NIGER POWER SECTOR PROGRAM (NPSP) STRATEGIES FOR OFF-GRID EXPANSION

The document focuses on optimizing cash flow stability, operational feasibility, and value to end-users for long-term growth. Research conducted by NPSP in 2018, including primary research of 25 off-grid company interviews and secondary research, identified various business model options for growth and expansion in the SHS market. SHS companies face various business model options, including downstream and upstream models. Downstream models involve direct sales or outright purchase, while upstream models involve vertical integration or in-house production. Consumer finance models, such as power-as-a-service, credit sales, and lease-to-own, are also explored. Distribution models, including partnerships with local distributors, community agent networks, and in-house sales forces, are also discussed. The document highlights the importance of achieving the "pay-as-you-go" (PAYG) 'sweet spot' for growth, which is driven by three key principles: prioritizing customer engagement and human relationships, maximizing reach through a suitable mix of distribution partnerships, and digitizing payments and collections using mobile money partners. Access to suitable and affordable financing for developers and distributors, as well as favorable regulatory policies on import duties and mobile money, are also crucial for achieving the PAYG 'sweet spot'. The document also explores strategies for distribution partnerships, including internal industry partnerships with SHS counterparts and external partnerships with distributors in other industries. NPSP is building on the work of the International Finance Corporation (IFC) by developing a national distributor map to match distributors to customers. The map will include indicative location, transaction volumes, and sectors, allowing developers to optimize customer reach and margin. Maintaining a suitable mix of distributors will also allow developers to optimize customer reach and margin. The document identifies four tiers of distributors, including large companies and subsidiaries of multinationals, telcos, FMCGs, and commercial banks, micro and small businesses, individual entrepreneurs and start-ups, local retailers, trade associations, and groups, and medium-sized, financially robust distributors with technical capabilities. Each tier has its unique characteristics and requirements, and developers must carefully select and manage their distribution partners to achieve long-term growth and success.