This article was written by Antony Sguazzin. It appeared first on the Bloomberg Terminal.
As a teenager, Washikala Malango’s family fled a brutal civil war in the Democratic Republic of Congo, walking for hundreds of miles and crossing Africa’s second-biggest lake in a creaky wooden boat before landing in a refugee camp in Tanzania. After years in makeshift schools, Malango won a German-funded scholarship to university in Dar es Salaam, then later spent three months at Dartmouth College in New Hampshire and three months working at San Francisco startup SolarCity Corp. But he always dreamed of returning home. “We really wanted to do something to eradicate energy poverty in the DRC,” Malango says. “The security situation was still unstable, but against all of that we decided to come.”
In 2013 he and his childhood friend Iongwa Mashangao moved back to their native city, Baraka, on the shore of Lake Tanganyika and founded Altech Group, a business selling solar-powered lanterns. Early on they focused on teachers, doctors, nurses and others with reliable paychecks from the state, deducting regular payments from their salaries.
While that worked for a while, the partners soon realized that in Congo—one of the planet’s 10 most impoverished countries, with some 60 million people living on less than $2.15 per day, according to the World Bank—they needed another strategy if they wanted to keep growing. Around the same time, as more Africans bought cellphones, the concept of mobile money was taking root. Instead of cash, more people in the region began to use their handsets to make purchases, transfer funds and sock away savings via services such as M-Pesa.
That, the two thought, could dramatically expand sales, as the mobile banking platforms provided an easy way of extending credit and getting repaid—and would let them turn devices on and off remotely if customers fell behind on payments. “We were dealing with some of the poorest households in the world,” says Malango, 41, who along with Mashangao serves as Altech’s co-chief executive officer.
Altech has become a leader in what’s called pay-as-you-go solar, operating in 23 of Congo’s 26 provinces, with 3,500 agents making a total of more than 10,000 sales a month. In 2019 it added larger systems with several lights and outlets for plugging in televisions, computers and even refrigerators, and it recently started trials with electric scooters. Revenue grew sixfold over two years, to $20 million in 2022.
Congo is among the most challenging places on Earth to do business. Transparency International, a global corruption watchdog, says its culture of graft allows politically linked criminal groups to plunder the country’s vast natural resources, leaving the government chronically underfunded and the bulk of the population impoverished.
Yet Malango says his contacts and background have helped him navigate the culture in ways that would challenge outsiders. Altech got $18 million from investors including a fund backed by the Shell Foundation and Dutch development bank FMO, and it’s in talks with three potential backers to secure an additional $75 million. “Altech is well-positioned because of local know-how,” says Edmund Higgenbottam, managing director of Verdant Capital, one of the companies negotiating to fund Altech.
Pay-as-you-go schemes accounted for almost half of sales of solar-powered lighting systems in sub-Saharan Africa, according to the Global Off-Grid Lighting Association, which researches and promotes the industry. But the businesses are hobbled by low margins and suffer from a high default rate as they serve the globe’s poorest and least-educated consumers. And some suppliers offer misleading information about the costs of the products, a 2022 Bloomberg Green investigation found.
Eric de Moudt, CEO of another potential funder, African Frontier Capital in London, says the pay-as-you-go model makes sense in Congo, where most people rely on dirty, dangerous kerosene lamps that require repeated purchases of fuel. Solar lanterns, by contrast, are clean and free once paid off, and mobile money networks mean buyers don’t have to leave home to pay their loans. With kerosene lanterns, there’s “black smoke filling up the house, kids huddled around, smoke in their eyes and regular fires—bad things,” De Moudt says. Solar “is a hundred times better.”
Africa offers almost limitless demand for small-scale solar installations. Nigeria has some 90 million people without access to the electric grid, Congo has 70 million and Ethiopia 56 million, according to the Off-Grid group. The global market is on track to grow tenfold by 2030, to 1 billion households, the group says.
The technology offers the prospect of doing to the electric grid what mobile phones did to landlines: leapfrogging legacy systems with a distributed network that offers people low-cost services that they can build on over time. “There are simply millions of clients, even in urban markets, for whom grid access is not commercially viable,” says Jonathan Shaw, co-founder of Nuru, a startup that’s building solar minigrids in eastern Congo.
For Malango, who grew up without a connection to the grid, nothing compares to bringing solar systems to even the most remote parts of Congo. “I know firsthand the negative impact of not having access to electricity,” he says. “When for the first time people see a bulb, a TV—then you can feel we are doing something great.”