144m Pakistanis do not have access to adequate supply of electricity. Together these on-grid and off-grid consumers spend USD 2.3 billion every year on alternative technologies to cope.
IFCâ€™s Lighting Pakistan program aims to tackle this problem by supporting the distribution and financing of quality-verified solar products to meet market demand for safer, cleaner and more affordable lighting. SRE Solutions, a local solar distributor has partnered with OmniVoltaic, a Lighting Pakistan quality-verified solar manufacturer, to distribute solar products to both on-grid and off-grid consumers.
SRE is using several approaches to establish to market household solar. One in particular looks extremely promising.
A Promising Partnership
Since December last year, SRE Solutions has partnered with Tameer Bank to pilot solar microfinance bundling at the Bankâ€™s outlets across Okara, Gujranwala, Multan and Hyderabad regions.Â 2000 solar lamps have been financed through Tameer Bank using the bundling business model.
Challenges & Solutions
Throughout the pilot a number of key lessons have been learnt on how to successfully implement solar product bundling:
âŒ‚ Price sensitivity: Target consumers generally have limited disposable income and are wary of heavy cash outlays.
Keeping in view the low purchasing power of target consumers, SRE and Tameer Bank have decided to start by bundling Omnivoltaicâ€™s most basic solar product, ovPilot X. The lamp, which retails in open market for Rs. 2150 (USD 21.5), when bundled with Tameerâ€™s business and salary loans, does not add to the base installment and is considered affordable by most customers.
âŒ‚ Distribution infrastructure: It is costly to build extensive distribution in remote markets.
SREâ€™s partnership with Tameer Bank helps SRE take advantage of an established channel that is present in 87 districts across Pakistan with 132+ outlets. It reduces SREs cost of sales and resources required to establish presence in target areas, which are often remote and difficult to penetrate.
âŒ‚ Customer education: A typical consumer does not have the time or information to evaluate quality in a market cluttered with substandard lighting products.
SRE supports Tameer Bankâ€™s staff with its own dedicated personnel, who are formally trained to provide information and aftersales support at the Bankâ€™s outlets. This approach gives Bank staff the confidence and awareness they need to pitch the solar lamps to Bank customers. Customers are also encouraged to operate the product themselves in the comfort of a Bank outlet and can return the product to the branch if need there are any technical issues.
“IFCâ€™s Lighting Pakistan team has helped us throughout. Their advice, networking, and persistence have kept us experimenting.”
Ahmer Ali,Â Chief Operating Officer,Â SRE Solutions Pvt. Ltd.
âŒ‚ Real win-win: Partnerships that are created in haste to simply offload product in the market donâ€™t last long.
SRE has introduced a complete incentives and rewards program for the Bank staff that is linked to their monthly sales targets. This model ensures that the Bank staff who are involved in selling solar lamps as part of loan packages have the motivation to do so day in and day out.
“Tameer is committed to financial and social empowerment. IFCâ€™s Lighting Pakistan program is a great initiative to provide basic amenities to the bottom of the pyramid segment to enhance their standard of living.”
Nadeem Hussain,Â Founder, President & CEO,Â Tameer Microfinance Bank
SRE and Tameer Bank are currently considering bundling solar lamps with the Bankâ€™s Agriculture, Livestock and Group Loans as well. Such bundling has the potential to boost sales many folds.Â At the same time, SRE is working on establishing its own retail network across the country, and has already launched its first outlet in the Bahawalpur district. They plan to roll out 8 more outlets nationwide within the next few months. These retail points will be established close to Tameer Bank outlets to facilitate cross-selling and after-sales service.
IFCâ€™s Lighting Pakistan program will soon be launching a targeted consumer awareness campaign to support the SRE-Tameer Bank partnership. The program remains committed to helping Pakistani consumers gain access to low-cost, high-quality, safe, reliable, and cleaner lighting products.
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