Five Questions about Mwezi – Solar Solutions for Africa from Africa – Special Interview with Mike Sherry, Founder, Mwezi, United Kingdom – June 3, 2013

On the first Monday of each month Emerging Markets ESG publishes a special interview with an academic, expert or practitioner about a specific topic with relevance to environmental, social and/or governance (ESG) issues.

This month’s interview, the 15th in the special interview series, is about Mwezi – Solar solutions for Africa from Africa, and is with Mike Sherry, Founder, Mwezi, United Kingdom.

Mwezi is a UK-registered impact enterprise operating in Sub-Saharan Africa.  (Mwezi means moonlight in Swahili.)  Its aims are to improve the health, wealth, education and environmental impact of the poorest people in the world in a sustainable and scalable way using a market-based solution. It will achieve this by developing a network of workshops that will assemble products and provide services that meet its aims.  The Mwezi network will provide jobs, skills and after-sales service to the poorest people, those at the base of the pyramid, by establishing local workshops within the poorest communities.  Its pilot program will establish a network of small scale workshops in Kenya to assemble, sell and provide after-sale support for a solar powered lamp.  There are 4.2 million households in Kenya that use kerosene lamps as their primary light source.  The Mwezi light will displace kerosene lights.  There are 580 million Africans in Sub-Saharan Africa that have no access to electricity, and kerosene is widely used lighting fuel across the world but it has serious consequences for the users’ health and a significant negative environmental impact.  The poorest African households spend between 10 and 25% of their monthly household budgets on kerosene.  The solar market in Africa is set to achieve exceptional growth; conservative forecasts suggest annual sales growth of 45-50%.  Mwezi has a number of distinctive advantages – local assembly, microfinance for the product and a product designed specifically for the target consumers.  Once it has successfully completed the proof of concept, its intention is to rapidly scale up the number of workshops and then to add complimentary products to the range.  Potential products include a solar powered mobile phone charger, solar powered radio, bio-ethanol cook stoves and a water filter.  All of these products require after-sales support.  Mwezi believes that this approach will be scalable and sustainable.

Mwezi is the brainchild of Mike Sherry, a chartered accountant, FCCA.  He has worked in finance for variety of organisations from start-ups to mature businesses with turnovers of up to £250m.   He has experience in the commercial property, pharmaceutical, publishing, professional services and marketing services industries.  Over the last six years he has been involved in several environmental projects in Sub-Saharan Africa-from energy efficient cookstoves to micro-finance. He has spoken at various climate change meetings from COP15 in Copenhagen to UNEP FI Roundtable in Washington DC. He has a a second class BSc Hons degree in Chemistry from Kings College, University of London and a first class BSc Hons in Applied Accounting from Oxford Brookes University, Oxford.  His interests are in entrepreneurship in developing countries, impact investing, crowd funding, environmental investment and finance.

Emerging Markets ESG:  Mwezi promises solar solutions from Africa for Africa.  In a nutshell, what is unique about the Mwezi solar-powered lamp?

MichaelSherryMike Sherry:  The Mwezi light is unique in that it has been designed to be modular so that we can assemble the light locally, thereby moving some of the value chain into African communities.  Since the light is modular we can also provide after-sales support locally thereby giving our customers confidence in the product.

Emerging Markets ESG:  Please explain the environmental, social and governance (ESG) advantages/benefits of the Mwezi solar-powered lamp vis-à-vis kerosene lamps.

Mike Sherry:  Kerosene is an expensive, dangerous and environmentally harmful fossil fuel.

The cumulative effect of 1.6 billion people using kerosene and other biofuels for lighting contributes heavily to global carbon emissions.  The mostly commonly cited estimate for the use of kerosene for lighting likely accounts for 100-150 million tonnes of CO2 emissions.  Furthermore, nascent research suggests that the impact of Black Carbon, formed from incomplete combustion of fossil and bio-fuels and also commonly referred to as soot, could be a major source of warming in the lower atmosphere and play a strong role in the melting of glacial regions.

The health implications of fuel-based lighting are two-fold: chronic illness due to indoor air pollution and risk of injury due to flammable mature of the fuel used.  Kerosene lamps emit fine particles that are a major source of air pollution because they quickly become lodged in the bronchial system and can result in chronic disease and death.  A study estimates that individuals breathing particulate-laden kerosene fumes inhale the toxic equivalent of smoke from two packs of cigarettes a day.  In addition to toxic fumes from kerosene lamps, the danger of the hazard of fire and ensuing risk to life and property is substantial.  In India alone, 2.5 million people suffer severe burns due to overturned kerosene lamps annually.

Whilst more research is required on the impact of solar powered lights (SPL’s) on education, the limited data available is encouraging.  In Malawi, 18% of participating households identified children’s study time and reading as one of the major benefits of better lighting.  Evidence from other regions is more direct and highly positive.  In Bangladesh, a study revealed that when SPL was introduced, children from the homes with SPL remained awake longer each day and used 38% of their additional time for studying and reading.

In Kenya a single kerosene lamp with a glass cover costs on average US$9, and the monthly running costs are US$8.  Average household monthly income is US$154.  Each household will have at on average three kerosene lamps.   97% of consumers in Kenya use kerosene for lighting, both covered lamps and open tin lights.  67% of, or 6.8 million households use a kerosene lamp with a glass cover.  The payback for replacing a kerosene lamp with a SPL is about 11 weeks.

Traditional lighting options, particularly those that use kerosene as fuel, are unequivocally flawed, imposing unnecessary dangers, substantial costs, and insufficient services on the un-electrified and under-electrified poor.  Consequently, the need for clean, safe, renewable, and cheap lighting alternatives is one that is both urgent and growing.

Emerging Markets ESG: How do you calculate and calibrate scale and sustainability when working at the bottom of the pyramid/with the poorest of the poor?

Mike Sherry:  Whilst Mwezi is a for-profit enterprise we have a very strong social motivation.  We are adopting a market based solution to replace kerosene lamps with the Mwezi light.  We will have priced the Mwezi light to ensure that the business is financially sustainable. Once we have completed our pilot scheme it is our intention to get to scale quickly as we have ambitious targets.  We have completed field research in-country and have determined optimum price points and target communities that are off-grid.

In addition, we are an evidence-based organization and we intend to gather both qualitative and quantitative data on indoor air pollution, environmental impact, customer satisfaction and wealth.

Emerging Markets ESG:  Which kind of investors might be interested in Mwezi?

Mike Sherry:  I believe that a variety of investor would interested in Mwezi especially those seeking double or triple bottom line returns.  Our business plans show that we can offer investors risk-based market returns as well as delivering positive social and environmental impact.

Emerging Markets ESG: In priority order, please list the three most significant impacts you expect from Mwezi one year after sale of the Mwezi solar-powered lamp begins.

Mike Sherry:  The three impacts we expect are:

1) Replace kerosene as fuel for lighting in off-grid communities.

2) Improve the wealth of our customers by reducing their costs.

3) Demonstrate to our investors that we have a scalable and sustainable solution so that we can increase our reach.