Solar refrigerators boost profits for women entrepreneurs: initial findings from our pilot
In October 2019 we installed 24 business systems for women entrepreneurs. The systems consist of solar panels, a large battery, 5 lights, a fan, and a 240L commercial refrigerator. We finance the system for 27 monthly payments of $90, plus a down payment. The women almost all run small dry goods shops and planned to use the refrigerators to sell cold water. After two months we began a follow-up survey to better understand the impact on the entrepreneurs’ profits.
We find that the systems boosted profits by approximately $137 per month, more than enough to cover the $90 monthly fee. From day 1, these entrepreneurs are netting about $47 per month in additional profit, representing an increased income of about 10% during the financing period. The systems will boost incomes by about 30% once the payments are completed.
Cold water is a rapidly expanding business in Liberia, as the supply chain for inexpensive bagged water now extends beyond the capital city and into rural areas. Each bag of water sells for 5LD (less than $0.03) and is one of the few luxuries that low-income Liberians can afford.
We were initially skeptical about the economics of selling cold water using solar-powered refrigeration. Could the women earn enough money to justify the financing costs? Since this was a pilot we decided to take the risk. If we found evidence that refrigerated water increases profits enough, we could unlock a potentially massive market opportunity. There are thousands of women entrepreneurs across the country who could benefit from these systems.
Here’s how the economics works. The business owner purchases a “sack” of water, which contains 30 bags, for LD85 wholesale (about $0.45). After refrigeration, they sell each chilled bag of water for LD5, or LD150 for the entire sack. This yields a profit margin of 65% — not bad. Our 240L refrigerators are capable of chilling at least 12 sacks (360 bags) per day, which quickly sell out. After 2 months, the business owners reported selling approximately 360 sacks per month, resulting in increased revenue of LD54,000 ($270) and increased profits of LD23,400 ($117).
But the economic benefit extends beyond this increased revenue. Before financing our system, the women paid at least $20 per month for “community current”, i.e. access to a shared generator that provides about 3 hours of light each evening. With solar lighting, our customers disconnected from these generators and saved the $20, resulting in a total net gain of $137 per month. Once we subtract the $90 monthly payment, the women pocket an extra $47. This represents about a 10% increase in their monthly take-home pay — a significant increase. Once they complete the payments after 27 months, they will net the full $137, increasing their incomes by nearly a third.
The most important aspect of this finding is that these women are operating businesses that can be found in nearly every rural town in Liberia. We have thousands of potential customers who could benefit from this product. And we intend to reach them.
