Signing of Investment Agreement for Off-Grid Solar Power Project in Sub-Saharan Africa: Making power services more accessible to the poor
The Japan International Cooperation Agency (JICA) signed an investment agreement with Digital Grid Inc. for the Off-Grid Solar Power Project in Sub-Saharan Africa. This is the first project to be conducted in Sub-Saharan Africa since the resumption of JICA private sector investment financing in October 2012.
The Off-Grid Solar Power Project, which is being carried out by Digital Grid, installs solar panels at retail shops in villages without electricity, and provides LED lamp rental services and mobile phone charging services at the retail shops for bottom of the pyramid (BoP)* customers. By providing 300 million yen in equity participation to Digital Grid, JICA will support expanding Digital Grid’s project in Tanzania.
The issue of providing power access is a significant challenge in Tanzania. The electrification rate in outlying areas is particularly low, merely four percent, much lower than the average Sub-Saharan African rate of 17 percent. Households without power access traditionally rely on primary energy sources such as cooking charcoal or kindling, and kerosene lamps for lighting, and the health damage caused by the smoke and the emission of greenhouse gases are also challenges for residents. In addition, the logistics network is underdeveloped, resulting in high kerosene prices in outlying areas, a financial burden that BoP households using kerosene lamps must bear.
This project provides LED lamps to BoP households that are safer, brighter and less expensive than kerosene lamps. This project will allow retail shops to keep night hours, create new business activities and increase the number of hours each day available for educational activities for children. The project is also expected to curb household expenditures by replacing kerosene lamps, improve health conditions and reduce greenhouse gases. This project will also make it possible to charge mobile phones through a connection terminal provided in the rental LED lamps. As mobile phones are used as a means for transferring money, including paying for goods and services, this mobile phone charge feature is an important way to support the daily life of the BoP class.
As part of its business model, Digital Grid has developed hardware and software technology that makes it possible to remotely control and manage LED lamp charging and rental services that are provided at retail shops in poor residential districts. Retail shops use a mobile phone to pay for the power consumed. With a mission of “power to the people” Digital Grid provides people with new experiences made possible with electricity. Based on the Swahili word “washa” meaning “kindle,” the company has named its services in this project “WASSHA.”
Using this business-to-business model with retail shops, Digital Grid plans to expand their services to all of Tanzania, and it is expected that this JICA equity participation will enable the business model to expand, improving power service access to the BoP class.
At the Sixth Tokyo International Conference on African Development (TICADVI), the Government of Japan made the Nairobi Declaration and is working to strengthen the role of the private sector, including measures for private investment, startups, innovation, public-private partnerships and access to financing. In the Sustainable Development Goals (SDGs) adopted in the 2030 Agenda for Sustainable Development by United Nations member nations in September 2015, ensuring access to affordable, reliable, sustainable and modern energy for all is an objective to be met by 2030. As this project is aligned with those policies, it will contribute toward meeting the SDGs.
* The BoP, or bottom of the pyramid, generally refers to the low-income economic class of people in developing countries with an annual income of no more than 3,000 dollars in purchasing power parity. A BoP business is a sustainable business providing products and services to the BoP class at affordable prices using mobile money.