A recent story from the Business Innovation Facility about the MEGA project touches many of the themes of this blog: how to distribute affordable energy to rural communities living off the grid at the bottom of the economic pyramid. It also raises an interesting question about scale.
MEGA intends to build 10 micro hydro power plants in 10 years to serve communities in rural Malawi. Nearly all people in rural Malawi live on less than $1.25 per day and have no access to electricity.
The lack of electricity has a pervasive impact throughout a community. Without electricity,
- It’s difficult to recruit teachers to teach in rural schools, let alone power computers.
- Shops have to close at sundown, which limits economic activity and access to goods.
- Health clinics have difficulty providing adequate care without adequate light to aid in diagnosis or refrigeration for medicines.
- Families rely on wood, charcoal, and/or kerosene for light, all of which are expensive and emit pollution causing respiratory and eye problems.
Rural electrification can have great impact, but can MEGA’s approach to scale live up to the guidelines for designing for scale set forth in The Business Solution to Poverty by Malwick and Polak? (I previously reviewed this book.)
- MEGA’s goal, ten micro-hydro plants in ten years, isn’t ambitious enough. Malwick and Polak would want to see hundreds, if not thousands, of plants worldwide within ten years.
- MEGA uses philanthropic money now, and projects it will still be using it ten years from now. Malwick and Polak think commercial investment is the only way to reach scale.
- It’s not clear that MEGA offers a way for customers, in this case rural Malawi communities, to triple their income in the first year. It might, but the article doesn’t address this point specifically. Malwick and Polak thing this ROI metric is critical to lifting global populations out of poverty.
These aren’t the only points that I think Malwick and Polak would contend, however they’re enough to show that MEGA doesn’t meet their criteria as a business solution to poverty. But is the approach of Malwick and Polak the only viable approach to scale?
Malwick and Polak emphasize small, affordable products and services that can be produced and distributed locally, attached to a business model that allows for decentralization and cultural independence. They make a compelling case that their approach can make a big dent in global poverty, because it can scale.
Theirs is only one type of scale. Small, individual solar lanterns, for instance, are great for helping kids study at home at night, but you can’t string together a bunch of small solar lanterns to power a schoolhouse full of computers. Last-mile distribution is important, as Malwick and Polak amply demonstrate, but so are regional road and rail systems. As poverty-alleviation efforts touch the need to deliver public infrastructure, Malwick and Polak’s type of scale becomes infeasible.
This doesn’t make either MEGA or Malwick and Polak correct. But it does point out the need for different types of scale in delivering public improvements and alleviating poverty.