Authored by: Edwin Kibanya and Kat Harrison
Despite recent progress and development in the renewable energy sector, energy access challenges persist globally with over 625 million people lacking access to electricity and an additional 2.1 billion people lacking access to clean cooking according to 2023 SDG7 progress report. The impacts of climate change and natural catastrophes further compound this especially in sub-Saharan Africa, described as being most vulnerable to climate change.
Since 2017, AECF (Africa Enterprise Challenge Fund) has been deploying challenge led investment funds, technical assistance, energy a and advisory service facilities to support inclusive businesses promoting adaptation and mitigation solutions for low income, underserved and rural communities in sub-Saharan Africa. Combined, the Renewable Energy and Adaptation Climate Technologies (REACT SSA) programme funded by Swedish International Development Cooperation Agency (Sida) and REACT Household Solar programme funded by Foreign, Commonwealth Development Office (FCDO) have invested and strengthened 101 companies that delivered energy access products and services to over 560,000 households translating to over 2.8 million people, 23,599 MSMEs, and supported over 3,800 direct jobs.
In 2021, AECF partnered with 60 Decibels, an independent impact measurement company, to conduct Lean Data studies with end consumers of REACT portfolio companies with the intention to gain a deeper understanding of if and how increased access to energy and adaptation technologies affects households’ quality of life, mSMEs’ productivity, and creates new opportunities in rural economies. Such studies are also precious in giving voice to consumers, providing critical customer feedback to our investees, and helping them improve customer satisfaction and impact. To us, it offers precious insights to guide our future investments, and the depth and breadth of our impacts. To date, 60 Decibels (60dB) has conducted interviews with over 7,000 randomly selected consumers drawn from 25 investees, spread across 9 countries under the REACT portfolio with technologies ranging from clean / improved cooking, solar home systems, mini and micro grids, solar powered irrigation, e-mobility, and waste management and recycling.
What are we learning:
REACT is indeed making strides in reaching the most underserved communities, primarily the rural and peri-urban poor, as well as the energy poor who have no prior access to energy products and have few alternatives. The average customer interviewed was middle-aged, living with four other people in their household. About 4 in 10 were female, and 54% residing in rural households while 30% reside in peri-urban areas. Overall, 48% of the customers live below the $3.20 per day poverty line with the AECF portfolio having an Inclusivity Ratio of 0.69 which is a measure of the degree to which the investees are serving the poor relative to the national poverty rate. This Inclusivity Ratio is lower than the 60dB Energy Sector Benchmark of 0.77 implying there is room to reach more vulnerable populations by making products and services more affordable and accessible.
81% of customers did not have prior access to energy products, and 7 in 10 cannot find a good alternative to the offering from the investees implying REACT investees are reaching underserved customer segments. Previously, most customers needing lighting services used torches, candles, and kerosene for lighting. 66% of prior kerosene users have stopped using them completely, while a further 25% say they have reduced kerosene lamp usage significantly. Overall, 7 in 10 customers have moved up the energy ladder to cleaner, more efficient, and renewable sources of energy.
Modern energy has a significant impact on people’s lives beyond moving them up the energy ladder to cleaner, more efficient, and renewable sources. It has the potential to drive other quality of life improvements, economic development, and productive use. Overall, 94% of the customers report an improvement in their self-perceived quality of life due to the offering from investees, with the majority saying the improvements were significant. The top outcomes they report are better energy access and well-being, reduced expenses, and increased savings. A further 9 in 10 customers feel that their sense of safety and security in their household and/or business has improved. While productive use of energy in the market remains nascent, about 2 in 10 customers use products for generating an income in their businesses or at home, mainly in their small shops and farms. Interestingly, the prevalence of productive use was higher among women.
While customers are largely satisfied with the investees’ products and services, it is important to ensure companies sell quality products, prevent challenges, and offer good customer service when there are issues, to ensure consumers can realise the full benefits of the products. Overall, customers are largely satisfied with the investees, with the Net Promoter Score® of 65 (Measure of satisfaction and loyalty on a scale of -100 to 100), compared to the 60 Decibels Energy Benchmark of 47. Customers mainly cite the quality of the product, affordability, and reliability as the main value drivers. Additionally, two-thirds of customers rate the value of money of the products as ‘very good’ or ‘good’. However, more than a quarter of customers are experiencing challenges with their products, and this is negatively affecting their satisfaction, and the impact of energy access.
Over-indebtedness can hinder the achievement of universal energy access, especially for the most vulnerable populations. It is important to provide support and create solutions that are unique to these populations to ensure they have access to clean and affordable energy and ensure consumer protection is adhered to. Over-indebtedness and ability to pay remains an issue with about a quarter of customers saying the repayments they make for their product are either ‘somewhat of a burden’ or ‘a heavy burden’. Customers from rural areas were more likely to report payment being a burden (32%) compared to those from peri-urban (21%) and urban areas (19%) perhaps reflecting their economic status.