Darragh Cotter, Communications and Marketing Manager
At the end of November 2016, GOGLA member SolarWorks! expanded existing operations to Mozambique. After the launch of its inclusive solar services for off-grid rural areas, we caught up with José Tavares of SolarWorks! He tells us what makes Mozambique an attractive market for off-grid solar and explains the importance of local partnerships. José Tavares outlines SolarWorks! targets in Mozambique, the necessity for quality verification and details how other off-grid solar providers can help to grow the market in Mozambique.
Question 1: Thanks José for speaking to us. Can you tell GOGLA about the company origins and activities to date? It is the classic start-up story. By chance our two founders (Bernard Hulshof and Arnoud de Vroomen) crossed paths in Madagascar, and came to realise that working together they could develop and market a product that could change lives. One of them was carrying out research as part of his Master’s thesis, developing a solar lighting solution for low income families. On reading Prahalad’s article The Fortune at the Base of the Pyramid, they decided to put the theory to the test. The article suggests that instead of targeting a niche market with a high profit margin it can be mutually beneficial to target a large market base with a small profit margin. As such they designed a product and a market strategy, offering a high-quality product to customers at the base of the pyramid at an affordable price. To date we have sold products in more than fifteen countries, that majority of which are in the Sub-Saharan region.
Q2: Why did SolarWorks decide to expand to Mozambique? What makes Mozambique attractive? After operating for several years in countries throughout Africa with a distribution model, SolarWorks! decided that it was time to make the transition to the PAYG model. The Mozambican market was already familiar to the SolarWorks! team based in South Africa, and they recognised that Mozambique has huge potential, with some 18 million people living off-grid. Being a Mozambican myself, I must say that there are many things that make the market attractive. Of course, the quantity of people in need of access to modern electricity services is a big draw, as is the facility to work with the local culture and language. There is great potential here among the local people, and we want to provide the tools to empower them.
Q3: How many households and people do you think your products can reach? What mix of products and appliances do you offer to potential consumers in Mozambique? After having opened our first shop in the Matola area, just outside of the capital city of Maputo, and having sold 100 systems within a month of opening, our focus is on expansion. We have an ambitious plan to have our products installed in locations throughout the country over the next five years. From January next year we plan to open one new shop every two months, with each shop we plan to capacitate local staff to serve local markets. Our medium-term goal is to reach 100 000 families. Currently we have three products in our portfolio. The smallest is the Roof Light, which is fixed in place and operates with a motion sensor. Then we have the Solar Power Ball, which is a stylish lamp with three light intensities and phone charging capabilities. Then we have the Solar Power Box, which comes in three sizes, namely 40Wh, 200Wh and 400Wh. The two larger systems function with DC/AC invertors and allow customers to utilise AC appliances such as LED televisions, hair clippers, and laptops. We currently work with a PAYG model, with payment terms differing per the product size. Generally speaking, customers repay their systems in up to 24 months. The advantage of the PAYG model is that we can amplify our reach. It is relatively rare to find customers that can pay the full product price in one go, and by spreading the payments, the products are accessible to a greater number of people. Also by spreading the payments, our customers gain access to a customer service department and technical assistance, which increases their trust
Q4: Do you work with other partners within the country? It is very important for us to work together with local institutions with the shared goal of increasing electrification rates. We have a good relationship with the National Energy Fund (FUNAE), the agency that is currently responsible for off-grid electrification in country. Close collaboration with our mobile money partner MPesa is also extremely important, because financial inclusion remains low in the country, and we would also like to help improve that.
Q5: What is the current regulatory and political situation in Mozambique? Are supportive off-grid energy policy measures in place? What do you see as the main areas of support still needed? The situation in Mozambique is changeable, and this presents several challenges. There is a national energy strategy, which includes specific electrification goals, whether these goals will be reached remains to be seen. Generally speaking, there is agreement that off-grid electrification is necessary, at least in the short and medium-term. The country is very large, and the population is extremely dispersed, so for that reason SHS and mini-grids are expected to play an increasingly important role. In terms of policy, it would be great to see reduced import tariffs and VAT on solar products, alongside fiscal incentives for customers to buy solar products. Another challenge is to increase awareness and understanding of solar products, mobile money and PAYG.
Q6: SolarWorks! are offering special business kits in Mozambique. Can you tell us more about these? Absolutely! Aside from providing modern electricity services to households, we are very keen to support local entrepreneurs and enable them to build their enterprises. Here in Mozambique it is common to see shops and small enterprises closing at 5:30pm, which is when it gets dark here. A solar system can enable entrepreneurs to keep their doors open, and to serve additional customers in safety. The business kits can support laptops, internet routers and printers, but also might be used for hair clippers or soldering irons. We hope that after seeing the kits and their capabilities, potential business people can see opportunities, and start to use solar energy to provide services and create employment in rural sleepy villages.
Q7: SolarWorks! products were among the first to be certified by Lighting Global. How important is certification to you and to the sector? Is SolarWorks happy that IFC and CLASP have recently announced a new partnership to sustain quality standards in off-grid solar markets? High quality is always important to technology providers, and in our case, in a market where the product is an entirely new concept to our customers, it is particularly important. We need to build trust among our customers, but we also want to ensure that we are providing a long-lasting product that offers good value for money. We have seen too many examples in the region of cheap, poor quality products, influencing customer behaviour and creating distrust. As such we firmly support national and international quality standards, and are keen to work with entities that seek to protect the customer and the market.
Q8: What would you say to other GGOLA members who are thinking of expanding operations to Mozambique? There is no plain sailing when it comes to opening a new company, or entering a new market, there is always a level of risk involved. Mozambique is a largely unserved market, and the people of Mozambique both want and deserve to have access to modern electricity services. There is a range of income brackets, and as such there ought to be a range of products and service providers to choose from. I would encourage other providers to come to Mozambique and help us to develop this market.
Q9: How important is GOGLA for building sustainable off-grid solar energy markets and supporting environments? What would you say to those active in the sector who have not yet joined GOGLA? GOGLA plays a fundamental role in the sustainable development of off-grid solar in developing and emerging economies, by allowing its members to learn from each other. Having a centralised organisation which brings together practitioners from all over the world is an invaluable resource. In addition, the work that GOGLA does to encourage quality standards is extremely important.
SolarWorks! is a Dutch based company operational since 2008 with offices in The Netherlands, South Africa and Mozambique. Solar-Works! developed one of the markets’ most advanced solar product range. Its products were among the first to be certified by Lighting Global and more than 100 000 have been sold in over 10 African countries. In Mozambique, Solar-Works! offers a full range of solutions starting with a solar lantern with phone charging capacity - The Solar PowerBall, the Theft Proof Rooflight with motion sensor and the newest upgrade of their solar home system - The Solar PowerBox, which comes in 3 sizes (40Wh, 200Wh, and 400Wh). For company contact details please visit their website.