Published on September 14th, 2018 | by George Harvey0
A Market Worth Billions Nobody Seems To Have Noticed (Yet)
September 14th, 2018 by George Harvey
The CleanTechnica article, “‘Bold’ Climate Action Could Deliver $26 Trillion In Economic Benefits Through 2030,” speaks to the enormous potential for dealing with climate change. It covers a report published by the Global Commission on the Economy and Climate (GCEC), “Unlocking the Inclusive Growth Story of the 21st Century.”
The GCEC report makes it clear that dealing with climate change is a huge business opportunity, possibly the biggest that has ever presented itself to mankind. Combined with the fact that climate change is probably the biggest threat humanity has ever faced, it is clear that only short-term inhuman greed or sheer lunacy would steer us away from the issue.
Shortly after that article appeared, another came along that told me the whole issue might not be fully understood, even by the authors of the GCEC report. It was published by the Lusaka Times. For those who don’t remember (which, I admit, included myself), Lusaka is the capital of Zambia, which is in the central-southern part of Africa.
That article, “30,000 Zambian households gain access to energy,” tells how two companies, Fenix International and MTN, have installed off-grid solar systems on 30,000 homes, providing electricity for more than 150,000 people, over the course of nine months.
The people in these households in rural areas of Zambia have mostly been in poverty. According to Zambia’s Central Statistical Office, in the report 2015 Living Conditions Monitoring Survey, most rural households have incomes of about $810 per month. That is about $5.40 per person per day.
Nearly all of the rural people have had no electricity until now. Lighting has been largely from kerosene lamps, which are very expensive to operate and which foul household air. People who have had cell phones have had to charge them outside the home, and very few other electric products have been in use.
According to the Fenix International website, the cost of the top-of-the-line 34-watt system, purchased with a 24-month loan, is a little less than K730 (Zambian kwacha). That is about K30 per month, after a down payment of K47.16. This includes a high-efficiency TV in addition to solar power, battery, lights, and two cell phone chargers. On a per-person basis, this is a total cost of about K146, or about K0.20 per person per day.
The least expensive system provides 10 watts of solar power plus battery, lighting, and cell phone chargers. Also on a 24-month basis, this system has a down payment of K9.36, and costs K7.09 per month, or about K0.24 per day for all the people in a family of five.
The benefits of enabling children to study in unpolluted air at night are widely acknowledged. So are the benefits of having cell phones. But market-oriented western business people should open their eyes to what is going on here. The world’s poor people are mostly ignored, from the point of view the broader market. For most investors, Africans living without power simply do not buy enough products to be worth much thought.
But when they have power, the new consumers will not stop at the supplied high-efficiency television and a couple of lights. They will become part of the modern world. Some will get educations and some will get jobs. They will buy books and footballs. They will put their money into T-shirts and bicycles. They will buy computers and go online.
If their buying computers sounds ridiculous, consider the cost of a Raspberry Pi computer. Right now, I am using a Raspberry Pi number 3 B+ for nearly all the computer work I do. It uses about 4 watts of power, so it could run for well over a week on one kilowatt-hour. The least expensive Model Zero costs $5, is quite capable of doing web searches, and uses about 0.5 watts. It is hundreds of times as powerful as the first IBM PC I had, and even a 10-watt solar panel could keep it going all the time with power to spare.
Poor rural people, who have been without power and largely left out of economic calculations, are set to become a market force. It will cost about $140 billion to get a billion people into the 21st century. When they arrive, we have no idea how big the market force will be. If their income is raised by 20%, it would mean they could spend $1.08 each, every day. That is nearly $400 billion per year. I would think it might be worthwhile to invest $140 billion once to develop an ongoing market of $400 billion per year.
They will do this on their own, if they have to. They will lease the equipment or buy it. And once they do that, they will no longer be a set of demographic statistics to be ignored. And they will owe their gratitude to the companies that enable them.
We, as inhabitants of the rich economies, could just sit back and wait for this to happen, licking our chops in anticipation of the gains that will accrue when the time comes if we put our money in the right place at the right time.
There is an alternative to this plan, which may or may not be less risky, but I would think it would be enormously more fun (and probably enormously wiser, even from a hard-nosed economic point of view). As an example of what I call “trickle-up economics,” we could help.
[Edit: This article originally stated costs and prices in US dollars, but the currency in use is actually the Zambian kwacha (ZMW).]