EcoMoto: Turning on the Lights in Kenya in Under 48-Hours

Step-by-step instructions on how eligible customers can apply for the EcoMoto loan, as of February 2018.
It’s happened to all of us: you walk into a store and see something you like – only to feel the disappointing realization that you can’t afford it. If what you were coveting was something frivolous, it’s not a problem. But what if the item you were hoping to purchase has the power to save you money in the long run, expand your productive and social hours – and even improve your health and the environment?
This is exactly the challenge faced by numerous consumers in Kenya, who lack the upfront cash needed to purchase a solar lantern or solar home system (SHS). Equity Bank in Kenya, which is one of the largest commercial banks in the country, has rolled out a solution known as EcoMoto, developed with support from IFC and the Lighting Africa/Kenya program.
This innovative facility allows consumers to apply for a loan to purchase a solar lantern, a solar home system (SHS), or a cook stove directly from their mobile phone at a banking agent location – and receive a response within minutes. Once the loan is approved, funds are transferred directly to the agent’s account and the consumer can take home their new purchase. And so, in about five minutes, the scene described above is transformed from one of frustration to one of empowerment.

By December 2017, EcoMoto had been piloted successfully in almost 20 towns throughout the Central Rift and Western Kenya, and Equity Bank plans to expand rapidly across Kenya, hoping to sell a million products over the next three years.

Tapping into existing banking channels

EcoMoto taps into several key banking options already in place in Kenya, including mobile phone banking and banking through local agents. Equity Bank partners with independent businesses –primarily small shops – in communities, to provide basic banking services to their customers such as bank deposits and withdrawals. There are more than 30,000 such agent shops throughout Kenya, allowing customers to conduct transactions conveniently and close to home.

Alternatively, bank customers can use their mobile phones to conduct financial transactions from wherever they are through their Equitel lines or the EazzyBanking App, all from Equity Bank. Equitel is the mobile phone network owned and operated by the Equity Bank Group. Each Equity Bank customer has the opportunity to acquire an Equitel line and link it to their bank account. This serves to lower the account management costs while also providing convenience and easy access to funds. The EcoMoto facility is powered by Equitel and accessed off the loan menu. Equitel has grown rapidly in the last couple of years and is currently Kenya’s fastest growing mobile money operator.

This provides an ease of service to even the most rural banking consumers as it saves time and costs – both financial and opportunity costs. Mobile banking and the use of agent shops accounted for 80 percent of consumer transactions for Equity Bank in the period between June – December 2016, when EcoMoto was being developed.

The Lighting Africa/Kenya team worked with Equity Bank to adapt their existing mobile banking software so as to allow pre-qualified customers to apply for a loan to purchase solar lanterns, solar home systems (SHS), and cookstoves. To qualify for a loan, customers must have an active bank account with Equity Bank, use Equitel , and have a credit limit that is sufficient to cover the credit price of their desired product. Products on EcoMoto vary, from as little about $30 to as much as $620.

Equity Bank selected the participating solar PV products, up to 15W, all of which meet Lighting Global/IEC Quality Standards. Plans are underway to test the larger SHS selected by Equity Bank against the newly created Lighting Global Standards for this category. During the pilot phase, Lighting Africa/Kenya worked with Equity Bank and the program’s associates to train more than 200 local agents in pilot areas on solar product sales and loan processing.

A list of products that are available for financing via EcoMoto as of February 2018.

Consumers can see the products directly in the agent’s shop, where they can immediately apply for their loans, or do so at their convenience via their phones. Consumers can then take home a solar product on the spot once their loan has been approved.

The EcoMoto loans range between Kshs 1,000 (USD 10) and Kshs 60,000 (USD 600) at 14% per annum with terms between 2 – 12 months. Generally, default on loans for good quality off-grid solar products is low as consumers immediately begin to benefit from the savings that would have otherwise gone to purchasing the fuel (kerosene), batteries, or candles that were previously used for their lighting needs.

Repayments are structured so that the monthly cost will be lower than the cost of buying kerosene for the same period would have been, so that consumers can afford the make their repayments.

Ongoing support

In addition to working with Equity Bank to design the program, Lighting Africa/Kenya conducted consumer education campaigns in the pilot areas to spread awareness of EcoMoto as well as deepen the last mile distribution of solar products across Equity’s network of banking agents.

Lighting Africa/Kenya is working with Equity Bank to scale EcoMoto nationally in 2018. Based on learnings from the pilot, Equity Bank has broadened the product range, expanded distribution by incorporating multi-product distributors and nearly doubled the number of Associates participating in the Lighting Africa/Kenya Program.

Equity Bank and Lighting Africa/Kenya will continue working together to ensure easy access to the products and to increase awareness about the benefits of using solar energy. The Lighting Africa/Kenya Program has high hopes for the viability of EcoMoto as it makes use of existing structures to simply and quickly address the primary issues hampering sales in Kenya today: lack of funds and unavailability of high-quality solar solutions at the last mile.

In addition, Equity Bank has high hopes for EcoMoto, looking to move 1M units in the next three years.