Overview of MVP Lantern Program
The basic approach for introducing solar charged, LED based lanterns to the Millennium Villages is based on a private sector led effort to create and strengthen local institutions. This also means MVP employs a full-cost (no-subsidy) method that adds marginal costs at each segment of the supply chain so that the final cost represents the true cost of the lanterns. The approach includes MVP business development support for supporting a national supply chain with key interventions to build capacity of the vendors at the community level and strengthen various aspects of the chain. The core premise of this program is an enterprise-driven approach that spurs entrepreneurship as well as aids in job creation at the local level. The primary source of entrepreneur stimulus and job creation will be through the local vendors. Lantern sales become an indirect form of job creation through the local administrative unit and the vendor program.
The ultimate goal of the MVP lantern program is to spur the creation of a self-sustaining commercial supply chain through a phased approach where initial technical support and oversight would be replaced by strong commercial supply chain that delivers energy services across Sub-Saharan Africa. For long-term sustainability, village businesses should have a stake in the continuation of the program, with the wholesaler and retailers making a profit from each sale.
Key Lessons Learned from Lantern Program Implementation in the Millennium Development Village Clusters
Importance of “Project Launch”. Early in MVP cookstove project rollout MVP discovered the importance of having a person dedicated to introducing the lantern programs in the villages. At the onset, launching the MVP lantern program is time-consuming, and developing a supply chain, costing strategy and local distribution strategy requires regular communication with national and international stakeholders. Due to the demanding workloads of other MVP staff members, it is difficult for them to invest the necessary amount of time. A lantern program specialist dedicated to tailored program development and project launch should help mobilize the community behind a new product and develop a site-specific supply model to make the program sustainable. After this initial model-development and launch the program requires only minimal oversight, and can be done by site teams.
Reliable supply chains are crucial. The lantern program can only begin if ordered lanterns arrive in the sites and will only continue if lanterns can be sourced reliably. MVP sites learned this lesson the hard way when one lantern order, the brand highly preferred by villagers in all field testing, arrived on site months after the program launch. The lag between introducing the product to the village and having the product available to sell was detrimental to the program’s momentum and lanterns sales. Having a reliable commercial supply chain that can deliver lanterns quickly and inexpensively to remote sites in rural Africa is crucial for the success of any lantern program.
Find a sub-distributor of lantern products. Many lantern companies partner with national or regional sub-distributors to sell their products locally in many African countries. Identifying a lantern sub-distributor in the region before project launch is vital for the development of a strong supply chain and facilitating a rapid transition to a community-led project. Because these distributors import lanterns in large quantities using sea freight, they are often able to get them for much less than it would cost a small project to air-ship lanterns. Additionally, many of these sub-distributors are relatively new, and eager to establish new regional partnerships.
Create an accurate pricing model. In order to create a sustainable business model, the lanterns must be sold at full market cost without subsidy. This includes the price of purchase from the wholesaler or the sub-distributer, all taxes (if applicable), all transportation and warehousing costs and a vendor markup. Failing to include any of these costs will result in a cost model when lanterns are priced artificially low, and a need to increase the price of the lanterns. MVP experience shows a strong resistance of village cooperatives to sell lanterns at prices higher than those quoted in the original project launch.
Strengthen community business skills through support and training. While some of the selected lantern vendors may be shop owners, others may be ambulant vendors. In both cases it proves prudent to provide training in lantern use and function as well as basic accounting and record keeping skills. In the MVP project, it is important to know who purchased the lanterns in order to be able to later go back and survey these clients. These were skills that had to be taught.
Provide simple technical training. MVP has found that at the onset of the lantern programs the majority of vendors are not familiar with solar technologies or the styles of batteries found in the lanterns. It has proved important to train both vendors and, if possible, community members, to charge their lanterns adequately and not to overuse them. Simple mistakes, such as not fully charging a battery, or allowing it to go into deep discharge, can quickly damage the batteries and decrease the life of the lantern.
Choose reliable vendors. In a program where vendors are loaned lanterns as working capital, there is always a risk of non-repayment by the vendors. This can be partially avoided by measures such as having community members and family members vouch for, or essentially “guarantee” the vendor, or by asking vendors to put a down-payment on the lanterns, to be returned upon repayment of the initial capital. In MVP experience, choosing reliable vendors and having a strong incentives system in place to ensure repayment can lower the instances of non-repayment of the project’s capital investment.
Provide continuing technical assistance. Although the lantern launch lasts only a month, technical assistance must be continued through the first several cycles of selling, ordering and purchasing. In MVP experience, burgeoning cooperatives often do not have the capacity or motivation to place orders at the beginning without site team support. After these first few cycles of ordering and selling the lanterns, the site teams assume that a strong enough connection will be established between the sub-distributor and the local cooperatives and vendors that limited support will be required from the project in the future.
Create in-country partnerships. New emerging technologies and the popularity of new, young solar companies, such as D-light Design, have contributed to a boom in the number of solar-focused organizations operating in Africa. Creating relationships with other in-country organizations organized around similar objectives can serve both for knowledge sharing and, in some cases, actually allow for bulk transport of products, thus lowering shipping prices.
Effects of market spoilage. Poor quality local lanterns can have an effect on the initial popularity of even high-quality lanterns. It is important to recognize if any of these biases are present in the sites before launching the program – efforts can be made accordingly in marketing and promotion to distinguish the new lanterns from poor quality lanterns. It is also important to ensure that the lanterns arriving are in good working order, otherwise risking market spoilage for the introduced lanterns.
Importance of a warranty for faulty lanterns. Occasionally lanterns arrive in sites with faulty batteries. It is important that vendors can return these lanterns to an in-country sub-distributor under a pre-specified warranty. This gives cooperatives confidence that the lanterns they receive will be functional and it ensures there is an accountable party in the event lantern malfunction.
Importance of framing the project. During each project launch it has been important for MVP to emphasize the program as a business, and the community’s participation as the opportunity for people to either expand existing businesses or start new ones. This project framing helps the community understand that the lanterns are not give-aways and that the lanterns are opportunities for small businesses, shifting ownership of the project to the cooperative and vendors.
Seasons matter. Feedback from site teams and preliminary sales records indicate that sales change with the harvest season, depending on the amount of cash available in the villages. The time of year will differ by country, site and crops grown. When planning a project launch, it is important to examine the time of year when people in the village will have available income and use this as a proxy for demand.