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Global changemakers gathered in University of Oxford’s Saïd Business School to exchange ideas, entrepreneurial approaches and innovative solutions to address the world’s most pressing challenges. +SocialGood Connector and Managing Partner at Mission & Co., Shariha Khalid Erichsen reported from the forum to discuss the emerging themes, solutions and how we can collaborate to shape interventions and dialogue.
In this interview, Shariha speaks with Sarah Alexander, Senior Adviser with SELCO Foundation, a nonprofit that seeks to alleviate poverty and create assets for the poor via last mile energy access solutions. This interview was originally published on +SocialGood's Medium page.
Meet Sarah Alexander:
Sarah Alexander is a Senior Advisor with SELCO, a non profit that seeks to alleviate poverty and create assets for the poor via last mile energy access solutions. Sarah leads the organization’s inclusive investment advocacy program and global replication of an ecosystems approach to energy access. With close to 10 years of experience in the energy access sector, Sarah has worked on multiple programs at the confluence of energy access, sustainable development and poverty. Sarah holds an MSc in Conservation Biology from State University of New York (SUNY), College of Environmental Sciences and Forestry.
*Note: Interview edited lightly for clarity
Shariha: Sarah- thank you so much for chatting with me. Can you tell me a bit about yourself and your organisation, SELCO?
Sarah: Hello! I am Sarah Alexander and I work as a Senior Advisor with SELCO Foundation. We started off as an an enterprise in the early 90’s to deliver last mile energy access for the poor. We have always seen energy access as this catalyst, something that underpins all development outcomes, be it health, livelihoods or general well-being. This was sort of the premise when we started SELCO. It was never about how do we get solar to the poor. It was more about how do we meet these developmental goals and energy access or delivering renewable energy happened to be the most suitable technology at that time.
With SELCO we have looked at an approach where technology has always been just one piece of what we do. While it is important to have the appropriate technology that meets the needs of the poor, issues and constraints around financing become equally key. Further, it also becomes important to understand the delivery model and how can we get this technology to the last mile.
Thus this tri-factor of technology, end use of financing and delivery models that reach the last mile have been the cornerstone of our innovative business model. And I think we have been fairly successful in the last 23 years as we have been able to deliver this to over 600,000 households over the years. We have about 500 people working at SELCO and about 50 branches in the networks that we have established over the years.
I think over the years, as an energy enterprise, we did face a lot of barriers. To start with, in the geographies/ environments we were working, the ecosystem was absent. We have had to build a lot of it ourselves. Say for e.g. there was very little needs assessment, understanding or documentation of the needs of the poor and so on. When you hear about the roti rolling machine, you will see the drudgery involved for someone to make this in a rural area or the difficulties faced by a blacksmith who is trying to modulate the heat to make their tools, or someone who is trying to make a rice milling machine. And these are issues that you don’t often hear about.
Thus for us it was not only important to look at technology but to find the most appropriate technology that would help meet the needs of these people. This brings me to the next part on end user financing, as even the best available technology will not help solve the problem if people are not able to pay for it. But finding financing partners was not easy. In India, we piggy-backed on the agri-financing ecosystem and connected with the local banks to work with us. But with the lack of an ecosystem, we had to spend a lot of our resources, including our equity money to build awareness, organise training sessions and deliver capacity building workshops.
While it was sort of unfair in many ways that we had to do this and that we should have been able to spend very limited resources on our side for this, but we were there to solve the problem. Be it end user financing, technology, high-risk innovation, local research and development, we dove into all of this. And this kind of laid the groundwork for the SELCO Foundation which was started in 2010. We knew every other company or player who wanted to get into this space, would face similar issues and if we could build the ecosystem, our experience will act as a catalyst in creating those enabling conditions that were missing.
Through the Foundation we wanted to assist the other stakeholders in this space and help scale processes and initiatives that worked for us at SELCO. Let us say for e.g. if we had to reach 10 million households in terms of our products, the major challenge was to find a bank that was willing to lend to the first 100 customers and to have that guarantee. Thus if we could look at scaling the process of bank guarantees, finance more renewable energy products, we would be putting in place systems needed to achieve the impact. So we wanted to take on the role of scaling systems and processes.
In 2012, we started the SELCO Incubation. The SELCO Incubation is a centre that looks at nurturing under the radar entrepreneurs, enterprises, some of them first generation or that are in rural areas and are interested in getting into this space. Often lack of platform and avenues are major barriers that start-ups face. Through the centre we want to support them and nurture them. Thus this is our third entity. It is central to note that we are not franchising the SELCO model but only sharing the principles and philosophy that worked for us. And the fourth of all our entities is the SELCO Fund which was registered in 2016.
The SELCO Fund is a USD3.1 million impact fund and we are in the process of finishing our initial round of funding. The idea is to provide capital to the local energy enterprises. We need to take into cognisance the fragmented ecosystem conditions. Profitability cannot be looked at in isolation but they are very much part of the operating environments. All our four entities that were built very organically have been established to build the ecosystem in the energy access space.
Shariha: Congratulations on receiving the Skoll Award for 2018 for SELCO India and SELCO Foundation. Can you tell me what this award is going to mean for your organisation? Also, as the theme for this year’s conference is proximity, how will this award enable to deliver more outcomes in your work?
Sarah: Thank you, Shariha. For SELCO this is a proud moment. Largely because it’s a validation of so many years of hard work put in by all my colleagues, who are not with us here, So this is a great validation of our work and it’s been a great ride so far. Proximity has always been central to our work at SELCO.
A lot of our work and philosophy stems from the thinking of how we can make this a level-playing field. Delivering this to the last mile and ensuring ways that make it accessible to them is key. We are closely attached to understanding the needs of the people we are working with or working with our local partners and local enterprises who are very close to the ground and connected to the people. I will explain it in two levels which for me resonates the DNA of SELCO in many ways.
On the one hand it’s the proximity to the end users. SELCO has always been in the realm of understanding the needs of our end users. We spend a lot of time with our end users and do not go in with pre-conceived notions of trying to fit a solution to find a problem. It’s always been the other way round. Thus SELCO has always been nimble in the kind of solutions that have been designed. Say for e.g. we are looking at the lighting needs of the poor. If our end users want to have four light systems, we work with our technicians and the client to understand the housing structures and explore options if one light can be efficiently used for two spaces and recommend having two light systems instead of four. We dive into the issue and that is not possible unless you are closely connected to your end user.
I think a part of our success is in being close to the people we work with.
The second proximate thread in our work is the way we do our business. Most of our employees come from the local areas. We are very committed to being immersed in our communities and so we do prioritise to have staff from the local areas, from families around where we work. So most of our staff are from ground-up. There is upward mobility. A classic example is that of Harish who actually started as a technician at SELCO. He was not the CEO. He worked his way up and grew the organisation. At SELCO, we have a non-hierarchical structure. It’s very flat in many ways and it’s very deliberate. These systems designed within SELCO are very key to our value systems and the way we work with our end users.
Thus there is proximity in the way we are connected with our end users and the way we do business.
Shariha: That’s great. How do you use technology to be able to connect better and deliver impact?
Sarah: With providing last mile energy access connectivity for our end users being central to our work, it is often hard to find an appropriate technology that is readily available. We have had to modify, repurpose and in some cases, even invent technology that is best suited to the needs of end users. At SELCO Foundation and even at SELCO India, we have always been very responsive to the needs of our end users. We have always explored options such as finding local fabricators, working with local manufacturers. In the process we try and see how we can locally source most of these materials and make it within an accessible reach for the end users and also providing them with efficient after sales service.
Technology per say is always one piece of the puzzle. There have been instances where we have failed. For e.g. when we implemented cookstoves, we failed as primarily we did not have technology that suited people’s needs. Further, there was no financing model that was attached to it. Supply chain logistics was another challenge. Thus it is important to look at technology not just from the point of view of end user functionality, component supply, after sales service but also factor in the component of financing and appropriate delivery model. For e.g. if you look at Healthcare, we are now dealing a lot with innovative biomedical efficiency.
Shariha: That’s amazing how you are making connections to every piece of the puzzle. You are absolutely right, it’s not just about the technology innovations but it’s about the entire ecosystem that can enable that technology to go to the market. So to conclude what’s the next exciting thing in clean energy and energy access for the base of pyramid and what words would you like to share with aspiring energy entrepreneurs who are out there?
Sarah: Sure, I feel we have a long way to go. To be honest, I don’t think we have even finished the ecosystem piece and I think we need more hands on deck. It has only started picking momentum in terms of awareness. My call-out would be to people who align with this line of thinking. For investors, I would say, don’t look at just investing in companies.
They must be cognisant of the fact that they are working in such challenging environments. It thus, becomes important to support other peripheral ecosystem building activities. Afterall, their company’s success or investee’s success rides on the success of these parts. We do need a lot more visibility. We need more local research and development, people who support high-risk innovations. We need to look at different models, different innovative interventions for Kenya, Tanzania, India, the Philippines. These are the countries where we are trying to go in ourselves and assist local partners in building their energy access narrative. I know that there are people who might not even be thinking of these things. We still have a long way to go with the systems thinking approach and so my call would be, if there are processes you have seen in the world which you think can be applied to these contexts, do share the best practices.
A lot of what we do has been borrowed and inspired from a lot of other sectors which we have tried to apply. We are always open to hearing what other people have done and how the same can be adapted and contextualised to different parts of Africa or India. We also need people who are open to supporting high risk innovations in these countries. We need collaborators and supporters who would help with the systems approach of doing things.
Shariha: Thank you so much, Sarah. Please continue to do the inspiring work that you do. I wish you all the best with the new fund and to expansion to reach 10 million people in the next few years.
For more on SELCO Foundation’s work, you can follow them on Twitter @SELCOFoundation and Facebook @SelcoFoundation