BY Dustin Homer,
The “Africa Rising” narrative has become commonplace among those who recognise the continent’s rapid urbanisation and industrialisation as rich opportunities. Yet, the fact remains that basic services remain out of reach for millions. Even access to a reliable electricity grid is far from assured for huge segments of the population – in fact, according to data provided by the World Bank’s Sustainable Energy for All Global Tracking Framework, several African states actually moved backward in this regard between 1990 and 2014.
The slow progress of utility-supplied electricity has undoubtedly affected socio-economic progress in these countries. Urbanised populations are growing at an astounding rate in Africa, and infrastructure upgrades are far outpaced by demand.
This said, the opportunity for a more widely electrified future is on the horizon—and a greener one as well, with the potential to leapfrog dependence on fossil fuels. Power shortages have spurred on incredible innovations and forward-thinking SMEs to provide household-level energy products, allowing consumers to bypass infrastructure that leaves millions in the dark. Some products offer a simple light; others power TVs and entire households or businesses.
However, while it’s tempting to think that an innovative product that affordably solves a pressing need is all it takes to build a thriving business, these organisations face enormous barriers to successful entry and growth. Understanding demand, finding new customers and moving sustainably across borders into new markets will be key to enabling expansion – and until then, smart, affordable, eco-friendly answers to the electrification puzzle can only ever be a drop in the ocean when it comes to full electrification on the continent.
Fraym is active in this sphere, working with both public and private enterprises to help them ascertain the location of their markets, how much these markets can afford to pay, and where both private services and grid expansion projects can deliver the greatest benefit to the greatest number of people.
This is achieved by making use of a wide variety of data to build a profile of a client’s ideal consumer. These profiles are, in turn, used in combination with alternate data points (such as satellite imagery of night-time illumination in target areas, household surveys and individual spending statistics) to identify the total demand for off-grid electricity solutions, and pinpoint priority areas for grid expansion projects. These insights are invaluable in prioritizing locations, informing strategic business decisions, and helping suppliers to mobilize their sales and distribution teams—driving both profit for businesses and easy, affordable access for citizens.
What is the spending power of households? How much of their income goes into less-than-ideal forms of fuel used for lighting and cooking, such as charcoal and paraffin? Is the potential target market credit-worthy, and how stable is their income (in a region where so many millions are dependent on the highly variable and usually seasonal agricultural sector)?
These questions and many others can be answered through a well-strategized combination of available data points, fed into cutting-edge machine learning algorithms. With this approach, it is possible to glean patterns and insights that may not be immediately apparent at the surface level.
The process is worth it. In the quest to bring reliable and affordable electricity to Africa, what’s good for business and what’s good for the population are perfectly aligned. Full electrification of the continent certainly won’t happen overnight, but slowing down is not an option. New players and funders in this arena need only get their foot firmly in the door – and investing in the knowledge they need to achieve maximum off-grid growth with minimal waste is one of the best ways to do it.
Dustin Homer is the Director: Client Solutions at Fraym