An interview with Iftiimiso and Enersom
Access to a modern electrical grid is something that is now taken for granted in Finland and Sweden; the grid brings affordable electricity for lighting, entertainment, food storage and preparation, and other facilitators of a comfortable life.
In Somalia and Somaliland, the grid does not meet the needs of the people: the World Bank estimates that only 29 percent of the Somali population have access to electricity. Moreover, the cost of grid electricity is prohibitively high at 0.8-1.5 USD/kWh – compare this to Finnish electricity prices, which are less than 0.25 USD/kWh. Clearly, alternative solutions are needed, and two innovative companies, Iftiimiso and Enersom, are providing just these.
Iftiimiso taps into the strength of the Somali diaspora to provide solar home systems in and around Mogadishu. The powerhouse behind Iftiimiso, Liibaan Mahamoud, lives in Sweden, where he studied electrical engineering.
“In Somalia, conflict is the biggest problem, but lack of energy is second”, says Mahamoud. “There is no competition in the energy sector and no alternatives available, but there is a huge demand”.
With Iftiimiso, Mahamoud aims to not only provide alternative energy sources, but also jobs, which are sorely needed. “The economy and energy are two sides of the same coin; if we can improve them, we can reduce the power of al-Shabaab and reduce the pressure for Somalis to leave their country.”
The Somali diaspora that Mahamoud is targeting is spread across northwestern Europe as well as in the United States and Canada. Exact figures of the total amount of remittances sent to Somalia are impossible to calculate, as much of the money is remitted through informal channels, but estimates range from 1 to 2 billion US dollars per year.
Capturing a part of this stream could have a significant impact on energy access in Somalia. According to Mahamoud, the diaspora customers who use Iftiimiso tend to be people who have emigrated during their lifetime – those who were born abroad are less likely to have strong ties to Somalia. Mahamoud emphasizes that Somali diaspora members do have purchasing power and want to buy quality products that help their friends and family save money.
Through Iftiimiso, Somali diaspora members have the opportunity to do just so by purchasing a Sundaya T-Lite solar home system for their friends or relatives in Somalia. Each kit costs USD 150, which includes the system itself, consisting of a panel and three lights with batteries, delivery in Mogadishu, and a two-year warranty.
Those receiving solar home systems reap many benefits from switching away from lighting by kerosene lamps or candles. First of all, they can save money; Mahamoud estimates that families spend 30 percent of their income on energy. When they do not need to purchase kerosene or candles, this money can be saved or spent on other consumption.
Second, kerosene lamps pose many health hazards, including risk of burns, lung irritation, and eye irritation. Solar lamps remain cool at all times, and thus improve safety in the home. Third, the solar-powered lamps included in the solar home systems are much brighter than kerosene lamps or candles, meaning that families can enjoy brighter homes, and children find it easier to study. The bright light itself can also improve a family’s sense of security.
The way Iftiimiso operates in practice is that a diaspora customer places an order on Iftiimiso’s website. He then deposits the payment in Iftiimiso’s Swedish bank account, after which Iftiimiso’s office in Mogadishu delivers the product to the customer in or around Mogadishu. The receipt of the product is confirmed via mobile phone. With Iftiimiso, the customer is entitled to a two-year replacement warranty, which helps create consumer trust and confidence in the product.
So far, Iftiimiso has sold around 150 kits, and Mahamoud is looking forward to greatly increasing his outreach. One major constraint is the lack of funding to scale up the operations, but Mahamoud is confident that the political environment in Somalia is changing for the better, which will in turn bring more investment to the country. Signs of this improvement include a new Swedish fund for Somalia, which is being channeled through the World Bank.
Like Iftiimiso, Enersom also aims to increase energy access through solar products. However, instead of remittances, Enersom taps into another powerful financing mechanism: mobile money. Nigel Carr, co-founder and Managing Partner of Qorax Energy, the parent company of Enersom, says that in Somaliland, where Enersom operates, mobile money is ubiquitous with even single street vendors using mobile phones to accept payments.
In Somaliland, as in Somalia, customers are spending about 30 to 35 percent of their monthly income on energy. Still, it can be difficult for customers to make an upfront payment on solar products, even if that would save them money in the long run. With Enersom, customers can pay for the solar products over a 6-month period, with a down payment of 15-20 percent of the product’s cost.
Each Enersom agent has a SIM card where he receives payments nightly, and he can see each customer’s balance remotely. At the same time, customers can also choose to pay cash upfront and simply own the product immediately. With smaller products, this has been a popular option, as the need for financing is not as great.
Enersom currently sells Greenlight Planet solar lanterns and small solar home systems. The top seller so far has been a solar lantern that also allows customers to charge their mobile phones. The benefit of purchasing lanterns through Enersom compared to other alternatives is the high quality of the product – Greenlight Planet products are certified by the IFC’s Lighting Global initiative – coupled with a 2-year replacement warranty that is serviced by Enersom. Demand for these products is high: after starting operations on April 1, 2015, Enersom has already served 250 households in Somaliland.
In addition to safer, cleaner lighting, Enersom brings other benefits to Somaliland. Like Mahamoud, Carr emphasizes the importance of creating jobs; with 50 percent unemployment in Somaliland, new types of employment are essential for improving the quality of life. Enersom hires agents within local communities, who work on commission to sell products. Abdishakur Mohamoud, co-founder and Managing Partner, helps Enersom navigate the local context to be able to serve all potential customers. This requires an in-depth knowledge of clan politics and the overall cultural setting of Somaliland.
Overall, Carr notes that it took time for Qorax to understand the landscape in Somaliland; when Qorax started operations there, the assumption was that it would be involved in building large-scale, grid-connected projects. It soon became apparent that the whole government-run energy system would have to evolve significantly before any renewables could be connected to it. While it is clear that a functioning power grid is necessary for a more prosperous Somalia, micro-distributed energy generation, including the products offered both by Iftiimiso and Enersom, is a valuable alternative that can provide immediate access to clean, safe energy across Somalia and Somaliland.
With Iftiimiso growing in Mogadishu, and Enersom rapidly increasing its customer base in Somaliland, the future looks bright for both companies. “Somaliland is a great place to work”, Carr emphasizes, “and growing Enersom is definitely a priority for us.”
Mahamoud feels a personal duty to serve Somalia: “If I don’t do it, who will?” Let’s hope that others join Carr and Mahamoud in bringing distributed, clean energy across Somalia and Somaliland, and that both enterprises continue to grow and flourish!
Text: Laura Sundblad
Photos: Liibaan Mahamoud