btw, that SunKing you bought in an African supermarket? How many rural low income BoP customers shop there, do you know? 

Hub and spoke model for new product introductions



Nairobi’s Central Business District – Luthuli Avenue is the heart of the electronics and consumer appliance trade for Kenya. Chinese businessmen can be seen mingling with Somali traders and wholesalers come from all over the country to see “what’s new”. I saw recently introduced solar powered refrigerators (just 60W) on display, direct from China but was not permitted to photograph.

Mobile phones, social media and the Maasai: Time to refresh the image

At first, I did not know what these two young men were upto during an enforced halt on our way to Kisii at the end of February this year. The road had been blocked by the local community demonstrating about land rights just a few kilometres outside of Narok, in the heart of Maasailand and the driver pulled the car back and to the side to park out of reach of any rocks if they were going to be thrown. Soon enough the traffic was backed up and a little community sprung up during the few hours we were there, waiting for the road to open up. While waiting I noticed these two in action.

First, one took the stage, expounding at length on what was going on and emphatically giving his opinion on what needed to be done by the government and the leaders of the community, while the other captured this on video (a smartphone obviously). Then they would review the video snippet,


carefully, while laughing and making jokes – I did hear the word Facebook being mentioned a few times – before the other took his place and shared his views loudly.

But the most amusing part was when they convinced a little girl to give her opinion, which she did, to the laughter of the crowd that had gathered,

“This road belongs to all of us, it is not their grandfather’s road, so why are they blocking us from using it to continue our journey”.

These few minutes, gratefully captured on camera, exemplify to me what is the current day situation in rural Kenya when it comes to everything we write and talk about the way smartphones and social media are enabling an information revolution in Sub Saharan Africa. Their response to being confronted with an unexpected political demonstration was no different from anywhere in the world today – whip out your smartphone and capture it on video.

Their intent however was one step ahead of simply uploading the action on YouTube – by adding their own commentary on the situation and capturing the ‘common man’s’ opinion, they quickly turned this opportunity into an exemplar of citizen journalism, to be shared freely on social networks like Facebook.


Perhaps its time we refresh these images to capture the impact of the mobile phone on the young moran from Maasailand than continue using the tired and stale imagery that we all recognize.

What does it mean when Chinese manufacturers enter the social enterprise space?

“The market has been destroyed for solar” or so I heard today from someone who prefers to stay anonymous but I’d hazard a guess knows a fair bit about what is happening on the ground in East Africa from the point of view of social enterprises.

Interestingly, I’d brought up the question of whether “It was time to move on from the label “the BoP””, something I’ve been pondering over for quite some months now. And that was when the conversation had turned to the popular products for low income customers – improved cookstoves, solar lighting, agricultural equipment like water pumps and the like.

This will not be the definitive post or article on the topic – consider this an appetizer or rather, the beginning of the pondering on the weak signals seen in the market and what they might imply for social enterprises and their ilk, but also the larger “BoP” marketplace as a whole.

You see, what I’ve seen now in the market are branded China made products in categories that were only recently created by BoP focused social entrepreneurs and designers. The Chinese manufacturer has no other bottomline but that which makes a profit on a product for which they perceive a high volume demand. And witness the rise of the Tecnos and the Birds even as the category creator and erstwhile market leader Nokia battles for continued dominance in developing markets.

What does it mean when a Chinese brand enters what hitherto were considered “social impact” product categories? Are social entrepreneurs – many of whom are still supported through grants and funds, as they seek to improve the lives of the poor – prepared for an increasing competitive environment? Not just from other international social enterprises either but from purely commercial solutions?

What we also realized in today’s conversation was that it was the BoP focused social enterprises who were doing all the heavy lifting of market creation – experimenting with value propositions and product and services that people would want, creating awareness and demand while investing their time, effort and resources in ensuring the best outcome for all stakeholders. As was pointed out to me, it was the social enterprises who tended to ensure that they offered high quality, well designed, durable and reliable products to the ‘poor’, something that the competition is not known to do.

And so, it brought us to the sentence that started this post – “the market has been destroyed”. While its just one category at the moment, how soon before its all the others as the increasing purchasing power and aspirations of the informal economy seek the best bang for their rupee, kwacha or shilling?

How do you compete in a market where charity distorts pricing?

Strategy guru Michael Porter’s 5 forces framework is quite well known to anyone attempting to assess or analyze the landscape of an operating environment for an industry or organization. Increasingly, since I’ve begun working out of Sub Sahara I’ve been sensing the challenge of a 6th force – one that is overlooked when consumer markets are considered particularly in the mass majority demographic. It is insidious however and hinders the sustainable practice of commerce. It is the dominant logic of charity and aid which leads to free give aways by so many seeking to help a poor African out.

Lets take the example of solar power as given in this recent BBC article:

The end result is DIY solar kits that can recharge phones and batteries. They look makeshift but they have the potential to make a huge difference to people thousands of miles away in Kenya.

As the director of KnowYourPlanet, Mark Kragh’s day job is to resell solar panels to small businesses and hobbyists. But in February he will travel to Kenya to distribute specially-made kits he is giving away as charity, and to show local people how to make more.

What if someone decided to give away solar panels for free to the small businesses and hobbyists who make up Mr Kragh’s customer base? How do you suppose that generous act of charity would impact his business?

Similarly, whether its the jua kali inventor/maker customizing solar power installations for each of his clients or the many social enterprise ventures that dot the landscape, each in their own way are trying to earn a living even while the work that they do helps improve the quality of life for their customers.

On one hand we talk about growing sustainable businesses and nurturing entrepreneurs as a critical means of social and economic development – ‘development through enterprise‘ we say- yet on the other, these very same fledgling ventures will be blindsided by a market force that has the power to distort pricing and disable competition.

Where will the support come from for these companies to establish and grow marketing channels, distribution networks and a win win profitable solution for all stakeholders? The majority are local establishments who employ local people and thus add value to their communities.

Well meaning enthusiasts who come in with hand outs are going to have the same effect on the market as any competitor who practices ‘dumping’ – it will undercut the market and cripple any sales or marketing strategy if the alternate to purchasing a local product in a shop is a free giveaway from a charitable individual or organization. Furthermore, they are not a business to provide any after sales service or maintenance or customer support, their goal is to be in and out having done ‘good’ during a flying visit.But the aftermath will create enough ripples in the market creation process that companies will have to deal with for a long time afterwards.

Interestingly, Mr Kragh intends to visit Kenya – one of Sub Sahara’s most mature solar power markets instead of Senegal where he’d originally gotten his inspiration from. If I was part of the solar mobile charger and lantern manufacturers association in Kenya or even Nakumatt or the electrical supply shop cooperative or whichever relevant body, I’d say they should petition to put a stop to activities of this sort or send them along to a location who needs it more than they. After all, it is the season of giving rather than receiving and one must always help one’s neighbours.

The challenge of assessing the size of an emerging market opportunity

Street stall, Durban, South Africa Jan 2008

Untapped opportunities in the developing world bring with them their own challenges for businesses seeking to invest in them.  An interesting one is that of assessing the market size and value, particularly for the lower income demographic that operates primarily in the informal economy (often called the BoP or bottom of the pyramid).  This snippet frames it well:

To begin, it is critical to understand why traditional market sizing methodologies are ill-equipped to size emerging markets. To illustrate, if a firm were to use traditional methods to size a mature market such as the coffee market in the United States, it would consider demographic trends (e.g., aging baby boomers), psychographic trends (e.g., increased health consciousness), past sales trends and consumption rates, price movements, competitor brand shares and new product development, and channels/retailers among others. However, conducting such an analysis for emerging markets presents a challenge as several of these factors (e.g., past sales, demographics of the customer when there are no current customers) don’t exist because the markets are presently untapped.

The situation is exacerbated  by lack of easily available demographic data, few formal retail channels, little consumer knowledge, and if the majority of the target audience happens to be outside the urban population centers, even lack of basic infrastructure like roads. One must begin from scratch. Can any rules of thumb be developed as we increase our understanding of the next few billion customers?

This conversation will continue.