Sollatek Electronics (Kenya) Limited has been in operation since 1985 as the sole authorized agent for Sollatek products and the owner of the Sollatek franchise in East Africa. The Head Office is in Mombasa and they run a sister operation in Dar Es Salaam, Tanzania. They operate as a wholesale and last mile distribution outfit, selling their products through a region-wide network of distributors.
Sun-Connect had a chance to interview Paul Musili, Solar Lantern New Business Development Manager and Titus Maina, Regional Sales Manager.
Paul Musili, Solar Lantern New Business Development Manager
SC News: What is your experience: which product, beyond lighting, customers request the most? And which other appliances for Solar-Home-Systems you think should be provided in future?
Sollatek: The Kenyan market has grown over time in the solar industry. Sollatek has been one of the pioneer companies of solar lanterns and solar home systems to the last mile market in Kenya. Customers have over the years moved up the energy ladder starting with solar lamps, small home systems and now on to Solar powered appliances such as TVs, fans, and fridges. Customers are now asking for productive use solar products like the solar powered water pumps, milk chillers, and iron box. As a company, we are ready to lead from the front by partnering with innovative technology manufacturers to satisfy the last mile customers in this new demand for productive use solar products.
SC News: When companies grow, the need for good and reliable staff is big. How do you find your staff?
Sollatek: Sollatek has been in the East African market for over 30 years and a key ingredient to our longevity has been our employees. Sollatek employees are passionate towards their work, knowledgeable about the market and customer centric. They always put the customer first, endeavor to satisfy and exceed customer expectations. This has been the engine that drives the company’s success and growth over the years leading to its market dominance. Sollatek has created a company culture of mutual trust, respect, and understanding. This culture values people’s inputs and opinions. This culture is one of the main reasons many of Sollatek’s staff have been with the company for over 5 years. As we hire new staff they usually go through a vetting process, interview and training, which introduces them to the company’s values and expectations. Many of our new hires actually find us!
SC News: Right now we see a huge focus on pay-as-you-go sale in the off-grid sector. How do you see the further development of this type of business?
Sollatek: As customers grow up the energy ladder, they are expected to spend more, however, the target market is mainly the off-grid Bottom Of the Pyramid. This category has a limited disposable income. The PAYGO model came in to fill the financial gap by spreading out the upfront payment to smaller affordable monthly payments. This type of business model will eventually incorporate all manner of domestic appliances including Televisions, Music systems, freezers and other home based appliances. However, the BoP’s disposable income is not growing at the same rapid rate as the industry is introducing new technologies. This means the end user’s ability to afford, even on PAYGO, some of these larger ticket items is limited. The industry must be careful not to sell a Land Rover to a person that really can only afford a Vitz. Due to this, many are looking towards the productive use of solar, which would enable costlier items to be sold into the same customer base because the customer earns income from their use.
We also see an emergence of different PAYGO models, which is essential to creating a sustainable industry. From the start, most PAYGO companies were “vertically integrated” meaning they owned the value chain. This effectively excluded most local (Kenyan owned) companies from getting into the PAYGO space due to lack of financing and manufacturing. Now, many local companies are looking to leverage their strengths through experience, knowledge, and partnerships to encourage alternative models to the “vertically integrated” standard.
SC News: In your view, what are the main challenges in making renewables an affordable easy-to-access energy resource?
Sollatek: There is adequate market demand for renewable energy products in East Africa and in Africa in general. The main challenges in this industry are the lack of capital to start the business or working capital for local distributors, low disposable income for most families and cheap counterfeits flooding the market. The counterfeits are making genuine products look unnecessarily expensive. The counterfeits have gained ground due to affordability by the target market, however, when a counterfeit fails within 6 months like they usually do, the entire solar industry is blamed making it harder to bring that customer back to solar products.
SC News: Is the off-grid market Driven More by Policy or Technology?
An enabling policy environment is required for any industry to flourish. Policy guidelines play a key role in the off-grid industry. However, we have seen a long tug of war between policy and technology. In many situations policies have held back innovative technologies or created an environment where they are encouraged and flourish. We have also seen technologies push governments to react with policies both to encourage but also restrict to protect the consumer as in the case of counterfeits. Therefore, off-grid market is driven by both policy and technology