The cause of lifting Africa from poverty has justified a long history of misguided aid projects. At best these are pointless and wasteful, such as a charity installing a well but leaving no money or expertise to fix it once it breaks. Worse is when they make intended recipients worse off, like when foreign aid props up corrupt officials rather than helps its citizens.
The popular social good business model of “buy one, give one”–pioneered by Toms Shoes–has been a strong modern example of this. The argument against these “BOGO” companies is that when a business donates say a pair of shoes or eyeglasses for every one purchased by consumers in rich Western nations, a poor family may benefit in the short-term. The problem occurs when the product isn’t made or sold in that same community. Then the jobs and market potential to grow local businesses is lost and opportunities to build an economy or improve people’s lives in the long-term are stifled. The lesson is that in non-emergency scenarios, charity isn’t always best for the long-term interests of developing world economy.
An example of this is playing out in Kenya, in a much higher-value market than shoes or eyeglasses, according to a piece by Stephen Lacey at Greentech Media. He reports on a controversy playing out around Canadian company SkyPower’s plan to give away 2 million free solar lighting and charging kits to people, schools, and hospitals lacking access to electricity.
Energy poverty is an important cause–without power, kids can’t study for school, and the work women must do in the household increases dramatically. Getting people connected to the grid does have enormous potential to improve lives.
But the giveaways could kill Kenya’s emerging for-profit solar market and damage local businesses that were just starting to find their footing, build sales and distribution, and attract investors, according to numerous solar market players that Greentech Media spoke with. Pay-as-you-go solar business models help poor people access electricity and also create a sustainable industry that develops local economies. In Kenya, 3 million off-grid households are already served by solar providers through mobile payment systems. According to the Consultative Group to Assist the Poor, a collective promoting financial inclusion, these business models have not only radically increased the adoption of solar products but have helped bring poor people into the formal financial system.
“Dumping free products on top of the fully functioning Kenyan market could destroy the commercial underpinnings of the domestic solar industry and undercut the investments of hundreds of Kenyan companies who have built this market and whose livelihoods depend on the services they provide to satisfied customers,” Russell Sturm, head of the International Finance Corporation’s climate change advisory, told Greentech Media.
The African Solar Cooperative, which operates in Ghana, not East Africa, observed to Co.Exist that there is a need for charity to help grow a sustainable solar market, but noted the market can’t be maintained without industry development. Many who can’t currently access any solar market might benefit from charity, senior partner David Wan said, but also that “millions of solar products irresponsibly distributed could end up as scrap.” Let’s hope it doesn’t come to that.