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Spotlight- Bidhaa Sasa

As distributors of goods to rural Kenyan households, the co-founders of Bidhaa Sasa have key insights to reaching  last-mile energy access markets. We spoke with them to learn about their experiences distributing energy products and their challenges and lessons learned in serving “bottom of the pyramid” populations, particularly women. 

Bidhaa Sasa focuses on the distribution of products using direct selling techniques, while simultaneously offering consumer financing. What led you to start an energy access enterprise focused on distribution?

Before setting up Bidhaa Sasa, we, the founders, felt frustrated in our previous roles because access to clean energy in developing countries has been traditionally perceived as a problem solved through technological innovation (e.g. PayGo), but very little attention has been paid to the rural distribution bottlenecks. We wondered how nascent consumers know about products and services that can improve their lives. How can they physically get hold of new goods? Why would they even trust these new products or services? We set up Bidhaa Sasa as a cost-effective solution to distribute life-improving technologies to the vast majority of rural families.

 

What are some of the means you employ to bridge some access gaps for low-income customers and in Bottom of the Pyramid (BOP) markets to provide “last-mile” distribution to rural customers?

The gap to access clean energy by low-income rural customers is not just a financial problem but a combination of problems. Rural women in particular face many barriers (and higher barriers than their male counterparts): their incomes are lower, they lack collateral for borrowing and credit histories, and they lack mobility and free time and are therefore less well-informed. However, they are rich in social capital. At Bidhaa Sasa, we leverage existing social networks that are part of everyday rural life to make clean energy goods both accessible and affordable. We sell our goods with payment plans using the well-understood group liability model and we have developed a women-to-women direct sales distribution model that is scalable and sustainable. We deliver the goods to our clients’ homes and we educate the end users. We also look after all their after-sales needs. Additionally, all of our services are offered by a single, professionally-trained local employee simplifying the customers’ journey.

 

In my ways, Bidhaa Sasa’s financing model provides a critical service for providing access to sub-$100 products. How did this innovative model come about and what have the results looked like?

We believe that the bulk of the demand from rural low-income women is for products that costs less than $100 and can be paid in installments over less than 12 months. Any price point higher than this or terms longer than this would not be attractive for the vast majority. Bidhaa Sasa can maintain low operating costs for such products with high demand by grouping customers and including clients in its sales process without compromising customer service, all thanks for existing social networks. To date, we have served more than 16,000 clients in western Kenya, have worked with more than 1000 client-leaders, and have achieved repayment rates of 97% and NPS scores of c.80%.

 

Our 2017 Energy Access Practitioner Network Survey results  showed that women still occupy a relatively low percentage (39%) in this distribution, whereas a segment such as sales has seen a considerable increase in their participation. As an enterprise with a heavy focus on building strong distribution networks, how would you say this can be improved? Is there an economic case to be made?

The users of clean technologies such as solar lights and improved cooking solutions are mostly women because they are the ones that spend most time at the house and are in charge of most domestic chores. It is also common that women manage the household’s budget as they need to provide daily for lighting and meals. Not only they are the natural users of many technologies but they also enjoy deep social networks. So, for us it does make business sense to target women on their own right despite the barriers they face.

An improved charcoal can save half the amount of fuel otherwise used meaning that women can contribute directly to improving the household’s economy. Our data shows that the vast majority of our clients (who are 70% women) make the instalment payments themselves (not their husbands) demystifying the economic role of women in rural households. And the best way to reach rural women is with the help of other rural women. Our staff (who are 60% women) build relationships with client-leaders (who are 80% women) who using their own networks create awareness and acquire new clients in exchange of cash and non-cash incentives such as social recognition.

 

What have been your biggest challenges so far and how are you working to address them?

Our biggest challenges so far are finding the right talent in the rural areas where we operate and the right funding partners.

Finding talent in rural Kenya is difficult as the best tend to migrate to the cities. To create a stable and professional workforce we decided to offer full time jobs rather than relying on commission-only sales agents, and this required to invest heavily in a selection and training programme to grow talent in-house.

Investors in the clean energy access space have little appetite for distribution-only businesses because they have not seen large-scale examples yet and also fear these businesses would compete with the manufacturers of the tech itself who often are also distributors. However, as the sector matures and businesses position themselves in one segment of the value chain, we are confident that investors will start considering last-mile distribution an attractive opportunity especially if they want to understand better their impact.

 

What market players are not currently engaged but would accelerate this market’s development and/or potential? Where would you like to see greater emphasis placed?

Distribution-only businesses have a tough time creating headlines as they are not the ones that invent new gadgets, apps and the like. How can a business be “innovative” if they are not launching a new piece of tech?

We believe that the technology solutions have been already invented (but not deployed at scale), from solar energy for LED lighting to LPG gas for cooking. And still the emphasis from grantors (e.g. DFIs) and investors is on generating new ideas that never go anywhere while there is surprisingly little focus on execution. Non-tech innovation, for example business model innovation, is too often out of scope in the application forms of prizes, grants and funding which puts distribution-only businesses at a disadvantage.