Co-Founded by Skoll Scholar, Jesse Moore and London Business School graduate, Nick Hughes in 2009 with Oxford Saïd alumnus, Chad Larson joining in 2010, M-KOPA has gone from strength to strength; winning awards and rising to be one of the leading solar-power providers in East Africa.
Ever since deciding to reconcile my interest in business with my passion for social impact I have asked myself the question: can for-profit businesses really do social good?To help answer this question, I travelled east from Nairobi to Machakos, Kenya with M-KOPA Solar – the leading ‘pay-as-you-go’ energy provider to off grid homes. Along with Suraj Patel, MBA/MPH at UC Berkeley, Deenah Kawira, M-KOPA Solar Business Manager, and Felix Kyalo, M-KOPA Solar Field Sales Manager (pictured above from left to right), I got the opportunity to meet and hear the stories of three remarkable Kenyan women:
Christine the shop-owner
Eunice the side-hustler
Jane the home-keeper
But firstly, what are customers buying from M-KOPA? M-KOPA customers make a deposit of $30 followed by 365 daily payments of $0.50, paid using their mobile money. The solar home system comes with three lights, mobile phone-charging and a solar powered radio. Customers who complete their payment plans on time can acquire additional lights, solar TVs, energy-efficient cooking stoves, internet-enabled smartphones and water storage tanks.
Christine the shop-owner
Christine is a proud roadside shop-owner selling fruit and vegetables, among other products. She is a born businesswoman with a personality that could overflow a room. After hearing about M-KOPA over the radio, she waited eagerly and waved down an M-KOPA vehicle passing the area in order to buy one.
Before buying M-KOPA, Christine used two kerosene lamps to light up her store – a significant business expense. When her phone, used to order stock and make sales, ran out of battery, she would lock up shop for three hours to walk to her neighbour’s, hoping they were home to help charge her phone. The kerosene lamps, which have now gathered dust in the corner of her store, have been replaced by M-KOPA. Her torch helps her to walk home safely at night, her radio blasting during the day attracts customers and her phone charger means she never has to leave her shop, giving her time to sell more. As a true businesswoman, she now charges customers’ phones for $0.10 per charge, helping people in the area and helping her pay off the device.
After six months with her M-KOPA Solar device, Christine has saved and made enough money to renovate and expand her store, as well as support her two children and their families. Although this was largely a result of Christine’s individual business savvy, M-KOPA provided her with the platform to grow her business and improve her livelihood.
Eunice the side-hustler
Eunice is a struggling single mother of three who is forced to run a series of side-businesses (aka “side-hustles” in Kenya) to make enough money for the basics of food, water, and shelter.
Living in the isolated eastern foothills of Machakos, where getting clean water means travelling 5km across mountainous terrain, Eunice does what she can from breaking quarry stones and making mud bricks for construction, to growing herbs and crops for sale.
Through a woman’s chama, an informal finance vehicle where individuals pull funds together, Eunice was able to buy an M-KOPA device.
For Eunice there was no electricity where she lives and providing lighting for her family was a costly luxury. When night comes her home would become “lifeless,” quiet and inactive waiting for the light of day.
M-KOPA’s home system gives her family the simple luxury of a common lit area where they eat, talk and laugh together. It also gives her children the confidence to go to the bathroom alone.
Despite the fact that Eunice does not have a stable income, she is committed to make her daily payments to keep the lights on in her home. Far from ideal, this highlights the challenge M-KOPA faces as a social business managing the tension between profits and impact.
Jane the home-keeper
Jane is a wife and mother of four children. Her family lives in an isolated North-Eastern village in Kangundo – an hour from Machakos along a rocky dirt road. Her husband works at a local quarry and she tends to their two cows and chickens to supplement their livelihoods.
For Jane, M-KOPA initially meant a device for affordable solar power. But after paying off the solar device, she found another opportunity through the company to purchase a 1000L water tank.
The closest watering hole for Jane is 1.5km across rocky terrain. Providing water for her family normally requires her to make the trip every 2-3 days – back-breaking work that she is becoming too old to manage.
Now with the water tank from M-KOPA, which she is paying for using the same daily rate of $0.50, Jane only needs to make the trips to the watering hole once every two weeks or over the weekends when her children can help. She can rest her back, knowing that she has enough water to wash clothes, drink, cook and feed her cattle. The water tank has also given her the opportunity to help her neighbours when they are short of water, which she does regularly. She credits M-KOPA’s payment system for allowing her to afford a water tank like this and giving her the security of a sufficient water supply.
This weekend in Machakos was a remarkable and an eye-opening experience for me. It became evident that M-KOPA is an example of a social business that undoubtedly operates at the nexus of profit-making and impact-generating. However, operating at this nexus also generates its own set of challenges – even for these three women. For instance, Christine has since had to fend off people looking to steal her M-KOPA device jealous of her success. Eunice has had to deal with the shame from family and friends of owning a device that she occasionally cannot pay off and Jane has had to trust that her family can maintain payments to pay-off the water tank over the long run, whilst taking care of a large family.
However, there is no doubt that this one solar business, established on an innovative for-profit business model, means a lot to these three women and has had a positive impact on their livelihoods overall. Now revisiting my initial question I have more confidence in knowing that despite the challenges that exist in social business, for-profit businesses can really do social good.
Research Fellows, Aaron Krolikowski and Robert Hope of The Skoll Centre’s Small Grants Research Programme, have contributed to The Smith’s School of Enterprise and the Environment Water Programme by leading a focused research topic on determinants of customer payment behaviours.
Aaron Krolikowski writes for the Skoll Centre Blog, an introduction to the research paper.
Fig 1: Wards and Offices
Water customers in urban Africa often struggle to pay their monthly bills, so much so that an estimated 500m USD is lost annually to nonpayment. Due to an inability to pay or a reaction to unsatisfactory service provision, these losses contribute to critical gaps in financing and further reduce service reliability. Skoll Centre-funded research has found that the expansion of mobile money and other electronic payment options across East Africa may partially address this long-standing problem.
Fig 2: Pay Points
Using a unique dataset containing over 500,000 water payment transaction records from Dar es Salaam (Tanzania), researchers from the Water Programme at Oxford’s Smith School for Enterprise and Environment found that mobile payment systems are positively influencing customer payment behaviours. Water customers that integrated mobile payment systems into their payment practices paid water bills more frequently and made greater contributions to overall utility revenue when compared with those who only paid water bills at utility offices.
Fig 3: Mobile Money
Dar es Salaam’s water utility was the first in sub-Saharan Africa to offer customers mobile payment options. In 2009, a new business facilitated the integration of the utility’s billing system with mobile payment channels like M-PESA and Airtel Money. Focused on mobile payment aggregation, Selcom Wireless helped the water utility 1) expand physical payment locations beyond 14 brick-and-mortar payment offices to encompass over 2,000 wireless pay points scattered throughout the city at pharmacies, kiosks, and grocery stores; and 2) to enable bill payment from anywhere and at any time using mobile money.
Improvements to payment behaviour were most evident when customers used both water offices and mobile-enabled options. Distance matters as well; customers living far from water offices were more likely to use mobile money and pay points. For water utilities, or any public service provider, mobile payment options can support improvements in financial stability while simultaneously extending the reach of service delivery.
Fig 4: Payment Options
Diversification of the payment landscape enables the creation of new models of service provision and increases customer choice in where, how, and how much they pay. As populations around the world become more familiar with electronic payment options and other mobile-based innovations, new opportunities continue to emerge in the water sector. One example is from Nairobi (Kenya), where the city’s water and sewerage company partnered with social enterprise Wonderkid to provide SMS-based meter-reading (Jisomee Mita) and complaint lines (Maji Voice). Another initiative from Bengaluru (India) is NextDrop, which works with utility staff to alert customers to water provision schedules. Mobile innovations like these bring water utilities closer to customers, help to increase operational efficiencies, and improve revenue collection; all of these are necessary if universal and equitable access to water services will be achieved by 2030 (Sustainable Development Goal 6.1).
Skoll Scholar alumnus Mike Quinn, malady CEO of Zoona mobile money transfer in Zambia, tells us how the Zoona story went from an idea to reality – and shares his vision for its future.
” In 2007, I experienced a turning point in my life. I was completing a theoretical master’s degree in Development
Management from the London School of Economics following three years of volunteering in Ghana and Zambia with Engineers Without Borders Canada. I was hungry to get back to Africa as a social entrepreneur, but deep down I felt that I lacked the experience and expertise in business I would need to have the impact I craved. A friend referred me to the Skoll Centre for Social Entrepreneurship at Oxford’s Said Business School, and the moment I opened their webpage I knew I wanted to be there. I applied and was extremely fortunate to be selected as a Skoll Scholar.
The year at Oxford was game changing in so many ways. I shook hands with the visiting President of Ghana in my first month, became friends with some of the most accomplished and talented people I had ever met, built a business network to draw on in the future, and filled my brain with knowledge on topics such as venture capital, organizational design, and social enterprise business models. I also got engaged to my wonderful wife Isabelle, thanks to all of the Oxford fancy balls I took her to!
I also came up with an idea. I would start a business connecting real entrepreneurs in Africa with impact-focused venture capital funds in Europe and North America. I made a business card with the name “African Enterprise Partners”
The Zoona Team
and the logo of a baobab tree and started handing it out at every opportunity. One of my professors of a social enterprise class, Kim Alter, helped me refine the idea into a pitch and introduced me to the Grassroots Business Fund (GBF). Shortly after finishing my MBA, I was back on a plane to Zambia on a GBF consulting contract in search of my first investment deal.
My very first day back in Zambia, I was introduced to two entrepreneurs who also happened to be brothers. Brett Magrath sat quietly while Brad sold me on their start-up mobile payments business that was about to launch called “Mobile Transactions”. They had had built a mobile payment platform from scratch and wanted to empower micro and small businesses in Zambia to process mobile money transfers for the 85% of Zambian consumers that don’t have bank accounts. They were motivated by making money, but the social mission was central to their vision.
Mobile money transfers empower small businesses
I spent the next two months emphatically selling the investment opportunity to GBF, which closed when the Fund boldly invested $200,000 of convertible debt into a business with only three months of revenues. They asked me to source new deals for them but my mind was made up that I was going to work day and night with Brad and Brett to make our business successful. And we had BIG dreams right from the beginning. When I stood in front of both brothers at our first ever strategy meeting and asked them what our vision was, Brad immediately replied, “Breakfast with Bill Gates”. We decided we should tone it down and be more realistic so we settled on a “Cashless Africa.”
Zoona in the market
The early days were exciting and we always thought we were on the verge of taking off. I remember how exhilarating it was handing out fliers in front of the government-owned post office in downtown Lusaka, which had a monopoly on the money transfer industry in Zambia, when Brad was placed under “citizen’s arrest” by the manager for attempting to steal their customers. So we set up one of our first agents 20 meters away. Five years on, that outlet now processes over $400,000 per month in transactions and is owned by a 24 year old woman named Misozi who operates an additional eight outlets, employs 14 people and earns over $9,000 per month in commissions. The social mission has become reality.
For the first three years we were constantly out of cash. I tapped into my Oxford network and recruited my MBA classmate Keith Davies to join the team and manage our finances while I went out to raise more investment. In early 2012, we closed what was the first ever international venture capital round in a Zambian start-up. The Omidyar Network, Accion Frontier Investments Group, and Sarona Asset Management Fundput in nearly $4 million of equity, the proceeds of which have helped to put the company on steroids. We rebranded to “Zoona”, which means, “It’s Real” in a local Zambian language and is one of our core values. We have built a customer base of 500 agent outlets that service 500,000 unique consumers and process $25 million per month in transaction value. And we are growing rapidly: our headcount has increased from 44 people to 75 in the first half of 2014 alone as we gear up for expansion into new markets.
Many Zoona agents are young entrepreneurs themselves
Zoona’s core purpose is to help small businesses grow. We want to become the best in the world at providing business solutions to micro, small, and medium enterprises in Africa that unlock their latent potential. Our mobile payments platform has evolved from money transfers to other transaction types, including payments from retailers to suppliers. We also provide affordable working capital finance and business management tools to our agents so that they can grow their businesses sustainably. Many of our agents are people under 30 years old who are first time entrepreneurs themselves and are creating jobs, servicing their communities, and helping their economy grow.
Our biggest challenge now is to prove we can do this at scale. Our vision is to build a billion dollar pan- African business that proves entrepreneurship can have social roots that make a big difference to people’s lives, while also making money.
As Steve Jobs once famously said, “We’re here to put a dent in the universe. Otherwise, why else even be here?” My job at Zoona is to make sure we do just that.”