NalaPayGo
NalaPayGo is a Lesotho-based majority female-owned and manage last mile solar distribution company. NalaPayGo is
the pioneer and sole provider of pay-as-you-go solar in Lesotho.
Overview
Lesotho has one of the lowest electrification rates in Africa, with about 62% of the population lacking access to electricity, mostly concentrated in the rural areas of the country In 2019, NalaPayGo was launched to address this challenge by offering 6-40W solar home systems on a PAYGO basis, enabling customers to purchase solar products by making small affordable instalment payments over 12 months. Since its inception, NalaPayGo has sold over 3,300 systems – positively impacting over 12,000 people. Within the next four years, NalaPayGo aims to establish its presence in all rural areas of Lesotho to reach over 52,000 households by 2026. NalaPayGo maintains profit margins ranging between 30%-40% on its products. So far, 96% of sales have been via PAYGO financing, with a low default rate of under 3% due to the company’s excellent after-sales customer support and the automatic lock feature of the PAYGO systems. Utilizing funding provided by seed investors and grant funding from EEP, NalaPayGo has developed efficient last mile distribution channels in Lesotho, with an agent sales network of 54 agents distributed in different service centres or hubs.
Market Context
Lesotho is geographically surrounded entirely by South Africa and economically integrated with it as well. The economy of Lesotho is based on agriculture (which accounts for two-thirds of its income), manufacturing, and remittances from migrant workers employed on South Africa’s mines. The majority of rural households subsist on farming or migrant labor, and almost 50% of the population earns income through crop cultivation or animal husbandry. The country’s unemployment rate is 28%, and about 30% of its rural population live in extreme poverty. 82% of rural Lesotho (about 1.2 million people) lack access to grid-based electricity and use candles, disposable batteries, paraffin, firewood and charcoal as their primary energy sources. As a result, energy in Lesotho is expensive, with the so-called “poverty tax” being extremely high in the country. Specifically, households spend on average $2.4 per week on paraffin/kerosene and about $33 on mobile charging annually. Furthermore, the local context of low income and credit constraints limit household buying power for high-impact, quality energy products and services. The result on the ground in underserviced communities is a vicious cycle of poverty, natural resource degradation, environmental damage and poor health.