From a non-profit to a for-profit with a bigger social impact
It all started with a sort of Kiva, a non-profit giving free money to microfinance banks. But it made Hugh Whalan, the founder, think: it is great to give free money to microfinance banks, but if you’re going to give them free money why not making them use it for something they wouldn’t use it for otherwise? So he experimented energy loans: partnering with a local supplier, they lent loans to the Microfinance Institutions (MFIs) for people to buy energy products.
But what they realized is that there were a good reason why the MFIs weren’t already doing it: lending money and selling products are two very different jobs and processes. You have to find the product, to stock it, give it to your branches, manage the inventory, the after-sale, market the product, etc.
And MFIs do not know and do not have the time to handle this extra work. At the end, what the MFIs really needed was help on this supply chain. And by managing this kind of partnership, Impact Energies could even help them do their job better.
The non-profit though became a for-profit, Impact Energies, creating an even bigger social benefit by sticking to what they were good at, while innovating. Impact Energies is indeed reinventing the way clean energy products reach the world’s poorest consumers by integrating the product to their Factory-to-Village (FTV) supply chain.
A model that leverages on the strength of MFIs’ network
Partnering with microfinance banks that already reach millions of borrowers, they help them sell clean energy products to the villages. But the challenge is to have thie biggest impact possible while creating little work as possible for the MFIs.
To achieve that, Impact Energies support all the process: they find the products, test them, supply to the selling points, train technicians and local entrepreneurs who can sell products in their communities etc. The model is supported by a proprietary cloud-based platform with SMS capabilities which gives MFI partners the ability to manage inventory and helps partners along the supply chain facilitate information sharing.
A win-win solution
The market is potentially huge: according to the International Finance Corporation, 7 million people could benefit from solar. The alternatives, like kerosene or candles, are very costly and dangerous for health as for the environment.
The clients already know and trust microcredit institutions, and so they trust the solar more. They already have built-in financial viability so they can get the loan to buy this kind of product, a product that they would not have been able to find anywhere else.
For MFIs, the benefits are also multiple. First, it is for them another offer people will want to borrow for. And it also generates their social mission, and increases their impact. In addition, it is definitely good to offer product in-house rather than give a loan without knowing what their clients will do with the money. Here, they can trust the product and they can control the supply,
The impact also concerns small workers in the region: TV technicians, electricians, people working often working in the informal market. One hundred of them are currently being trained by Impact Energies to become technicians for the solar products, which give them another source of revenue.
To infinity…and beyond?
Next steps for Impact Energies? Bringing more investors in, and diversifying in other energy products than solar lamps, but still being products that people really need. They are even thinking of marketing a more design thermos basket (see article related), so we will definitely keep you informed!