Providing sustainable energy to Ghana's poor
- 8 March 2011
- From the section Business
Leaving Microsoft to help launch a successful board game called Cranium was evidently not a big enough challenge for Whit Alexander.
Now he wants to deliver affordable goods and services to some of the poorest families in the developing world.
At the same time, however, he still wants to make a profit for the company he founded in 2008.
He points out that charity is not enough to lift people in the developing world out of poverty. They need solutions that will improve their lives.
Mr Alexander believes his business model will allow him to sustainably serve people who are largely ignored by the marketplace.
"The world's poorest spend some $5 trillion (£3tn) annually on goods and services," he says.
"But few businesses pay careful attention to meeting the particular needs of those who only earn a dollar or two a day."
Birth of an idea
What is normally offered to the poor is overpriced, poorly made, and sold at inconvenient locations, Mr Alexander believes.
But his strategy is to put his customers first.
"Like the hardworking pack animal that inspired our name, Burro, we are in the fields and on the trails, helping our clients live more comfortably and work more productively," he says.
Mr Alexander began by looking at where people were spending money - people who are earning a dollar or two a day, often living in rural areas.
"The first thing which struck me was this incredible reliance on throwaway batteries. In Ghana alone it is a $50-60m a year business," he says.
He thought batteries would be a great launch product for Burro to demonstrate that you can bring more appropriate products into rural locations and deliver them in a profitable way.
The solution; to provide batteries that could be re-charged at a fraction of the cost of buying a new one.
"We look at it as a battery service," he says.
"We are actually selling the energy content in the battery, rather than the battery itself."
It seems such an easy idea, it is surprising no-one has thought of it before, but Mr Alexander says it involves a huge upfront investment.
Mr Alexander has a bachelor's degree in African Studies from the Georgetown University School of Foreign Service.
He lived and worked throughout West Africa as a student, so returning to the region seemed a natural move for him.
Burro is conducting a pilot scheme in Koforidua, the capital of the Eastern Region of Ghana.
People living in rural areas are spending up to $6 a month on throw-away batteries, using them predominantly to run wireless radios, torchlights and other products that require electricity such as charging mobile phones.
"Our batteries and recharching service come in at a substantial discount to the disposable batteries and we are building a network so it is available to them in the village," Mr Alexander says.
"When a battery runs out, people just leave their 'fallen' battery, as they say in Ghana, with their authorised Burro retailer, who immediately gives them a fresh fully-charged battery," he says.
"So for 20-25 pesewa (15 cents) they get a fresh battery. And then Burro comes round twice a week to the retailers, and exchanges all the fallen batteries with fresh tested ones."
If a family is spending $3-4 a month on batteries, that family can be saving 30%.
"They are saving a dollar or two a month," he says. "It does not sound like a big deal, but when you are living on such an amount each day then every penny counts."
Moreover, the Burro battery has a no-leak guarantee.
"A problem with the inexpensive throwaway batteries is that they leak and they can destroy devices. You can imagine the challenge that brings to people when an expensive torchlight or radio is damaged," he says.
"We only bring in nickel metal hydride batteries, which are relatively benign environmentally. In Europe and the US you can legally dispose of them in any land fill with your household garbage, unlike nickel cadmium batteries which we would never consider bringing into Ghana."
With such small amounts of money involved, it is difficult to comprehend how a profit can be made.
"We have not cracked the nut yet," Mr Alexander warns.
"But we hope to demonstrate by the end of this year that for an investment of under $200,000, we can reach an average of 10-15-20% returns on equity, and be supplying these low income families a quality product in a sustainable way."
He thinks Ghana can support between 50 and 80 Burro branches and he is also very interested in surrounding countries and areas.
He counters the argument that there might be a moral dilemma making a profit from such poor people.
"They are happy with their cell phones and those companies are all making a profit," he says.
"It is a little naive to think it is immoral or inappropriate in any way when we are meeting people's needs, just because those people happen to be on very low incomes," he asserts.
He says very few people are tailoring products to this milieu and hopes he can make a difference in the long term.
"We hope to attract the brightest in Ghana to come and help grow the Burro brand," he says.
"I sleep very well at night knowing that."