One year ago, Kumar began renting out 40 Selco solar-powered batteries to the people living in his slum community in the heart of Bangalore. Prior to this, 400 families were left to rely on cheap, easily breakable lights, dangerous and flammable kerosene lamps, or simple darkness. Without affordable energy, the inhabitants of Kumar’s slum lose hours of otherwise productive time that would allow them to build a pathway out of the slum, and into a secure life. Within months, demand for Selco’s rechargeable batteries sky-rocketed and Kumar increased his inventory to 86. Now, he is requesting yet another 50.
Selco’s solar powered system allows Kumar to take advantage of the sunny Bangalore days and charge the batteries. When the batteries die, the families who rent them come to his small kiosk and pay seven rupees to take the batteries and attach them to a small light bulb that they keep at home. This small battery and light bulb allows these families to light their homes while they cook, do household chores, and continue to be productive throughout the day and night. As long as the sun is shining, the cycle continues; creating a long term, livable solution to the lack of energy that exists in these slums.
For 20 years, Selco Solar Private Limited, a Bangalore-based social enterprise, has created branches in Gujurat, Tamil Nadu, Kerala, Maharashtra, Bihar, and Karnataka. Focused on delivering sustainable energy to the poor and underserved communities, Selco works in places that have little, no, or what could best be described as intermittent access to grid electricity. To do this, Selco identifies and incubates entrepreneurs, like Kumar, from the communities they target. Selco aims to build relationships with rural banks and provide training so these entrepreneurs can grow their businesses. Ideally, Selco will act as the middle man, getting the rural banks to provide loans to entrepreneurs who are usually deemed too risky to lend to.
Unfortunately, Selco faces a challenge that is indicative of the larger alternative energy, social entrepreneurial sector: while there are examples of creating financial access to a few entrepreneurs and at-risk citizens, these poor people remain highly excluded from the banking sector because of the costs of borrowing remain high, they have little propensity to save, and have little collateral. Rural banks remain largely hesitant, if not unwilling to provide access to their services to these risky borrowers. Without these connections, the Kumars of the slums cannot afford to make the initial investment to purchase Selco’s products. For those entrepreneurs who have enough capital to make the initial investment, without support from the financial institutions, they do not have the funds to build their businesses and eventually build a life outside of the slums.
For the 2014 India Development Marketplace, Selco, in partnership with the Rural Resource and Training Centre (RRTC) Don Bosco, has proposed to provide its services to the remote North East Indian State of Meghalaya where there are numerous black outs and off grid connected households. Selco believes it can provide its energy solutions where they are currently unavailable, simultaneously cultivating the local entrepreneurial space. Over the next 24 months, they will identify, train and build the capacity of 25 entrepreneurs in the North East state of Meghalaya, while creating linkages with local banks in order to secure access to credit and loans for their energy solutions.
While Selco plans to scale its operations, Kumar will be scaling his business too. Given the great success of his the solar batteries, he has extended his services to refrigeration and mobile phone charging. His gumption and entrepreneurial spirit – along with Selco’s invaluable support – have led Kumar to increasing his salary to US$340.
Selco is dedicated to bringing energy solutions to those who otherwise would be left in the dark, but it is Kumar’s success that highlights their ultimate goal: proving to local finance institutions that – despite being poor and from the slums – local entrepreneurs are credit- and trustworthy. With lights and financing, these entrepreneurs can see a pathway out of poverty, and into a secure, stable lifestyle.
This post is part of a mini-series from the DM Team, who recently conducted on-site visits of our 22 finalists for the 2014 India Development Marketplace. Selco has been short listed as a finalist for the 2014 India Development Marketplace, all of whom have proposed incredible projects that truly help the poorest populations in India. Winning organizations have not been selected yet, and an announcement of those selected will be made soon. In spite of which organizations are selected, the DM Team wanted to make sure that these innovative stories were told.
Cristina Navarrete Moreno is a consultant with the Development Marketplace who focuses on the intersection of private sector development, science and technology, and education, and how they can lead to results driven international development. She is currently developing an eLearning course for our Development Marketplace grantees so the will be equipped with the skills necessary to scale their solutions and create a poverty free world.