Friday
August 9
2013

Gaurav Gupta and Shanti Mahajan

Productive Consumption: How high-end technology enables market-driven service delivery for the BoP

The meaning of poverty is shaped by one’s ability to access basic amenities, such as electricity, cooking technology, and clean water. Access to modern forms of these services – the ability to turn on a light, stove, or faucet – provides more than convenience. These amenities reduce sick days and reduce costs – both financial and otherwise. For example, households can spend between $40 – $100 USD a year on kerosene for lighting or just $30 USD on a solar lantern that lasts 3 years and provides better light. Such amenities also reduce the time spent collecting water and cooking fuel. In other words, access to basic services improves productive capacity, freeing up time for work and education, which ultimately offers a sustainable ladder out of poverty.

Historically, expansion of basic service access has been hindered by the costs and slow speed of expanding “the grid.” Yet there is no longer any need to move at the pace of grid expansion; technology to offer basic services safely and affordably, without relying on grid electricity, is here today. Best of all, doing so is significantly more environmentally friendly. Thus, off-grid enabled products that provide core household services are a whole new commercial and social opportunity waiting to be exploited. Interestingly, this opportunity to reach the poorest has been created by the insatiable demand in richer countries for what is in our pockets, handbags and briefcases.

Mobile phones, phablets, tablets and laptops are an attempt by all of us to live without wires. Companies advertise these products by showing us actors laid out on hammocks in the middle of nowhere yet still able to surf the net and enjoy eight hours of power. It is strange to think that this coveted “untethered” situation mimics closely the challenges faced by the poor everyday – but not out of choice. For close to a billion people, living with no telephone or power lines is a reality, and many others who do have wires find they function for only a few hours day. So it is a happy coincidence that consumer demand for smaller, longer-lasting devices with better screens is driving innovation that can also be applied to serve the needs of households forced to be off the grid. A better screen means brighter and more efficient LEDs. Longer power means better batteries with improved power management. These two technologies not only help on-grid laptops remain sleek and powerful; they form the lynchpin of a power and lighting solution for an off-grid household. The demand by the rich for these improvements has helped drive prices down sharply, ensuring that a solar LED lighting system is affordable for many who would otherwise pay a fortune in monthly kerosene expenditure.

The examples run well beyond power and lighting. BioLite’s biomass camp stove provides efficient off-grid living for avid campers and also is able to charge your phone by turning the stove’s heat into electricity. BioLite is also promoting a cheaper version for Bottom-of-the-Pyramid (BoP) households, where biomass-based cooking is a necessity and efficiency is critical to avoid indoor air pollution and fuel costs (being able to charge your phone also helps!). The wealthy world’s demand for tablets has allowed a host of companies to offer low-income households a cheap alternative to a TV/Computer at an affordable price (see India’s low-cost Aakash tablet). Water filters have become ubiquitous in every middle- and upper-income home in developing countries and are now achieving the scale economics that can allow them to reach poorer households (where arguably they serve a much greater need given the quality of the unfiltered water generally available to the BoP).

These products represent sustainable – and increasingly affordable – substitutes for existing means of lighting, cooking, water purification, and even entertainment. Much of the innovation behind them is being driven by the technological appetites of the more well-to-do. This factor, combined with the complementary trend of decentralization of utilities (a topic for another post) holds transformative potential. However, many obstacles toward large-scale adoption of these new technologies remain – BoP access to finance and the distribution, after sales service, and consumer awareness of products, to name a few.

Our work with Lighting Africa and India, the Global Alliance for Clean Cookstoves, leading electronics companies and CLASP, among others, has focused on creatively thinking about market-driven service delivery for the BoP, and ways in which technology designed for high-end applications can be adapted to affect social change. This market remains severely underserved, but the economics for it are sound. We encourage established companies and new entrepreneurs to engage in a sustained manner with this opportunity, which will be an important lever for poverty alleviation. It is what we label, ”productive consumption.”

To find out more on this emerging market, check out Lumina, a social network for off-grid lighting providers, the Global LEAP awards, or our TEDx talk on living off-grid.

Gaurav Gupta is Dalberg’s regional director for Asia, based in Mumbai, and also co-leads the firm’s Energy and Environment practice. Shanti Mahajan is a consultant in Dalberg’s Mumbai office, where she has worked on engagements in the Corporate, Energy & Environment, and Global Health practices.

Note: This article was originally published on the Dalberg Blog.

Categories
Energy
Tags
consumer products, energy, renewable energy, technical assistance