The United Nations Millennium Development Goals identify affordable access to electricity as essential to eradicating poverty. With less than one-quarter of households in Kenya connected to the grid, the poor must rely on expensive fossil fuels and candles to light their homes.
Low-income households spend around USD 150 per year on kerosene alone, which constitutes twenty percent of household income on average.
M-KOPA’s innovative pay-per-use model allows customers to distribute payments for a three-light solar and radio/phone charging station over several months. Customers pay for the solar home system in installments via SMS on preexisting mobile money networks.
The company, which was started by the founders of Kenya’s mobile money provider, M-Pesa, is partnering with solar product producer d.light to make solar power affordable for rural Kenyans and to solve the last-mile distribution problem of bringing critical goods and services to remote, rural communities.
By replacing a kerosene lamp with an M-KOPA financed product, a consumer can expect to save an entire year’s income within three years of owning the product. In addition to cost savings, a household will have increased safety from the elimination of accidental fires caused by kerosene lamps, better health due to lower levels of indoor air pollution, and increased productivity.
Solar home systems also have positive outcomes on education as children are able to study into the evening hours due to high quality lighting from M-KOPA.
Creating an effective method of last-mile distribution for one product can serve as an example for bringing other goods such as irrigation pumps and sewing machines to the rural poor.