How This Solar Startup Became a Multinational Social Enterprise

If you thought solar energy in developing countries is the purview of NGOs and social enterprises, M-Kopa will prove you wrong. This Nairobi, Kenya-based company, founded in 2012, combines solar technology with mobile phone payments, which is increasingly the preferred currency in Africa. The result has been a revolution that has electrified homes in Kenya, Uganda and Tanzania.

M-Kopa's concept is relatively simple. Most rural regions throughout Africa lack any access to the grid, and even if they do, most residents cannot afford to pay for the electricity anyway. Home solar installations have become far cheaper and more effective, but even at a price of $200, they are still too expensive for most families in the region. M-Kopa solves the problem by installing the system at homes and allowing its customers to pay them off slowly over time (hence the name Kopa, which means "to borrow").

Users pay the equivalent of about 50 cents a day for an electrical system that provides enough power for lighting, phone charging and keeping small appliances such as radios humming. Users can pay every day, or for a week or month in advance through their cell phones. If users don’t pay, the lights go off. Once they pay, the lights come back on within five minutes.

That model has resulted in a company that now has 300,000 customers, equating to 1 in 20 households in Kenya alone. M-Kopa’s Nairobi headquarters is now home to over 700 employees.

Last year, M-Kopa scored a huge shot in the arm thanks to its winning a Zayed Future Energy Prize (ZFEP), which  can be best succinctly described as a Nobel Prize-like award for clean energy. Its 2015 US$1.5 million prize is allowing the company to invest in what largely has made it so successful: its employees. To gain more insight on the prize's impact, I interviewed Chad Larson, M-Kopa’s co-founder and chief financial (and credit) officer.

“One of the biggest challenges we have faced is that if we are going to continue to be a large Nairobi-based company, we’re going to need a GE-style training program where we can invest in training managers and staff,” said Mr. Larson during our talk at the Masdar booth at Abu Dhabi Sustainability Week.

Every company has growing pains, which can become apparent when a product or service takes off. Much of M-Kopa’s challenges were cultural. Some of the company’s executive leadership, including its co-founders, moved to Kenya from Europe or the United States; the rest of the management and staff is local. Challenges such as encouraging employees to be proactive, management approaches and coping with constructive criticism became challenges for the organization.

Receiving a ZFEP award has allowed M-Kopa to invest in a training program that help its employees adjust with future growth, Mr. Larson told me. The company has launched more than 20 classes covering a host of topics from email communication, improving soft-skills crucial for business and delegating tasks. For those of us on either side of the pond, these classes may sound hum-drum. But as Mr. Larson explained, this education program has made a difference in boosting employees’ confidence and hone their skills while the company pursues new growth opportunities — and they are sprouting like weeds across Africa, where the middle class is expanding rapidly.

As a result, this ambitious social enterprise continues to expand. M-Kopa has rolled out more products to more homes, and many long-time customers are now ready to invest in even more powerful home electrification systems. The result has been several benefits for Kenyan society: less burning of dirty kerosene; more opportunities in education with the ability to study at night; and improved communications plus more economic opportunities for citizens with the ability to recharge that phone quickly and cheaply. And all of this has been unfolding cleanly and cost-effectively within and beyond Kenya with almost no carbon emissions.

Image credit: M-Kopa

Disclosure: Leon Kaye’s Abu Dhabi Sustainability Week expenses were provided by Masdar