Originally published on UNCDF.

In Zambia, a country of almost 18 million people, approximately 70% of the population is not connected to the electrical grid.

For off-grid households, life grows even more challenging when the sun sets. Children struggle to complete homework under the dim light of kerosene lamps or candles. Families try to complete chores in near-total darkness. Small shops can’t power lights to illuminate their wares or play radios and TVs that could draw in customers.

Zambia, thanks in part to the SIDA-sponsored Beyond-the-Grid Fund, has significantly supported the expansion of solar and alternative energy products across the country, including increasing the prevalence of solar home systems (SHS), also known as Pay As You Go (PAYGo) solar. These systems bring light and energy to power phones, radios, and TVs to households that previously struggled to access clean, affordable energy.

Despite the growing adoption of SHS, the UN Capital Development Fund (UNCDF) in Zambia and Fenix International (a subsidiary of ENGIE) recognized that significant hurdles remain. Agents selling Fenix products were not able to provide the financial inclusion services that customers required to make payments for their SHS, and mobile money agents who were able to facilitate payments for customers were highly distributed and hard to find in rural areas.

Fenix, MTN and UNCDF partnered to test a new approach to address these challenges by asking two main questions: 1) What are the requirements to convert the existing Fenix distribution channels – remote sales agents – into a mobile money agent network and what is the business case for a combined solar sales and mobile money agent network? and 2) how can this network achieve scale and financial sustainability?

This represents the first time Fenix and MTN have formally combined forces to tackle mobile money and energy access in one fell swoop. To address the first question above, Fenix and MTN needed to train a group of sales representatives, called Fenix Traders in how to sell Fenix Power systems and how to serve as effective mobile money agents.

What happened during the pilot?

During the pilot, between November 2018 and August 2019, Fenix, MTN and UNCDF aimed for 75 Fenix Traders to be deployed in the rural communities as mobile money agents and salespeople distributing Fenix solar home products. Fenix hired and trained the traders in solar sales and service, and MTN conducted the training on mobile money with their distribution partner. Traders then began to work in areas identified as both having a large potential customer base for Fenix Power (Fenix’s SHS solution) and lacking ready access to MTN mobile money. Traders register and educate new mobile money users in addition to promoting the Fenix Power solution. The Fenix Traders were deployed in 12 districts across Zambia namely Chibombo, Choma, Iringa, Kafue, Kapiri, Katete, Lundazi, Mansa, Mbala, Monze, Ndola and Serenje.

By the end of the pilot in August 2019, 93 traders had been onboarded in the 12 districts, with 82 agents operating in fixed locations and 11 mobile traders moving through their communities. In total these agents signed up over 400 active customers and sold over 2000 solar kits. In addition to the new customers accessing solar and mobile money, the pilot demonstrated important effects of the model on the agents’ earnings as a result of the combined income stream.

Results from the pilot

Two key learnings from the pilot stood out:

  • Increased commissions to agents: Fenix Traders earned over K500 in commissions from the Fenix Power transactions, including MTN mobile money transactions and Fenix payments. Data shows that 82% of the recruited Fenix Traders were active each month and consistently received income throughout the pilot, indicating that through this model, they were able to sustain their business financially in their localities. In addition, Fenix Power customers conducted over 60% higher cash-in transactions than the overall cash-ins, which indicates a higher activity rate and more sustainable income streams through the Fenix Trader model.
  • Building customer trust and loyalty: Over 40% of the Fenix Power customers returned to the same Fenix Trader compared with an overall return rate of 30%, illustrating how important it is for traders to operate at the community level, accessible to rural customers.

What did the Fenix Traders say?

In addition to these key metrics, Fenix Traders also note in interviews that they have increased foot traffic in their businesses and increased sales of other products as a result of this new business opportunity. Evans Mwape, a Fenix Trader agent from Kapiri Mposhi, notes, “I have been running my shop for quite some years now and because we are in the village, there has always been very low sales. But since becoming a Fenix Trader, I have seen a big difference. There are more people coming to my shop to pay for their solar kit or to send and receive money using MTN Mobile Money. I am enjoying the commission I receive on the mobile money transaction as well as the solar kit sales. What is interesting to see is when people come to make payment or withdraw money, they always buy some groceries as well, not always a lot but even just a packet of biscuits.”

These learnings suggest that combining PAYGo solar sales and Mobile Money service into a single business model can drive agent profitability and activity for Fenix Traders, addressing the second key question for the pilot. Traders relying on two income streams can create more sustainable businesses than a sales agent relying solely on Fenix commissions or a Mobile Money agent bringing in only mobile money fees. Agents – who earn more – will be more likely to maintain their businesses and keep operating in underserved rural regions where power and mobile money are critical services.

Can agents achieve sustainable business models?

While the effects on Fenix, Fenix Traders, and their businesses have been clear, the most powerful impact is still on solar customers. Solar home systems transform rural families’ homes with clean, long-lasting lights and reliable power for appliances. The Fenix Trader model, by virtue of its increased sustainability for agents, can make PAYGo solar and mobile money more accessible to hard-to-reach families across Zambia.

UNCDF and Fenix are proud to have partnered to test a solution for critical last-mile challenges that hinder universal adoption of energy and financial inclusion. Combining access to mobile money and solar products via a single agent can help improve access to these critical services for previously-excluded rural populations and bring more households onto the energy access and financial inclusion ladders.