This post is also available in: Chinese (Traditional)
“Entrepreneurship brings dignity, it brings hope for the future”, says Andrew Tanswell, CEO of ToughStuff, winner of one of this year’s Ashden Awards for Sustainable Energy [see 'Money box brings clean stoves to the masses']. The company has ignited private enterprise across Africa and Madagascar with its unique model for distributing affordable solar electricity. At its core is the ‘Business in a Box’, which sets up village entrepreneurs with solar panels, LED lamps, mobile phone chargers and radio connectors. The result, says Tanswell, is “to bring solar power within reach of the poorest of the poor”.
Over 1.5 billion people in the developing world have no access to mains electricity. This means the only way to work, read or cook after dark is via kerosene lamps or candles. These are not only expensive – they are also hazardous. Fires caused by kerosene kill or disfigure tens of thousands every year; the fuel is also notoriously smoky, leading to breathing disorders for millions of women and children across Africa and Asia. Kerosene is a major source of carbon emissions, too.
People without electricity are highly dependent on disposable batteries, particularly for radios. These batteries are discarded in their millions, and leak, polluting local water supplies.
Now there’s another pressing reason for speeding the spread of power in developing countries: the mobile phone. Invaluable for market intelligence, information-sharing and banking, the humble mobile can play a key role in lifting people out of poverty. Over 500 million people who live off-grid now own one of these modern miracles. But first it has to be charged. “In Malawi, people were travelling for an hour each way on average [to do so]”, Tanswell explains. “They would walk for an hour, then wait 3.5 hours while it charged because they couldn’t trust people not to steal their battery. They’d lose 5.5 hours and pay US $0.25 – and they would do that once a week, maybe twice.” That adds up to a costly investment in terms of both time and money.
Enter the Solar Village Entrepreneur (SVE), a local person equipped with 20 or 30 sets of robust, easy-to-use ToughStuff kits costing less than $30 each, typically bought with a microcredit loan.
“These entrepreneurs charge up the lamps in the daytime, then rent them out to people in the village for less than the cost of kerosene”, Tanswell explains. “So if that costs ten cents, they rent them out at nine cents. The entrepreneurs now have a healthy income, and every one of those consumers has something that costs less than the alternative: they have a clean energy product which they can use for several hours during the night. Their children can read and study, while the parents can increase their productivity.”
Tanswell and his team have calculated that ToughStuff products pay for themselves within two or three months – and that a typical solar customer saves around $100 a year. The average solar entrepreneur, meanwhile, earns $450 a year: a respectable income in the developing world.
In similar fashion, SVEs will charge up mobile phones for less than the 25 cents paid elsewhere – further income to help pay back their loan. Individuals or groups can also buy their own ToughStuff kit from one of 40 sales staff in Kenya and Madagascar, all of them locals.
It’s what Tanswell refers to as a “triple bottom line business”, an approach that brings social and environmental benefits at the same time as it delivers financial returns for everyone concerned, including investors. “We’re a for-profit organisation, not a charity”, he explains. Because we have taken a commercial, business-based approach, we’ve been able to recruit fabulous people – but we’ve also been able to get the kind of investors who want to see [us grow to] scale.”
Bill Gates recently described solar as “cute”. For Tanswell, it’s anything but. “If you really want to have an impact,” he says, “you have to think about tens of millions, hundreds of millions [of solar kits] … You have to think about getting to the billion level. We set out from the beginning to think about global scale. That way, we got good investors who could see where we were going.”
So far, after a year of trading, ToughStuff has sold over 140,000 solar products, reaching nearly 730,000 people – and saving them $2.8 million in fuel, candles, batteries and mobile charging costs. On the environmental side, it has meant savings of over 9,000 tonnes of carbon and an impressive 4.5 million batteries.
And these are early days. By 2015, the company aims to reach 33 million people, put $2.2 billion back into the pockets of the poorest, and create 10,000 jobs.
With such figures, ToughStuff has attracted a second round of investment from Norfund, the Norwegian Investment Fund for Developing Countries. “We were on a trajectory to break even with continued growth,” says Tanswell, “but we’ve been able to get further investment because of our success and our impact. It will take longer to break even, but we’re scaling up significantly.”
Some development purists may be put off by the unashamedly capitalist language of ToughStuff’s operation: entrepreneurs, markets, undercutting on price, and villagers described as ‘consumers’. But Tanswell, a former management consultant who worked for Ernst & Young before building up and eventually selling his own successful consultancy business, believes tough-minded social enterprises like this are the way forward.
“People value things they pay for”, he insists. “If a community is just given something, there is no sense of ownership. If someone pays only a few dollars, as they do with our [kit], they own that: it’s theirs. They’ve had to make some sort of sacrifice, but they know they will get a financial return through savings.”
“We have layaway schemes,” he adds, “where people put money aside to buy, or they get the product first, and through the savings they make are able to repay the cost. We work with large NGOs in Africa and with savings and credit cooperatives, where people save money together and hold each other to account for repayment of loans. There’s a system whereby people put in a dollar each week, and one of the 12 in the group then has 12 dollars to spend. We even have a distribution innovation lab in Kenya where we’re thinking about things like the Tupperware parties model.”
It’s a far cry from change management and making money for big business, Tanswell’s previous stock-in-trade. But, he maintains, as a Christian he never forgot the broader picture. “I took a sabbatical from Coopers & Lybrand at the time of the first Gulf War and worked in the Kurdish mountains doing relief work”, he reveals. “I took another sabbatical and worked in Somalia for a year, on a huge project flying in medical aid. I ran that, and I was only 28. These two [activities], business and aid, have been constantly intertwined in my life. This is what I believe God wants me to be doing – and the reward isn’t earthly success. It’s being able to face God, my Maker, and for Him to say, ‘Good and faithful servant, you did well with the resources I gave you.’ That’s my mission.”