Over recent years a number of development programmes in East Africa have together incubated hundreds of micro-scale businesses at the Bottom of the Pyramid (BoP). But what avenues of growth should we expect from the small-scale energy enterprises seeking to make a bigger impact?
I read last week about a start-up social enterprise providing low-cost lighting services through solar micro-grids in India. The enterprise, Mera Gao Power, expects to install 50 systems this year but has ambitious plans to increase this figure to 1000-2000 over 5 years. Given the capital intensity of solar installations, I began looking at how such an expansion would be financed. A seed grant from USAID’s Development Innovation Ventures has helped to install the first phase of solar micro-grids and a comment from the company’s founder makes clear that it could not have been done without the grant. But he goes on to stresses that social enterprises can indeed be sustainable and scalable – once commercial funding is available. But before then, while many commercial investors are still too risk adverse to invest, are grants the only way to fuel growth?
Reflecting on the briquette sector in East Africa, for which there is increased attention to expand, organic growth seems unlikely; there becomes a point where proper (and capital intensive) machinery is needed. Looking at the few successful commercial businesses that produce briquettes in the region at any significant scale, almost all have benefited from grant funding by government and non-government organisations in order to purchase this machinery.
Impact investing is certainly on the rise and attention towards investment opportunities in BoP markets continues to increase. Evidence from businesses that have been linked to finance through GVEP’s Developing Energy Enterprises Programme and ventures like Mera Gao Power in India suggest that up-front capital investment can indeed lead to a financially sustainable energy enterprise and create market opportunities in previously under-served areas.
The challenge that remains is to expedite access to this finance and to direct it to where it will lead to profitable businesses that have most social impact.
Tags: Bottom of Pyramid, briquettes, grants, impact investment, MSME growth, seed funding
Alessandra GVEP International
simongvep73
David Disch
peterjamesgeorge
jasmienbronckaers
Hamish F
lauraclough
Lets hope this development continues.
Great article, and the DEEP program seems to be one of the most effective solution to develop access to energy through BoP initiatives.
The idea of instaling solar panel in rural areas is a step of eradicating darkness poverty from the community i wish to welcome you to nakuru for stoves and solar panels fo your information nakuru is semi arid where fuel is history where are you thanks