1. Lighting Africa: The Siren Call to Purpose and Profit Russell Sturm IFC Lighting Africa 2010 May 18, 2010

2. Copyright © 2008 The World Bank – International Finance Corporation 2 Wheres the POWER, Harriett? Reality… 1.6 billion people live in the dark 500 Million in Africa By 2030, 700 Million Africans will still lack access to electricity (IEA) Why Lighting Africa??

3. Copyright © 2008 The World Bank – International Finance Corporation 3

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5. 5 Lacking Access To Electricity, Off-Grid Populations Left with Poor Lighting Options Fuel-based lighting... – Expensive – Emit Poor Quality Light – Unsafe – Unhealthy – Releases potent GHGs

6. Copyright © 2008 The World Bank – International Finance Corporation 6 The Opportunity: Technological Advancements enable products MATCHED to Consumer Need The arrival and development of new lighting technologies Introducing LEDS- the next lighting revolution Range of technologies and delivery systems Independent, off-grid lighting service systems create option to focus in one need Simplified product allows for small packages -- reducing costs across the value chain (inventory, working capital, risks) and increasing affordability

7. Copyright © 2008 The World Bank – International Finance Corporation 7 True commercial benefits beyond cost savings… Tanzania: shoe seller - flame [left]; 1-watt white LED [right] VS. LEDs offer substantially higher quality lighting than what people are using now

8. Copyright © 2008 The World Bank – International Finance Corporation New technology+ innovative business models = Opportunity to redefine energy paradigm Fuel-based LightingLED/other modern Technology Average kerosene expenses/month = $10- $15 High efficiency = low to zero operating cost Low light output & qualityHigh light output & quality Hazardous for health and safetySafe High emissions, pollutingClean Analogue

9. Copyright © 2008 The World Bank – International Finance Corporation 9 The Market Opportunity….is HUGE! Fuel-based lighting accounts for 17% of global lighting market – a US$ 38 billion/year demand ($10-17 billion in Africa) It is a commercial, functioning market – established value-chain – collection systems – spare parts, repairs services, etc $25-38 Billion $185 Billion Global Annual Spending on Lighting Source: Evan Mills, International Association of Energy Efficient Lighting and Lawrence Berkeley National Laboratory Fuel-based lighting is ALREADY a very large market

10. Copyright © 2008 The World Bank – International Finance Corporation 10 IFC and World Bank ASKED… If so, can global and local private companies be engaged to develop this market commercially? Are those 1.6 billion lacking access to modern energy services a (functional) market? Does a market, commercial solution that increases access to modern energy services serve our development objectives? Is there Evidence of Proven Demand/Consumer Interest & Willingness to Pay for Lighting? Is there INVESTMENT INCENTIVE for the private sector?? Is There an Opportunity for a Large-Scale Commercial Solution To Increase Access to Modern Energy Services?

11. Copyright © 2008 The World Bank – International Finance Corporation 11 Dangerous Market Interventions: Need to boost… not tame the giant Inappropriate interventions can impede market development The market is smarter than any single actor – use it, dont abuse it! Self – interest is real power; leverage it – dont fight it!

12. Copyright © 2008 The World Bank – International Finance Corporation 12 The Response Goal: Rapid scale-up of access to clean, reliable and affordable lighting & basic energy services for 250 million people across Africa by 2030 Lighting Africa Lighting Africa – Joint World Bank/IFC Initiative

13. Copyright © 2008 The World Bank – International Finance Corporation Conceptual View of Intended Impact Short-Term Goal: 2.5 million people by 2012 Long-Term Goal: 250 million people by 2030 [*Illustrated example of a one-time bulk-purchase/subsidy approach (not Ltg Africa)] * 50 million units provides access for 250 people

14. Copyright © 2008 The World Bank – International Finance Corporation Lighting Africa: A response to a rapidly changing industry Industry Association Emerges Continuous Industry Consultation – Increased Industry Ownership and Responsibility IFC-World Bank Builds Program Infrastructure Industry- IFC Dialogue – Initial Mrkt Assessmen t 2005-2006 2007-2009 2009 2010- A dynamic market requires a nimble platform No industry focus on mrkt. Cost of Ownership ($/MLHr) Efficiency $2.66 $9.84 $20.38 $34.04 2004 14% 5% 4% LED Improvements

15. Copyright © 2008 The World Bank – International Finance Corporation We Provide A Bridge Between Industry and Consumers Building PARTNERSHIPS is Critical to Developing Effective and Lasting Markets Wholesale Distributors Retail Industry International Manufacturers End consumers Quality Assurance Market Research Technical Advisory Bulk Procurement Concessional Finance Access to Partners Product Quality Info. B2B Linkages Trade Finance Market Intelligence Access to Partners Product Quality Info. B2B Linkages Financing Access to Partners Quality Assurance Consumer Education Consumer Finance External Partners Joint IFC/World Bank Initiative We Provide a Suite of Services Across the many nodes on the Lighting Value Chain

16. Copyright © 2008 The World Bank – International Finance Corporation We Work to Remove Market Barriers Across the Value Chain ProductionTransportExport/ImportWhole Sale Transport / Distribution Retail Facilitating Intl Collaboration Addressing Policy and Regulatory Barriers Mobilizing Finance / Business Support Services Ensuring quality Consumer education

17. Copyright © 2008 The World Bank – International Finance Corporation 2008 Development Marketplace – planting seeds of innovation Innovations supported: 1.In-country assembly 2.Product Innovation 3.Power generation & community service delivery 4.Innovative distribution models 5.Alternative service access models Key experiences from the LADM innovation projects: Market dominated by mission driven initiatives Following good business practices and strategies are pre- requisites to doing good Challenges of doing business in a developing country environment combined with an undeveloped market importation problems, restrictive duties & tariffs, uneducated market 16 projects 11 countries

18. Copyright © 2008 The World Bank – International Finance Corporation How do we reduce market impediments? Market Barrier Lighting Africa Program Response High Transaction Costs to Understand the Market Lack of Understanding of Consumer needs/preferences, size of market opportunity Lack of access to partners and understanding of playing field, distribution channels Market Intelligence Buyer inability to make informed purchasing decisions and decipher quality in the market Lack of understanding of the comparative advantages of off-grid lighting to fuel-based lighting Consumer Education Lack of product quality standards in the marketplace Lack of testing facilities, manufacturing standards High risk for buyer dissatisfaction and market spoilage Lack of local capacity to test products, develop/maintain product standards Product Quality Assurance Lack of access to finance : consumer, trade, Lack of business support services, proven business models and marketing strategies Access to Finance & Business Support Inconsistent regulations and poor business enabling environment Policy and Regulatory Reform 5 Program Areas address specific market barriers

19. Copyright © 2008 The World Bank – International Finance Corporation 19 Market Intelligence: lowering barriers to entry and mitigating risk for new entrants Market assessments and consumer profiles reflect multiple segments Field-tests, interviews, and focus groups Public information Going Forward Will publish condensed synthesis report on results of 10,000 interviews (early summer 2010) Will publish market trends report (early summer 2010) And… for Associate Members Baseline survey to profile what products exist in the market Monthly retail audit to track changes

20. Copyright © 2008 The World Bank – International Finance Corporation Access to Finance Objective: Address key gaps in financing along the value chain Manufacturers: growth and working capital requirements – IFC Clean Tech Fund – Dedicated funds, incl. E&Co, Acumen, GBF, Responsibility etc. Distributors/Importers: working capital and trade finance – Dedicated funds, incl. E&Co, Acumen, GBF, Responsibility etc. – Collaboration with local commercial banks Consumers: financing product purchases – Collaboration with formal and informal Microfinance Institutions (eg, Susus and merry-go-round approaches) – Collaborations with large corporates, e.g. Unilever Tea Co. Kenya 20

21. Copyright © 2008 The World Bank – International Finance Corporation Product Quality Assurance LED technology is promising, but – Danger of market spoiling is real – Large # of products, some perform poorly – Integrated systems are complex Primary QA Components: – Standardized Test Method – Pre-Screening /Local Testing Capacity Building – Technical Notes/ Information Dissemination – Products of the Year Awards- TONIGHT! Quality Assurance Advisory Committee – China Solid State Lighting Alliance Member Low cost LED torches for sale in Kenya Counterfeit LED torch (3 non-rechargeable batteries; non- functional mechanical charger)

22. Copyright © 2008 The World Bank – International Finance Corporation Consumer education Honest Broker introduces technology and supports educated consumers – Creates awareness to inform purchase process – Giant marketing umbrella to support all quality products Complement mass media with experiential marketing and interactive discussions.

23. Copyright © 2008 The World Bank – International Finance Corporation Responding to industry need for a consistent, supportive enabling environment 8 Country Assessments Cameroon DRC Ethiopia Kenya Ghana Rwanda Senegal Tanzania Comprehensive Kenya Policy Dialogue and Reform Following the 2008 Lighting Africa Industry Consultation Session… …We have launched two levels of initiative… Policy and Enabling Environment Support

24. Copyright © 2008 The World Bank – International Finance Corporation LA Website - the virtual home of the industry – www.lightingafrica.org Access Partners Across the Industry and Supply Chain Post and receive business leads; form local and global partnerships Access off-grid lighting research; follow latest industry news, and MORE Register today

25. Copyright © 2008 The World Bank – International Finance Corporation Thriving Online Industry Community > 2500 Members 9,000 Hits Per Month 49,000 Page Views Per Month 650 Followers on Twitter Lighting Africa Web Activity Sept 09 – April 10 SeptJanOctNovFebAprMarDec

26. Copyright © 2008 The World Bank – International Finance Corporation Invitations to members only events Access to LA research findings, publications, etc. Access to financing institutions Testing feedback to improve product design Business development assistance Matchmaking to financial institutions (reference) Advanced marketing & consumer education support Custom strategy and mgt. support Registration on the Lighting Africa Website/ Database Products submitted and passed initial quality screening by LA Products have been tested and passed LAs quality assurance testing methodology Company passes good corporate governance screening We propose a three tier membership system for our clients Member Network Associate Membership Level CriteriaLighting Africa Service offerings

27. Copyright © 2008 The World Bank – International Finance Corporation Africa Renewable Energy Access Grants Program Lets meet the team

28. Copyright © 2008 The World Bank – International Finance Corporation A Dynamic Industry In Motion 8 products in 2008 71 products 49 companies Market dominated by >$50 products $15 - $25 products abound Quality Issues Paramount Yesterday Today Lighting Africa Outstanding Product Award

29. Copyright © 2008 The World Bank – International Finance Corporation Innovation Drives The Market: Emergent Business Models Leverage multiple consumer interests Enable incremental purchase/finance Ride the Mobile Telecom Wave Modular/ Pay as you go Enable financing and provide marketing partnerships Formal (MFIs) and informal (SACCOs) Microfinance Institutions Leverages community leaders Lowers distrib costs for remote mrkts Build consumer confidence for new products Direct Marketing Form of consumer finance Opportunity to monetize full value Opportunity to cross-sell other services Fee for Service NGO networks Large employer / plantation operators Joint Marketing Partnerships Leveraging existing distribution networks (kerosene, soap, cigarettes, softdrinks etc) Leverage existing distrib channels

30. Copyright © 2008 The World Bank – International Finance Corporation A Transformative Industry is Born Industry leaders discuss terms of proposed Off-Grid Lighting Stakeholders Association

31. Copyright © 2008 The World Bank – International Finance Corporation A Call to Purpose – Responding To Our Moment in Time

32. Copyright © 2008 The World Bank – International Finance Corporation The rumbling under the surface is us…

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