Solar Sisters: The Avon Lady of African Renewables

[This piece is also running over at worldchanging.]

Solar Sisters, a new solar entrepreneur program, has taken Avon's social sales model and is using it to spread solar powered lamps across Uganda.  Avon cosmetics began as a failed 19th century book-selling venture.  It's “Avon Calling” approach, where saleswomen sold directly to other women, helped it grow into one of the 500 largest companies in the USA with annual global revenues of over US$ 10 billion. 

Both energy and cosmetics have a lot to do with gender.Solar Sisters -- like the Barefoot Solar Engineers that I've written about earlier -- uses the special place that women have as procurers and managers of fuel use to take on the social, environmental and economic impacts of energy poverty.

In the developing world women are primarily responsible for gathering, purchasing and using household energy:  wood, coal, kerosene or gas. Smoke from using these fuels indoors causes serious long term health problems. Poor households also spend a greater percentage of their income on energy than wealthier ones, and are charged more for energy. This unreliable and costly access to energy, especially electricity, is one of the key factors that drives migration from rural and semi-rural areas to expanding cities.

Now starting their first pilot projects, Solar Sisters approach to these issues is relatively simple:  they sell two different models of solar lamps (a basic model, and a larger one that also recharges cellphones).  The lamps can replace both kerosene lights and long trips into urban areas to get phones recharged. In a recent ChangeMakers article, Katherine Lucey, former banker and founder of Solar Sisters, explains the multiple benefits of the lamps:

“With solar, they don’t have to breathe in tadooba toxic fumes. When they look at the black walls of their house, they realize that if the walls are black, the inside of their lungs are black. ... Economically, it makes sense because within two months, they they'll recover the cost of having to buy kerosene. This immediately frees up 20 percent of their income.”

Last year, Oxford business professor Linda Scott argued that the Avon model might even be better then microfinance when if comes to lifting women out of poverty.  Initial results from research that she has been doing in South Africa show it to be more accessible than microcredit and well suited to dynamics of local communities.

Whether lessons learned from lipstick in South Africa will hold true for solar lamps in Uganda is an open question.  But Lucey claims that for the female entrepreneurs working for Solar Sisters, the lamps offer a rare economic opportunity and can bring in up to $US450 a year.  Solar Sisters covers the upfront costs of the women's first solar light inventory, and they then use their earnings to purchase more inventory.  

The biggest hurdle may be the price of the lamps themselves.  The two models sell for $US15 and $US45.  That may simply be out of reach for many families.  The Solar Sisters blog discusses one community that came up with a way of collectively financing their purchases (something also done for livestock and other larger purchases).

In interview, Lucey talks about the difficulty of convincing women to think of the lanterns as a long-term investment.  It is about more than a change in thinking though.  The same factors that stop women from saving money by purchasing larger quantities of kerosene or coal also apply to solar.  A lack of savings, unpredictable finances and in some cases concerns over theft steer women to purchase energy (and many other daily commodities like rice and oil) in small amounts.

Solar Sisters is a promising project – and the image of solar “Avon Ladies” spreading across across Africa is hard to resist.   Solar Sisters is addressing the same issues as the impressive Indian  Barefoot Solar Engineer program.   That program's success depended both a clear understanding of women's role as energy managers and a smart approach to financing.  That second part seems to be the one thing missing from the Solar Sisters project.  Before Solar Sisters really takes off, I have a feeling that they will take the lessons learned from their early clients' community financing arrangements and build them directly into their business model.

[images from Avon and Solar Sisters]

Comments

4 Responses to "Solar Sisters: The Avon Lady of African Renewables"

Katherine said... 6 June 2010 at 14:00

Hi Alex -
Thanks for your comments and interest in Solar Sister.

I especially love the Avon photo that you found that is such a perfect match to the Solar Sister picture! And I appreciate your comment that both "energy and cosmetics have a lot to do with gender. Solar Sister...uses the special place that women have as procurers and managers of fuel use to take on the social, environmental and economic impacts of energy poverty." Exactly!

You are right on target that economics is one of the hurdles in achieving widespread adaptation of solar technology. The advent of the affordable solar lamp is a huge step in the right direction. Now it is a challenge of distribution and individual adaptation. The financing challenge is an obstacle for both the micro-entrepreneurs and for the individual customers.

Solar Sister has adopted a micro-consignment business model rather than a micro-franchise model to address the issue at level of the individual entrepreneur. In a straight franchise model, the entrepreneur buys the franchise and makes an investment in inventory, which is recouped when she sells her product. This requires an upfront investment on her part that she will need to finance. Micro-credit is often used for this type of small business investment. But the micro-credit loan comes at a significant cost - typically 30% or more - that reduces the entrepreneur's return and puts her at significant risk of mismatched cash flows. If she does not sell her inventory quickly enough, she could owe the finance fee but not have generated enough revenue.

The Solar Sister program is structured as a micro-consignment program so that the women pay for the lamps at the time they sell them, earning a commission. Operating this way, the women entrepreneurs do not bear the burden of the inventory cost. As an organization, Solar Sister is in a better position to finance the inventory at more favorable rates, and in a better position to bear the risk of matching the cash flows that are generated from a diversified pool of Representatives.

As a result the overall return to the women entrepreneurs is higher and overall cost of the program is lower. (You can probably see some of my banking background in this structuring of risk allocation and cash flow diversification). The result is a more robust financial structure and a more empowering program for the women.

Your point was more focused on the purchasing power of the individual consumer - the customers of the Solar Sister entrepreneur, and their ability to pay upfront for a lamp that has a 2 month payback. Our experience is that the entrepreneurs have many customers who are willing and able to purchase the lamps at the price offered and they are able to operate a successful business selling to those customers. Building a business on this strong customer base allows us to work creatively to design sales programs that reach even the customers that can't afford to pay for the lamp upfront. As you mentioned, we facilitate groups who purchase using "merry-go-round" financing programs, and we are experimenting with supporting our entrepreneurs with installment-payment options.

I hope you continue to follow our development as the program grows. You can visit our website at www.solarsister.org or follow my twitter account @Solar_Sister http://twitter.com/Solar_Sister .

Best regards,
Katherine Lucey
Founder
Solar Sister, Inc.
www.solarsister.org

Alex Aylett said... 8 June 2010 at 01:12

Katherine,
thanks for stopping by and adding that information on the business model and financial structure.

Whether you are in Uganda or the USA, when it comes to spreading renewable energy technology the devil is always in those details.

If you have a chance, please repost your comments here as well: http://www.worldchanging.com/archives/011236.html so that they reach more readers.

best of luck - I'm looking forward to seeing how the program develops.

Alex Aylett said... 8 June 2010 at 01:15

And glad you liked the photo. I stumbled on it and couldn't believe what a good match it was!

Katherine said... 8 June 2010 at 06:45

Thanks - I tried posting on worldchanging...but they haven't posted it yet (maybe too long of a comment?)

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This is a blog for news and views on the future of sustainable cites. A major revamp is in the works. Until then I am keeping this version up as an archive of my past writing.

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