SHS, Clean Cooking and E-mobility — Their Digitalisation Journey
Let’s start with the basics. What is the difference between digitisation and digitalisation?
If digitisation is a conversion of data and processes, digitalisation is a transformation. More than just making existing data digital, digitalisation embraces the ability of digital technology to collect data, establish trends and make better business decisions. (TruqCapp)
Another way to put it: Digitalisation is a journey. As we take a quick look at the sectors of Solar Home Systems (SHS), the Clean Cooking space and e-Mobility, it is clear they are at different stages of that journey and each have their own maturity level; below are some of the critical questions they need to answer next.
Distributors of PAYGO SHS — Data to anticipate risk
The last mile distribution of SHS has more than a decade of history — and all the players know that to scale you need to digitalise. Yet, when the industry started, distributors could not find many off-the-shelf solutions to properly support their business: CRM integrated with Mobile Money? Manufacturers already doing PAYGO enabled products? Agent mobile application that works off-line? And so the M-Kopa’s of the world had to be fully vertically integrated and develop in-house solutions to help them build their business. Today, distributors of SHS have a good choice of digital tools to support their sales operations, a wide selection of PAYGO ready manufacturers and the collaboration between Product — Software — Distributors is solid (always with room for improvement). The industry is now mostly dis-integrated and maturing quickly.
However, during the GOGLA Conference last October, one crucial question was raised and remains to be answered: How can data really help to limit or even better, anticipate risk? One obvious answer is: “listen” to your KPIs such as PAR (Portfolio at Risk) and Repayment Rates.
The second is more complex: pertinence of data entered, profiling of potential customers etc. First it requires a series of hit/miss crossing with historical data to see patterns. Some talk of AI to find those patterns and improve early customer profiling. But an unbanked customer can easily share incorrect information about their income or activities to have access to PAYGO products. Ultimately, the industry would require a central registry of their future customer’s credit risk. A customer having already bought, and not fully repaid, from company A a PAYGO SHS (now locked) should not have easy access to another PAYGO SHS from company B. In Kenya, such registry is managed through the CRB (Credit Reference Bureau) which currently has a database of 19 millions kenyans, 66% of the adult population. Unfortunately, major gaps remain for those living in rural areas, where distributors of SHS mainly operate…
Therefore, although not a perfect process, today finding the RIGHT customers remains the work of the agents who should not just be compensated on number of customers they get, but also on other metrics such as repayments rates and/or utilisation rates. Finally, having a strong department that follows-up on non-paying customers and implements efficient repossession processes is critical.
Clean Cooking — Digitalisation to improve carbon off-setting.
Undoubtedly, clean cooking equals carbon off-setting. It’s an industry that requires considerable data collection from the field at point of sales, and months after the first sale. The first is “easy”, what remains to be defined is how to properly collect customer usage data “How many times is the cookstove being used”. Information collected today through repeated post installation surveys.
During the last Clean Cooking Forum, it was clear that for the industry to become more sophisticated, cookstoves would need to be smarter, with embedded IOT that automatically send data usage and make the whole Carbon Credit dynamic more precise and transparent. The latter however means much higher prices for the end user — solved through more PAYGO based Cookstoves.
The expectation is that the Clean Cooking Space will follow the path of the SHS industry that started with pico lights before moving to IOT type products with PAYGO leading the way. The good news for cookstove distributors is that a lot of solutions are being made available and SHS has paved the way in solving many of the unknowns around managing a PAYGO distribution business.
While visiting Ghana, Upya’s Impact Lead Emilie Cohen-Boulakia shared her thoughts on the similarities and notable differences between the two sectors.
E-Mobility — Moving away from Vertical Integration
Although new, the e-mobility space already counts more than 100 players. Together, they are working to define their business model with most being vertically integrated, even in terms of their main digital tools.
Multiple scenarios explain the above. The first one is that most have yet to validate their business model and therefore want everything in-house to change and pivot very quickly if and where needed. Another one is the perception that third party tools are not specific enough to their space (Reach out to Upya if that is your belief 😉 ) Finally, the need to control and exclusively own the data as a key asset for future business and monetisation opportunities that may come.
However, adjacent industries like the PAYGO SHS space, and the Clean Cooking space show that slowly but surely the industry will “disintegrate”. In fact, recently, Ampersand announced their partnership with BBOXX to manage the distribution and leasing side of the business. Very quickly e-mobility companies will need to define what is their true value proposition and collaborate with external partners for the rest… before they lose focus and run out of steam.
About Upya Technologies:
Upya’s mission is to support its customers as they scale and manage impactful businesses. Upya is an ERP/CRM provider present in more than 20 countries partnering with small promising start-ups and industry leaders of impact driven solutions: Off-Grid Solar, Clean Cooking, Productive Use and E-mobility. www.upya.io
