NewLight Africa (doing business as Heya!) is a Kenyan distributor of clean energy products including solar home systems and solar lights and a recent Spark+ grantee. We got a chance to interview NewLight Africa’s CEO, Steve Andrews.
What inspired you to start NewLight Africa?
I was finishing up as Chief Executive of SolarAid and SunnyMoney. We spent 4 years building SunnyMoney into the largest last mile distributor of solar lights in Africa to a peak of 75,000 units sold per month. And then I realised that I hadn't finished with this market. That I hadn't spent 4 years learning about rural energy and distribution just to walk away. So I decided to set up a privately funded business (where my heart is) and do it all again. Except this time, I decided on a few key differences:
- To make pay-as-you-go (PAYG) or consumer credit central to the plan;
- To not limit ourselves to solar – recognizing that cooking was causing a more urgent health and environmental crisis and was actually a primary use of energy for these consumers;
- And therefore to recognise, from the outset, that we needed a way to sell products on credit without having a mobile-enabled asset locking mechanism that is found in many solar home systems these days.
- And finally, to recognise what we had seen at SunnyMoney, that most rural consumers are a lot poorer than the solar home system companies seem to think; so we needed radically affordable products that the actual ‘Bottom of the Pyramid’ could genuinely justify and purchase.
Congratulations on being selected for the Alliance’s Spark+ program. How do you believe this support will create value for the company?
The Spark+ grant had an immediate and huge impact on the business. We had seen our sales of clean cooking products (Envirofit's charcoal stove and a liquified petroleum gas solution) starting to take off. It caught us a little by surprise and we didn't have the working capital to support those sales. Thankfully Spark+ provided funds as bridging finance until we raised that working capital from commercial sources. And the figures speak for themselves. Our sales of clean cooking solutions rose from 502 units in December 2017 (we received the Spark+ grant just before Christmas), to 4,058 units in February. And in turn, those sales figures have really helped the investment community to sit up and notice us: to see that we have a model that can scale to deliver a range of products; and to recognize that we're not just another solar home system company.
Now that we have a great working capital provider for cook stoves in Lendahand, we are focusing the Spark+ grant on improving our credit model and logistics; all essential elements to scaling our sales and impact.
What is the most striking lesson you’ve learned since founding NewLight Africa?
That it's easy to sell people products on credit... but a bit harder to actually collect the funds!
But we seemed to have cracked it. We've tweaked our model and collections rates are looking good. Which is incredibly important. As one of NewLight's earliest investors reminds me: we're not going to get very far in addressing universal access to energy if the only products we can sell on instalment are solar home systems.
When I was a kid in the 1970s in the UK, we bought our TV through Radio Rentals on an instalment plan; and every family would receive the Kays Catalogue, from which we could buy a wide range of products on instalment, from clothes to consumer hardware. Only 40 years ago, many British families couldn't afford the products they wanted without access to credit.
It is the same today in rural Africa. Except our customers are looking to buy some of life's most fundamental products; such as cooking solutions that don't kill them.
How do you see the market for clean cooking solutions evolving in the coming years?
It's all about the fuel. What is the most promising fuel that can displace charcoal and wood ovens; is substantially better for the climate; and can be scaled immediately? There is only one answer: gas. LPG is the only fuel that has helped significant populations to stop using charcoal. This pains me to say this a little. I'm not totally in love with gas. It's a fossil fuel. But it is dramatically better than wood or charcoal and it is the only practical and scalable game in town, at least right now.
NewLight (or Heya!, which is our trade name in Kenya) sold a lot of ethanol stoves in 2016. Customers loved them. But we stopped selling them because the market for fuel production and distribution was immature. We were selling a product to some of the poorest people in the world which they couldn't use because they couldn't get hold of the fuel. We had to stop. My hope is that the players trying to get the ethanol market going manage to do so in a way that genuinely serves customers. I haven't seen much evidence of that yet.
And what about wood pellets? Well, nearly 8 years ago my wife and I replaced our gas boiler and heating system in our house in the UK with a wood pellet boiler! So I love the idea and believe sustainably grown wood pellets could have a big role to play in changing how Africa cooks. But like ethanol, I need to see the market substantially mature before Heya! will sell wood pellet cook stoves. We owe that to our customers.
At Heya!, we’re very optimistic about the future. We believe that if we stay focused on distribution, affordability, and listening intently to our customers, we will play a leading role in changing the way Africa cooks.