Henri Nyakarundi is the founder of African Renewable Energy Distributor (ARED). Twenty of their ‘Mobile Solar Kiosks‘ have been operational in Rwanda and now Henri and his team are ready to scale up and therefore they are looking for follow-up funding. We contacted Henri (who is explaining the kiosk to IMF boss Christine Lagarde in the picture above) to learn more.
“We primarily try to solve the unemployment issues that exist on the African continent. With a 30% unemployment rate in East Africa we believe innovation and entrepreneurship is the key to solve those issues. ‘Brick and mortar’ business are too expensive for the average person and our low-cost technology and business model allow low-income people to start a business and earn over two times the average income per capita. Our solution is a proven income generating business for people at the Base of the Pyramid.
But we also solve the lack of access to energy. More than 70% of the population has access to a cell phone but less than 20% have electricity at home. Some people have to walk miles to the closest town with electricity. Our solution uses solar energy to charge small electronics, therefore it can be implemented at any location and does not need to be connected to the grid. We even have our kiosk in the capital of Kigali, because most people are ‘on the go’ and do not have time to go back home to charge their phones. For people in market places, they do not have wall sockets to charge their phones so they use our kiosk while staying at work.
Finally we are developing a solution to offer low-cost internet using a build in WIFI-system on the kiosk. Less than 10% of the population in East Africa has access to the internet because of the cost. For people making less than 2$ a day, paying 1$ for internet is just too much. The growth of smart phones was real, however, no one as yet developed a cost effective platform to bring internet to the people a the Base of the Pyramid. And as we’ve found a solution for access to energy, we will do the same for internet access.”
Apart from charging services and internet access, what else do the Mobile Solar Kiosks have to offer?
“We focus on all value added services that can be sold electronically. In Rwanda for example we sell Ewasa (which is your home electricity bills), airtime, and we do mobile money transactions on the kiosk. We plan to add the option to buy an insurance and payment of taxes. All of franchisees use a tablet or smart phone to process those transaction and because the kiosk produces energy, keeping the kiosk charged is not an issue. We have a profit sharing structure with our franchisees where we collect 1% on all the sales.”
How does opening an Mobile Solar Kiosk work for an entrepreneur who is interested?
“We are using a franchise business model to promote entrepreneurship at the Base of the Pyramid. Our franchisees pay the equivalent of US$800 to start our business. For this amount they get our 3-day training program, insurance, maintenance of the kiosk and transport of the kiosk to the working location. This also includes the tablet they will use to sell all the electronic vouchers (airtime, insurance vouchers, mobile money). Of the $800, $100 is the start up capital needed to pre purchase the vouchers. $100 is the mobile money capital float they need to do transactions. The franchisee has to pay a yearly renewal fee of $50 that include the insurance and maintenance fee.”
Isn’t $800 a lot of money for the average person in Rwanda?
“Actually US $800 as a start up capital for a business is not a lot. If you compare it to the motorcycle business, which is very popular in the region, it costs around US $2000 to purchase a motorcycle. Plus our franchisees recover that investment within four months. But, we do have a payment plan program for women for example. They pay $200 as a start up fee and the rest in instalments for a period of 18 month. It is harder for women to access financing, and at the same time women perform really well on our kiosk. See for instance this story from one of our franchisees.”
This is your second round of fundraising? How did the first round go and who invested in your company so far?
“The first round was a small loan from a company called ‘Inkomoko’, based in Rwanda. We used it in combination with grants of SEIF and the Siemens Foundation. This was a total investment of US$26.000 to purchase twenty solar kiosks. We have just signed a deal with Airtel Rwanda. Now that we paid off the loan we planning to expand in the whole country of Rwanda: 400 kiosks in the next 2 years. We are also preparing ourselves for expansion outside Rwanda.”
How will you use the investment when you’ve successfully raised new funds?
“The funds will be allocated for the development of the next generation of the Smart Solar Kiosk with Machine to Machine (M2M) software. M2M technology allow us to communicate to and from the kiosks. For example, we realize that to better monitor the kiosks we need to make it smarter. So for example will be implementing GPS sensor system that will tell us where all the kiosk are at any given time, battery sensor for better maintenance, and charging sensor to know how many exact charges are done on the kiosks. The data will help us improve on our business, and give us a future insight of market trends and many more.
With the funding we want to purchase 100 new Mobile Solar Kiosks ($1300 each) and to cover our operation cost. We also need to expand our team to be able to grow.”
What achievement are you most proud of so far?
“We have accomplished a lot in the two years in business, but I am most proud of our program we have for women and people with disabilities. We realize how big the impact our business model and technology can have. Thirty percent of our franchisees are women and people with disabilities and our goal is to bring that number to 50%.”
What are the main hurdles you have to overcome to make Mobile Solar Kiosk a success?
“Because our technology and business model is so unique, changing people’s mindset that our business is sustainable, especially potential investors, has been a challenge. Product development is capital intensive, we spent a year testing the model and the technology and another year developing key partnership with telecoms.
Also, access to financing is a big challenge for us, most investors prefer to work with more established companies. Impact enterprises are often not seen as a valuable investment, and local impact investor are non existent in Africa.”
How do you envision your company 5 years from now?
“In five years we should be in all the major African countries such as Nigeria, Kenya, Uganda and Ethiopia. We already getting a lot of request for those countries; however, we need to finish building our next generation kiosk that will allow us to expand. We estimated that we there is a need for 100.000 mobile solar kiosks on the continent alone. I believe our technology will not only have a positive social, environmental impact, but offer a strong sustainable business opportunity to anyone interested in duplicating our model in their respective countries. Because our expansion model is through partnership, we believe we can expand very fast.”