EEP Africa is partnering with the IFC Lighting Global Group to improve the commercial viability of off-grid solar companies. On 11 June 2020, a group of 10 EEP-funded companies were invited to participate in a jointly organised webinar on a new Path to Profitability (P2P) tool.
The off-grid solar (OGS) industry requires substantial investment to progress further and firm-level profitability plays a critical role in accessing working capital. As business models become more complex, especially for companies serving last mile and base of the pyramid (BOP) customers, it is important for firms to have a detailed understanding of their unit-cost economics. This is even more critical during the ongoing COVID-19 crisis, when OGS companies need to maintain liquidity and start thinking about the future of their business in a new “normal” market.
The IFC Lighting Global group has developed a unique framework called Path to Profitability (P2P) that allows OGS firms operating in emerging markets to evaluate their pricing, margins and cost structures. The framework is designed with early-stage and scaling firms in mind to support their profitability at various phases, including launching, refining and pivoting. By assessing the total net margin through operational model mapping and bottom-up financial modeling, the P2P tool shows how an OGS firm can achieve profitability at scale at the last-mile operating unit.
EEP Africa’s portfolio of early-stage clean energy projects has had a strong focus on off-grid solar since 2010. By partnering with the IFC, the P2P tool is now available as part of EEP Africa’s business development support offerings. About 40 participants from our portfolio companies participated in the June 11th webinar on the basics of the P2P framework led by Miguel Soriano from Lighting Global.
During the webinar and in follow-up discussions, the participating companies have shown a keen interest in adoption the model and using it to advance their business development.
“I find this to be a very essential tool, as it can give us major insights both in data analysis and in market segmentation. It’s going to help us to focus areas with more prospects in terms of ability to pay. We really find this quite exciting because it fits very well with our strategic plans.” -- William Ponela, CEO, Zonful Energy, Zimbabwe
Building on this event, EEP Africa and IFC will select a few companies to participate in more intense one-on-one workshops and go through the main components of the P2P framework. The EEP Africa team will share lessons learned from this with the broader portfolio.
Learn more about the P2P tool on the Lighting Global website.
Photo: Zonful Energy customer in Zimbabwe