M-KOPA is a consumer lending company that uses an innovative SIM-card-based payment system to help off-grid consumers at the base of the pyramid finance the purchase of solar home lighting systems. Since 2010, M-KOPA has helped over 35,000 Kenyan households acquire solar assets through its proprietary pay-as-you-go technology. The company employs more than 160 full-time staff through its sales, customer care and technology divisions and sells its products through 740 retail shops across Kenya. The company receives over KES 1 million (USD 120,000) in customer payments each day and is on track to generate USD 10.5 million in revenue in 2013.
At the current electrification rate of 23%, approximately 6.2 million households in Kenya lack access to electricity. This hinders productivity as it limits daily activities such as schoolwork, household chores, and business at night or in the early morning. This population incurs sizeable daily fuel expenditures, with three-quarters of Kenyan households spending $0.42 on average per day on kerosene fuel.
M-KOPA’s pay-per-use purchase model spreads the price of a solar home system out over several months, allowing consumers to redirect wasteful daily spending on kerosene and other lighting sources toward gradual ownership of a better value system. Customers pay M-KOPA through daily small payments made through their mobile phone—a practice that is already widespread in Kenya. The M-KOPA solution is a high-quality solar home system that supports three LED lights and a charger to charge a mobile phone, which customers acquire with small daily payments by mobile phone.
To buy most solar systems outright is out of reach for people earning roughly $5 per day. So M-KOPA’s most popular pricing model is a price per day, roughly equal to what the customer is paying for kerosene. After paying for 365 days of energy, they own the system outright.
One of the most innovative components of M-KOPA’s system is that each unit has a built-in SIM card, allowing the company to check on each owner’s energy usage, balance and payment history. They send an SMS message when credit has run out, and to confirm a received payment. This system will allow them to even lend money back to people once they own their system outright, as mobile phone balances are a very common form of banking.
Using their tracking abilities, they know that quite a few of their buyers are charging phones throughout the day, while many are only drawing energy from the system at night to provide lighting.
In the future, M-KOPA plans to bring out other appliances that work only with their chargers, such as refrigerators, TVs and higher-power outlet strips. They don’t want users plugging in any old TV or fridge, as many of the older ones would drain the battery in an hour or less.
