How Nuru Lights markets LEDs via networks of micro-entrepreneurs
While driving through a village in Rwanda, Sameer Hajee came across a mother walking with her two-year-old son, who had severe burns covering a third of his body. The cause: an accident from a kerosene lamp. “That haunting image of the boy, who was the same age as my kid then, is what keeps me going,” says Hajee, founder and CEO of Nuru Lights. His company sells affordable, off-the-grid lighting systems to poor people who would otherwise be dependent on hazardous and expensive fuel sources, like kerosene. The Nuru portable LED lights are charged by pedal-operated generators and sold by local entrepreneurs backed by microfinance. Currently in India and parts of Africa, Nuru is looking to expand to new markets.
Dowser caught up with Hajee to learn more about Nuru’s technology and business model.
Dowser: You have an engineering background in the U.S. and Canada; how did you end up designing lights in India?
Hajee: My first engagement with the developing world was with a telecom operator in Afghanistan. I worked there for six months and realized that delivering technology was really an area I wanted to focus my life on. I was looking for something that would enable me to use my background in engineering [to make] an impact. I wanted a career in the BoP [Bottom of the Pyramid] space and thankfully I got to work with the United Nations in exactly this area.
How did the idea of Nuru come about?
[At] the United Nations I was working with global corporates, helping them think through and develop business models for the rural poor. It was not CSR or charity; we were seeking ways to engage the rural poor either as suppliers or consumers to the products and services these companies offered. I spent a year there as a BoP consultant.
One of the clients we had was Freeplay Energy who had developed hand-cranked power technology back in 1995. I knew that this could have a lot of impact. People were using kerosene or firewood for energy and I thought: this technology can [put] them in charge of the energy they need. I started to work with Freeplay full time. We had a product called Weza, which was a foot-powered generator. That got me thinking, there is a lot of room for development of new products here. We pitched many ideas but [Freeplay] was not in a position to develop and design new products. So eventually I left and started Nuru energy.
What went into the design and conceptualization of the product?
We knew that the primary need for energy at the BoP is lighting, the other, cooking. We started in Rwanda. It has one of the highest densities of population in the region but one of the lowest distribution rates for electricity.
We spent six weeks in rural Rwanda, to study consumer patterns and to learn more about how they used energy. Ninety percent of the population used kerosene and a majority of the energy needs were task-based – the whole room need not be lit up, only a specific area. We thought of providing smaller lights, which are affordable but can be bundled if you need more. So it’s a modular aspect of lighting, which is an innovation we have patented. We looked at solar as an option for the charger but it was inefficient. Human power is fantastically efficient, and you can charge up the devices very quickly. We designed a simple pedal device that uses existing pedal and cycle parts available in the rural market.
How do you distribute?
That’s what makes our model work – we do not directly have to contact or sell to the end-consumers; we do that through our network of rural entrepreneurs in Africa and in India. The entrepreneurs buy a charging unit through a loan from the microfinance partner, and from the income they generate, pay off the loans.
These entrepreneurs are able to charge five portable lights in 20 minutes, and in Rwanda they charge 30 U.S. cents [per unit]. Each charged portable light lasts 20-40 hours, which means seven to ten days of usage. The entrepreneurs make $1.50 from each recharge, which is as much as they make in a day [farming] and less strenuous than agriculture. For households a one-time charge almost lasts a week and this means a $1.20 [expenditure on light] for the month, which is one tenth of what they used to spend on kerosene.
Do you train the entrepreneurs?
We provide technology with marketing materials. The financing of the pack comes from microfinance partners. We work with BASIX in India who also has a focus on generating sustainable livelihood.
What are your plans for India?
Our plan is to manufacture in India. Based on our research and calculations we estimate that it is going to cost about $6 for a light and $200 dollars for the generator. The generator is a shared resource and we are not selling it to every single household. We are using the collaborative consumption approach.
We are in Orissa at the moment. We want to scale to Bihar, Uttar Pradesh, Maharashtra and West Bengal in the first quarter of 2011.
How would you compare this with solar lighting?
We are working toward selling the lights at one-third the cost of a representative comparison of the solar light. Within six months the entrepreneur will have paid back the loan along with the interest. The loan for buying a power cycle/generator is for an income-generation asset and helps the economy of the village.
Interview was edited and condensed.
Photo: Nuru Lights