Philippe, why did you attack yourself about clean-cooking?
I grew up in West Africa – in Bamako, Mali – and was surrounded by friends and their families who cooked with charcoal. Outside of any ecological considerations, doing so seemed slow and ineffective to me, even as a child. Later, energy inclusivity was the subject of my MBA thesis at INSEAD. During it I designed and patented the Pay-as-you-Gas™ solution.
The PayGas adventure began in South Africa eighteen months ago. We got initial support from a partner in the gas industry who offered to test our solution. We developed a patented solution that allows us to sell gas in small quantities via online payments. Now our pilot has been running for six months. There have been more than 2,000 customer transactions and more than 10 tons of gas sold. A real success story!
I contacted Yoven Moorooven, CEO of ENGIE Africa, on LinkedIn in the spring. Very quickly, ENGIE began showing a real interest in our solution. They came over to the township of Delft in Cape Town to learn about it, and it seemed obvious that we should participate in the Africarena Clean Cooking Competition. For us, winning the competition meant earning the recognition and approval of one of the leaders in energy for our Pay-as-you-Gas™ solution.
Your solution allows you to partially refill gas bottles, right?
Yes, it is a technical solution linked to an app that allows you to simply add the quantity of gas you want to pay for. This Pay-as-you-Gas™ solution consists of:
We are implementing a "cashless" solution in South African townships where people can pay through GSM using phones connected through 2G or 3G for the amount of gas they want to or can afford to buy. It can be compared to a fully automated, secure petrol station but for gas.
The market we are targeting is made up of all of the potential customers in urban townships who cannot afford a full 5kg bottle at one time and are who are thus forced to buy charcoal or paraffin in small quantities – or electricity when they can afford it, because electricity is extremely expensive.
In addition to technical patents, this solution also has a strong social impact.
Yes, the impact is enormous and represents a major change in a very short period of time. More than 40% of our customers have consumed less than one full bottle over the course of five months. This means that we have given access to gas to those 40% of customers who could not afford it before.
Paraffin and charcoal used for cooking create a lot of pollution. They’re dangerous for health reasons and the pollution they create mainly affects women and children. Our solution allows you to save up to 20€/month as compared to electricity, i.e. between three and seven days' salary. Our goal is to get returning customers, which has been the case, since 73% of our customers have used the service more than twice.
An economic model suited to very low incomes
“Competing” solutions such as Kopagas (Tanzania) or Paygo Energy (Kenya) are technically interesting but target a different audience. These are post-payment solutions based on a smart valve that cuts off access to gas when the customer cannot pay. This means that the product remains on the customer's premises even when not in use, freezing the money there for the company. Still, these are technologically interesting models.
In our solution, when the customer has no more money, they don’t come to the station: it is a prepaid solution. I worked a lot on investing in the stations, which is why we use tanks from our gas partners. To make a station profitable, you need about 850 customers, which is a very low number.
Our first model is based on the idea of a digital petrol filling station and the principle of frugal innovation, which lets us set prices that are suited to customers living in very poor urban areas.
Gas stations operated by the local community that create local jobs
We operate on a micro-franchise model: in each township/slum/neighborhood, we identify potential customers and entrepreneurs who can operate the stations. We invest in setting up the station, doing so scrupulously in compliance with regulations (Major Hazard Installation). We buy gas from our gas partner and collect payments on our digital platform. But the most interesting aspect is that the station is operated by a member of the local community who will then hire between 4 and 10 people from the local community to provide impeccable service.
Including people from the community is fundamental: it is a local business where trusting relationships and knowing each other are very important. People who can't buy a full bottle don't have a car; everything is done on foot, like at a corner shop. Including people from the community ensures that the business is sustainable and that the investment is protected.
ENGIE awarded a prize of $10,000 for winning this competition. What do you want to do with it?
The $10,000 prize awarded by ENGIE will be shared among the people on my team, Natalia (Ops), Justin (Commercial) and Adrian (Digital) to thank them for their commitment since the beginning of this adventure, which was really about people. The project could not have been completed without their commitment and the sacrifices they made. A small part of the prize money will be used to help structure the relationship between the French holding company and South Africa in order to prepare for investors to invest and implement the next PayGas stations.
Now, we are starting to implement the solution in 366 South African townships where more than 20 million people live, almost half the country’s population.
Secondly, we want to export PayGas to other countries in sub-Saharan Africa where the topics at hand are a little different: deforestation linked to cooking in countries such as Côte d'Ivoire, Ghana, Senegal, where we are already working on a second pilot suited to the rural environment. In these countries, it is estimated that 85-90% of deforestation is related to cutting wood for cooking. This is dramatic and irreversible so long as consumers are not offered an accessible clean cooking solution.
Carole, the PayGas solution interests ENGIE Africa, which imagines a bright future for it.
One aspect that interests me most in the PayGas solution is its potential for expansion, not only in southern Africa, but also west and east Africa. PayGas, with its frugal innovation model and low production costs, offers a clean and reliable cooking solution to low-income customers and also creates jobs and boosts the local economy. Participating in the Africarena Challenge sponsored by ENGIE gave PayGas visibility and allowed them to showcase their solution for an audience of professionals.
Philippe, didn’t you also get support from the city of Cape Town?
Yes, the City of Cape Town has registered us as a stakeholder in its climate change and economic inclusion policy, particularly thanks to the fact that each PayGas station creates between four and ten jobs thanks to a local entrepreneur. Our clean cooking solution creates jobs in the most disadvantaged areas of townships with the highest crime rates (Delft, Nyanga, etc.).
We are also supported by the French Embassy in South Africa and had an audience with the Minister of Foreign Affairs, Jean-Yves Le Drian, during his visit to Cape Town on March 1, 2019.
Economic and ecological inclusion are a priority for the Sahel region countries, especially those where there is currently conflict, since we know that terrorism is first and foremost an issue of poverty. Using 7 kg of gas per month for cooking helps to avoid deforestation of 800 kg of wood each year. So, this is a particularly vital subject for the 2.6 billion people who cook with wood every day, especially in Africa, Asia and South America.
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