4 April, 2023

A cleantech company Qotto provides clean energy, internet, and financial services to rural communities in Africa’s least electrified areas. In this interview, co-founders of Qotto Jean-Baptiste Lenoir and Fabrice de Gaudemar talk about their decentralized and digital infrastructure and how it empowers communities and unlocks sustainable development in West Africa.

With over 60% of their customers living below the poverty line, Qotto's mission is to make essential services accessible and affordable to the most vulnerable populations in West Africa. With a newly launched West Africa Bright Future Fund, Cordaid Investment Management has invested in Qotto's expansion in Burkina Faso, aiming to reach approximately 5,500 households in the country's remote regions.

- How does one get into the solar tech business?


Jean-Baptiste: When I was a student in technical Telecom and IT in France, I travelled to Burkina Faso to build a school and experienced first-hand the absence of essential services such as electricity, Telecom, and water just 40 km from the capital. In 2003, while working for Action Against Hunger, a French NGO in Somalia, I had to install my own engine generator and solar panels for electricity. I had to dig a well to have water. Those essential services were missing, and yet everyone around me had a cell phone. I realised how powerful mobile technology is and how we could change people's lives using it. Since then, I have been working on making technology and basic services more accessible to people and simplifying complex innovations for widespread use - especially to empower underserved populations of Africa. 

Fabrice:  About ten years ago, in my previous life as a venture capital investor, I became interested in decentralised and renewable energy and invested in one of the first French solar developers and some other energy-related companies. Seven years ago, I decided to start a company that combined technology and impact. I saw both how the existing incumbent companies disturb the clean energy transition in Europe and the challenge of installing solar farms in Africa. I wanted to bring energy to those who didn't have it, and focused on decentralized and renewable energy.

In 2015 or 2016, I was surprised to see companies like Zola and Bboxx raising so much money. As someone who invested in asset financing companies, I found their business model intriguing. I called Jean-Baptiste, who I knew already worked in a related industry,  and said, 'Have you seen this company? Do you know how it works?' It all came together. I had an investment and financing background, Jean-Baptiste had operational experience in the field, and we shared a telecom DNA. We saw a recipe for success: if we could do everything digitally and provide multiple services with recurring revenue, we could create a direct-to-consumer system. 

- So Qotto is more than a solar kit distributor?


Jean-Baptiste: Our company is about essential services: we bring off-grid solutions, connectivity, and financial services. Instead of just providing hardware, we aimed to build recurring services on top of it. We created the triple play system that involves de-centralization, digitalization, and offering multiple services. You need to transfer energy, data, or money from one place to another, and there are places where you store them and where you spend them. So once you have an infrastructure to provide solar energy, you can add on telecom, entertainment, and banking – reducing the cost of operations.

Network and winning clients’ trust are the most important factors for all these services. We have a sales team on the ground who builds relationships with our customers. This builds trust and enables us to provide insurance, loans, and internet services in the future.

Energy consumption is 100% correlated with wealth. The more energy you use, the richer you become, and vice versa.

- Most say investing money in solar in fragile West Africa is far too risky, but you saw an opportunity. How did you know that your customers could afford your solar systems? 


Jean-Baptiste: Both countries, Benin and Burkina Faso, have mostly informal economies, so estimating the population's income was challenging. We were going door to door, asking the rural communities about their work, household activities and their needs.

We have found that people in Africa are willing to spend a lot of money on communication; it's a significant part of their budget and essential to their growth and development. Energy consumption is 100% correlated with wealth. The more energy you use, the richer you become, and vice versa. Our goal is to provide enough energy to rural areas and underprivileged people to power their homes, to have access to information and entertainment, and to charge their mobile phones so they can stay in touch with relatives and friends. 

While our competitors usually sell 10-20 watts solar systems, we offer 5-10 times more energy. We offer our products at a higher price, but we provide more services - in the end, they receive much more value for the price. Bigger energy consumption eventually turns into additional income and better education for our customers. 

Fabrice:  People pay if there is good service and they need it. It is just a reality. Our system costs about the price of 1 large bottle of Coca-Cola per day. It is a matter of priority: I've seen many who prefer Coca-Cola, but many people don't. Over 60% of our customers are below the poverty line and can afford it because it provides a lot of energy and better service. Our main goal was to create both an impact-driven and profitable company. We believed it was possible to achieve both without compromising on either, and our data to date still shows it is possible.


- Do you see that your customers can generate income from using your product? 


Jean-Baptiste: Absolutely; an excellent example in Burkina Faso is video clubs. Not everyone can afford a TV, so there are bars that broadcast football games and charge visitors a small fee of 100 francs (approx. 15 cents). Our system costs between 300 and 700 francs (0.5-1 EUR) per day - using it quickly becomes profitable. 

Before we arrived, the video club owners used engine generators and didn't believe much in solar. So we told them, "Take it for one week, and if you don't want it, we'll take it back." In the end, all of them kept it saying, "It's cheaper, it's better quality, and if I have a problem, I call you, and you come and repair it." Some of them expanded to two solar TV systems, as their business is doing good.


- You have started Qotto in Benin. Now that you have expanded your operations to Burkina Faso, do you notice any differences between working in these two countries?


Jean-Baptiste: Each African country has its own culture and way of living and working. In Burkina Faso, there are new challenges, particularly with regard to security issues and a less-developed telecommunications infrastructure. We have standard processes, technologies, a unique platform and methodology, but transferring competencies and know-how requires a different approach for each country. Besides, selling strategies that may work in Benin may not work in Burkina Faso. We adapt our business to a specific geography. Working with the local team, we create something great together. We transfer our skills and encourage them to share their ideas. Knowledge-sharing is a big part of our company's culture. We've learned that sharing our work and ideas is important to improve our processes and work. 


- As I understand, your company employs quite a bit of people...


Jean-Baptiste: We have around 250 employees across Burkina Faso and Benin, with one-third working in sales. Our salespeople travel to rural areas to pitch our solutions, do demos, and invite villagers to see how our products work. We also have 300-400 agents who work for us part-time, contracted through a local network. Over 60% of our team members are under 30, and more than 25% are women, which is significant given the gender barriers in Burkina Faso.


- Can you tell me about your biggest challenges as an entrepreneur in fragile markets? 


Jean-Baptiste: The bigger challenge we face is access to finance, as we need funds to finance our infrastructure (even though it's decentralized) - banking sector is not much help for SMEs, and most investors avoid Africa in general and the sector in particular due to high-risk perceptions. Another challenge is access to talent. We want to have local teams and train and retain those talents. At the very beginning, it was challenging as we were not known, but gradually, the situation improved. Political instability and heavy administrative load can be challenging to navigate, but we manage by keeping the focus on our clients. 



- How do you see the future of the clean energy sector in Africa?


Jean-Baptiste: There are a lot of opportunities in Africa, whether for wind, water, hydropower plants, or solar. The market is huge as well. There are 650 million people without access to electricity today, and it will be 850 million by 2050. The challenge today is how we articulate those solutions together to fill the huge gap in the market.


For example, if you start a mini-grid in the middle of nowhere, it needs to be 3 kilometres wide – you will lose money. In that case, it's better to operate SHS, as we did. But on the other hand, our solution can't power even a small industry. We need to be smart and efficient to address the population with the appropriate solutions. That’s why we are very specific on whom we focus on.

... you want the investor to understand the real risks, not imagined ones. The Cordaid Investment Management team knows what is at stake and will be able to handle issues that might scare off other international investors.

 - Is there any advice you could give to an entrepreneur who wants to go into those markets?


Fabrice: Just do it. Start, fail and retry - is our best advice. We've made a lot of mistakes, but by keeping an open mind and working with local partners, we can be agile and correct our mistakes. To succeed, you need to have a vision and confront it locally, finding local partners you can trust. Being European strangers, we couldn't have the same relationships with our clients as our local staff can, so empowering and trusting them is essential.


Jean-Baptiste: You'll have many intrinsic rewards when you can work in an area with a significant social impact. It's not about the money. It's about the satisfaction and joy you derive from the work, the recognition from your team and customers, and the sense of power that comes with creating something new.



- What's your vision for Qotto in the future?


Jean-Baptiste: We want to deploy our solution in other countries in West Africa. Our ultimate goal is to have a maximum impact that is sustainable socially, environmentally, and financially. We would happily have Qotto systems, hotspots and financial services everywhere in Sub-Saharan Africa, but we must keep our focus on the company’s sustainability and the ability to create a lasting impact. It is not just about having enough time and money; we also need the energy to transfer our competencies, capitalize on our existing teams, and duplicate our model. 



- How was the partnership with Cordaid investment management instrumental to the growth of your business? 


Fabrice: Having an impact investor on our side who knows how to navigate fragile contexts helps us to focus on delivering quality operations and sales. Due to security concerns, finding a partner willing to invest in Burkina Faso could have been problematic. c For example, when the coup d’état happened twice this year in Burkina Faso, it wasn't a deal breaker for CIM. They asked us what the effect was and how we could manage it. This is precisely the type of investor we need - someone who understands the challenges we face and is willing to work with us to address them.

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