Madagascar

Empowering Local Economies in Villages with Solar Mini-Grid 3.0

This is an excerpt from an early draft of this chapter.

“Don’t worry, we know it’s precious, we got this,” said a Malagasy villager, one of about three dozen unloading one-ton pallets of solar panels and equipment by hand from tractor-trailers. The odds of a disastrous drop seemed 50/50.

This post describes the adaptations needed by a business to bring electricity to rural Madagascar, where 90-95% of people in villages are not on any power grid.

In contrast to my doubts, the project leaders seemed confident that the equipment would all be safely unloaded and used to complete a solar-powered mini-grid.

Beyond that, they seemed sure that selling access to electricity in Marosely, a village of about 2,500 people, would make enough money to pay for itself and even return some money to investors.

But how, I wondered, could this mini-grid (if it got built) be financially viable? Could it make enough money? To satisfy profit-seeking foreign investors? In a village where a filling meal of cakes and coffee for six people (both prepared over a charcoal fire next to a tailor using a hand-powered sewing machine) costs (even at possibly inflated prices) less than two U.S. dollars?

Camille André-Bataille, Co-CEO of ANKA Madagascar, provided the explanation. Camille was one of several entrepreneurs and a total of over fifty-five native Malagasy and expat sources (known as Vazaha if they happen to be light-skinned) with whom I spoke in the summer of 2019. Some were brutally candid about the challenges of starting a business in a pseudo-colonial economy where the legal system doesn’t always work as expected. But Camille sees a way forward, as imagined and now jointly realized with her Co-CEO, Nico Livache.

Mini-grid 3.0: incubating local (client) businesses

“We are the first and only mini-grid builder in Madagascar and one of a very few in the world (as far as we know) who is taking an approach that we may call Mini-grid 3.0, meaning we are – based on local consultations – siting solar power generation and electricity distribution, plus also providing support – and even space sometimes – for local businesses,” Camille explained.

Until now, essential services – including basic medical care and food processing-and-preservation – could not be provided locally for lack of adequate electric power. Essential activities have been costlier, less safe, and worse for the environment because they required transportation of material or people to-and-from a city.

Incubating new local businesses and helping existing village activities to adopt electricity can therefore save-and-improve lives, reduce waste and environmental harms, and result in paying customers that can allow the mini-grid to be financially viable.

Why so confident of success? And that people will pay?

Whether it is in a failing state, emerging market, family business, or where I teach in the Boston area, aspiring entrepreneurs often skeptically ask: “even if contracts and courts may exist, and maybe (sometimes) serve their function, what if I cannot (or do not want to) use the legal system to enforce agreements?

In this case, why are Camille and her colleagues so sure that (1) villagers would start-up (or expand) businesses, and (2) pay what they owed?

Know your customers and build relationships

Villagers and their leaders independently explained why they trust the people and entities building these grids. They said that they appreciated regular consultations and time invested in relationship-building.

Iry Raïssa Alaoy (who goes by Raïssa) is a Malagasy business development consultant at ANKA who is dedicated to long-term consultations with people in Marosely and other villages. Similarly, Aurélie Buffo of Experts Solidaires (an NGO that cooperates with ANKA to expand electrification) moved to the region – sometimes living in Marosely for many days-at-a-time – to build relationships.

This investment of time in getting to know the needs and wishes of their potential clients has built a consensus around the need for local services, and therefore the viability of new and expanded small businesses, and the ability and desire of locals to pay to keep the electricity flowing.

Boosting local farms and food processing: why it matters

Raïssa is also accountable for local consultations that are a part of ANKA’s Agri-Grid initiative, a part of its Mini-grid 3.0 approach which specifically will encourage villagers to make the most of local plants that already grow in their yards that go under-utilized, or other resources.

She explains: “although we produces staple crops such as cassava, maize, and sugar cane which could be processed into other commodities such as flour, nutritious products, or sugar, Madagascar is a net importer of these kinds of products.” More to come (in future content) on why this is so. Subscribe or follow this blog to be notified when I publish on this (links below).

Two Malagasy businesses show that it is possible to profitably process under-utilized local plants into higher-value products for both domestic consumption and export. Suzanne Jaouen of Moringa Wave explained that the Moringa plant is seen as nearly useless locally around village residences but is prized as a trendy powdered dietary supplement in Europe. Her company hopes to scale-up to both sell more of their product abroad and to educate and distribute more locally to help combat malnutrition. Similarly, Ken Lee Randrianarisoa, founder of Soanamad, turns cassava, breadfruit, and other local vegetation into gluten-free flour and baked goods, including cookies and baguettes. 

The only remaining questions involve math and relationships: can all of these entities (including potential start-ups engaging in processing food) secure enough financing and then make enough revenue to sustain themselves, allowing them to pay for, among other things, electricity from a local mini-grid? 

Tips on entrepreneurship in a tough environment

How do these people keep hope alive when things go badly? Especially in a place famous for nightmarish deforestation? At a time of worldwide environmental collapse? When they see suffering? And when they are very aware that institutions such as courts or other parts of the government can fail?

Aurélie borrowed from an anecdote about a little bird that fought a forest fire by dropping water from its beak: “the other birds laughed at her, but she said ‘I will do what I can.'” She added: “I live in Marosely – I can tell you that already, before the grid is active, there is a difference in people’s lives. There is hope and excitement.”

Raïsa elaborated upon some generalizable lessons: “‘development’ – it is such a big and over-used word – we sometimes are not sure what it means, and some traditionalists and conservatives can instinctively be against change, so it is not easy. But we see that if we get everyone involved it is easier. This is not something anyone can do on their own, but working with partners makes things happen. It takes time. Our continuous communication increases the chances that this tool will be used, and that its implementation will last.”

Interestingly (to an outsider), safety and gender roles were never mentioned by these three women as challenges to leading and managing change.

So? Did they succeed? Does Marosely have a mini-grid?

By the end of our site visits, the pallets had all been successfully unloaded with no damage. Solar panels and equipment were in the process of being installed. Marosely now has a working solar power installation (pictured below in its nearly completed state) and mini-grid. ANKA was about to start incubating start-ups there, but, as of 2020 and until 2021, the pandemic has put a lot of projects on hold.

Similarly, Mini-grid 3.0 and all the entities and people involved in helping locals use solar power may defy the expectations of skeptics. During the next few years it will become evident whether, as predicted, new solar-powered mini-grids will be used by villagers to begin (or expand) activities to boost their quality of life.

Next steps: sustaining a fragile balance in many ways

ANKA Madagascar’s Co-CEO, Nico Livache, added that a key to their success so far has been coordinating “a diversity of funding sources and partners - including:

• Experts-Solidaires, an international NGO providing technical expertise,

• Ground Squirrel Ventures, an impact investment fund [established by Eric Klose, to whom I am very grateful for letting me tag along – thank you!],

• corporate foundations (EDF, Nexans, Synergie Solaire), and

• a financing program of the World Bank.”

In his words: “As fragile as the unloading of the panels seemed, so is the balance in development projects — it lies in the ability of all these actors to work together.”