Mapping Market Expansion for Off-Grid Companies in Southern Africa
Power Africa and private energy companies are lighting up homes, connecting rural communities to the broader world, and boosting economic prospects across sub-Saharan Africa. Now, Power Africa’s publicly available route-to-market (RTM) tools provide geospatial data and techniques to map population density, electrification, telecoms, and road infrastructure to help solar home system (SHS) companies prioritize geographic markets for increased sales and greater energy access.
Two out of three people in sub-Saharan Africa lack access to electricity. Most of these people live in rural areas that are out of reach of central electricity grids. Here, mini-grids and stand-alone systems, primarily solar-based, are the most viable ways to increase energy access.
Reaching the Right Customers
In rural areas of Southern Africa, where relatively few people have access to electricity, it is often challenging for SHS companies to reach new customers in order to expand their market footprint. Most SHS companies employ local sales agents to sell their systems house-to-house. Some visits are more successful than others, and some areas generate more sales than others. Unsuccessful trips can be frustrating, time-consuming, and expensive. Identifying the areas with the greatest opportunities for SHS is essential to promoting company success and bringing power to those who need it most.
In 2019, Power Africa conducted power sector assessments, analyzed market characteristics and regulatory landscapes, and consulted with energy sector players in Malawi, Mozambique, and Zambia to identify support areas with a high potential for transformative impact. Based on its findings, Power Africa developed off-grid technical assistance solutions to accelerate household electricity access. One of these solutions was the RTM tool, which uses open-source software and publicly available geospatial data to map several indicators of readiness for SHS expansion — including affordability, distance to national grids, electrification rates, and presence of mobile networks. The RTM tool thus pinpoints those areas with the highest potential for SHS or mini-grid deployment.
Mapping the Route to Market
By mapping the physical locations of infrastructure, such as transmission lines, households, and businesses, geospatial tools can help identify where the electricity grid will likely extend and where off-grid technology, such as household solar panels, could be more economical.
The RTM tool includes data points such as population density, distance to major cities, income levels, mobile activity, and agricultural activity. By providing this information in a consolidated and digestible way, the RTM tool can help SHS companies fine-tune their market expansion strategies by targeting the areas with the highest potential. Companies can then determine the most appropriate locations for service centers, regional offices, and recruitment of sales agents.
BENEFITS
- Helps identify high potential geographic markets in Malawi, Mozambique, and Zambia
- Enables customization of criteria to identify specific target markets
- Supports the development of robust RTM strategies
No technical expertise is required to interpret the analyses; the tool outputs are accessible to anyone who can download Excel and Google Earth. Tool updates require only some prior knowledge of geographic information systems (GIS).
Zambia: After sharing the RTM tool with the Zambian Ministry of Energy and the Rural Electrification Authority, Power Africa worked closely with the Solar Industry Association of Zambia and SHS companies to help them implement the tool by utilizing various data points such as demographic data and new market locations to enable more efficient, data-driven location targeting.
DOWNLOAD: The executive summary of the tool includes links to supporting files and explains how the tool was constructed, how it is used, and its key insights.
Malawi: Power Africa developed an RTM tool for Malawi that built on the geospatial tool developed in Zambia. The database combines various factors that SHS companies typically use to prioritize geographic target areas at both the district and the village levels. Power Africa also developed a four-part video tutorial on how to use the RTM tool.
Mozambique: Power Africa recently released an RTM tool for Mozambique, with an updated dataset that includes healthcare facilities within the district data. The healthcare data further support the identification of high-potential regions for expansion for SHS companies and mini-grid developers.
Impact and Outlook
In June 2022, Power Africa hosted a webinar to share the RTM tool more broadly with Southern Africa’s energy sector. The webinar featured three panelists from three SHS companies who discussed their experiences and successes using the tool.
Growth: “The model allows us, with demographic-based analysis, to prioritize our outreach to areas most underserved by the grid. Previously, our agent recruitment was arbitrarily determined by our field staff; now, our growth is guided directly by this model,” VITALITE Zambia.
Business start-up support: “The tool came at the right time when we started Zuwa Energy operations in Malawi. It guided us in tackling the market and identifying which schools and hospitals to approach. We have grown our Lilongwe customer base through the RTM tool,” Winston Ngwira, Operations Manager, Zuwa Energy, Malawi.
RTM tool customization: “We had, for the first time, a lot of valuable data that we couldn’t find publicly available, and we could now plan at a district settlement level, which was critical for our expansion. It assisted us in addressing the customer repayment challenges we were facing. When you find a location where network coverage is low, customer repayment from a PAYGO perspective will also be low due to lower mobile money access. We customized the RTM tool to add productivity and mobile network penetration, which helped us invest more intelligently. We focused on areas with low electricity access but manageable mobile network coverage. Based on this data, we expanded to these locations where we have better repayment control. The informed decision resulted in an increase of about 27 percent in sales and a decrease in credit risk issues,” Emidio Amadebai, Managing Director, ENGIE Energy Access Mozambique.
Sales agent expansion: “We mainly used the RTM tool to grow our agent network in Malawi. In 2018, we had around 200 agents. The tool helped ensure that the addressable market where we onboard an agent doesn’t affect other agents but still has enough customers for the agent to engage with. We’ve now grown to around 950 agents with the help of this super-powerful tool,” Justin Gerber, Head of Customer Operations and Development, Yellow, Malawi.
As of July 2022, more than 940,000 homes and businesses in Malawi, Mozambique, and Zambia have gained access to electricity as a result of Power Africa’s work through various off-grid support initiatives.
