Prototype testing a new opportunity for MMA revenue generation

Through the Frontier Technologies Livestreaming (FTL) programme we are testing the product concept of “daily rentable batteries” that customers in Senegal can use to light their homes and charge their phones (replacing the battery each day for a freshly charged unit). A solar powered charge station situated in a mobile money agent (MMA) retail outlet provides the daily re-charge and enables control of the batteries. The concept under exploration is offering an MMA-centric service beyond mobile money (ie energy) that leverages mobile money presence and customer relationships, while not being limited to a purely digital financial service. Although this product does address the end-user need of affordable clean energy, the primary objective is to find new ways to generate additional income for mobile money agents (MMAs) through a daily rental charged to the end-users of the batteries.

As explained in a previous blog, MMAs are important economic nodes in wholesale and retail distribution chains throughout Sub Saharan Africa. They are very localised and ideally situated to serving the needs of mass market and low-income customers. Some MMAs in urban areas with high footfall can sustain their businesses entirely on mobile money related transactions. However, many others have to diversify the range of goods and services provided to earn sufficient income. Therefore, the operating hypothesis for our initial pilot test was that we should identify MMAs in rural areas where their end-customers are poorly served by grid power and off-grid alternatives such as pay-as-you-go (PAYG) solar home systems (SHS).

During market surveys end-users also provided some contradictory responses about their access to on/off-grid energy services, making it difficult to accurately define the real levels of access and, hence, demand for alternatives. It is the case that PAYG SHS have been made available in many areas of Senegal, although some of the providers have moved on from rural areas toward more profitable locations.

Findings of MMA surveys

The initial MMA survey revealed that about 70% of the agents surveyed offer non-MM services to their customers (such as phone charging services, hardware products and food). Their regular customers come to their shop many times each weeks and a few even visit several times per day. While the MMAs are interested in offering new services and products to customers, 60% of them responded that they couldn’t due to the lack of working capital. 85% responded they would be interested in offering a battery rental service to their customers and believed this would be a popular service due to the perceived lack of energy access. Even among the agents, two thirds of them responded that while they have access to the grid, reliability is an issues and they require a more reliable energy source to help them with their businesses.

As a result of these factors and after conducting surveys with 13 shortlisted MMAs we chose two MMAs to work with in the pilot test:

MMA 1: The first agent runs her shop from the town of Fimela. The shop is accessible from the main tarmac road and has access to grid. As well as MM services she offers basic goods and also has a freezer in the shop. Her customers who are taking part in the pilot are within a 1 kilometer radius and usually visit her shop a few times per week. While the grid is available to customers off the main road in nearby villages, for households slightly further away there is no grid access. Hence their willingness to participate in the pilot.

MMA 2: Our second agent is based in the electrified town of Kayemor (about 5h drive from Dakar) but he also has a smaller shop in the nearby village of Kapay which isn’t electrified which is where the battery charger is based. Currently the shop shares a large SHS with neighbouring houses, and other households in the village also have their own SHS. Customers recruited to participate in the pilot mainly use candles or torches for lighting while charging their phones at neighbours.

Initial feedback from the MMAs and their customer

After a few weeks of running the pilot, our first agent was keen to have access to more batteries as she believes there is enough demand from the customers. Customers appears to switch batteries every 1–3 days depending on their usage. So far it has been reported that the rental batteries have allowed households to use lights for children to do their homework in the evening and charge up to 5 phones per day. Our initial survey informed us that it is common for end customers to have two phones per person (where one would be used for data and the other for voice). Being able to charge their phones at home has been highlighted as a great benefit as customers no longer have to leave their phones in town while they charge.

Thoughts on the market opportunity in Senegal

Initial feedback from the market suggests that both MMAs and their end-customers like the product concept. Surprisingly, phone charging at home seems to be as much of a benefit to users as lighting and an area in which users can save time and money.

A key challenge is the stage of market development in Senegal in relation to the rapid scale out of agent networks and delivery of basic mobile payment services. Quite naturally, there is significant demand for these services and responding to demand is absorbing a lot of the operators’ attention. The need for additional revenue generation opportunities is not yet as obvious or pressing as it is in other markets. The challenge that we now face in our next sprint is to demonstrate to operators how this solution can complement other services offered by the MMA’s and generate increased mobile money transactions by the MMAs and their end-users. In the short term it may be that the focus on scaling out payment services takes precedence at this stage in Senegal and so the opportunity to explore the same proposition in other markets with different dynamics also exists.

[1] The GSMA’s “Profitability 2.0” report provides an interesting model for the expansion by MMOs of MM services as MM ecosystems mature. However, the MMAs themselves may diversify much earlier out of necessity.

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