GVEP has completed a study which analyses the off-grid lighting market in Rwanda, offering useful insight into a sector that remains largely untapped.
GVEP’s analysis provides first-hand data collected from major companies in Rwanda that are currently selling off-grid lighting solutions to households including solar lanterns and solar PV systems.
Like it’s counterparts in the East African Community block, Rwanda faces obstacles in the path to supplying energy to its nationals; approximately 85% of the population remains without access to the electricity grid. Its high population density, reformed and business-friendly regulatory environment and economic and political stability have attracted a number of companies from the region to establish a presence in Kigali. Despite ambitious government electrification programmes, more than one million households will likely still require off-grid electricity by 2020. Nevertheless, solar products sales amongst all distributors are still very low. The assessment is aimed to provide further understanding into the structure of the solar market, product suppliers and dealers in rural areas, promotional strategies currently employed by companies and the challenges encountered as businesses seek to increase sales.
Some of the key findings and conclusions of the assessment are as follows:
- Data from field trials show that the use of a solar lantern can reduce a household’s lighting energy expenditure by around 65% as compared to traditional fuel such as kerosene, often enabling financing the investment costs within that timeframe.
- Annual turnovers for solar products range between US$15,000 and US$2 million with institutional installations and government tenders contributing the bulk of revenue for these companies. Still, some of the smaller players are highly specialised in the rural poor market fulfilling an important function in enabling energy access to that segment of the population.
- Approximately 80% of sales are achieved through pro-active marketing and distribution by entrepreneurs and agents. Companies actively using such strategies achieve 75% higher turnover on average on products below US$100 compared to companies that do not actively market their products, showing the importance of marketing in reaching customers.
GVEP is assisting the World Bank and the Energy Water and Sanitation Authority (EWSA) in a project which will provide small grants to local businesses to support the development of retail networks for off-grid lighting products in rural areas and to scale-up their marketing and awareness campaigns.
David Disch, GVEP’s Sustainable Markets Advisor and lead author of the report stated, “Our research shows that compared to other countries in the region where bulk sales appear more common, it is important for companies in Rwanda to build a dealer network and market their products in order to achieve sales. Awareness is still very low in Rwanda but the country has a high potential, despite challenges in affordability. The settlement structure is still very rural. However, companies require support to set up a distribution network and getting the marketing right.”
Source: Article written by Rehema Kahurananga, GVEP International (Global Village Energy Partnership). The full report can be downloaded from GVEP International’s website here.