Recycled electronics keep Ethiopian farms irrigated.
A solar pump that saves money and irrigates farmland
If a tech start up should have its origins anywhere, where else than a garage could be more in fitting with the, often apocryphal, Silicon Valley mythos? From oil, diesel and petrol fumes Mesafint Alebel moved to a spot with a view that would be coveted by any Silicon Valley tech entrepreneur, a boathouse on the shores of Ethiopia’s Lake Tana. Here Mesafint found himself ripping old capacitors, for storing power, and metal-oxide semiconductor field-effect transistors – okay, MOSFETs to almost everyone else – for regulating the flow of power, from old PCs and universal power supplies donated by the Ethiopian government.
Far from being an engineering graduate, Mesafint had taught himself at an early age the principals of electronic engineering.” When I was a kid there was no electricity. My family bought a generator but the petrol to run it was really expensive. Even with only four lights at night, gas was so expensive that I became obsessed with electricity. Then a man told me about UPS devices that I could charge off the generator.” This filled the gap for a time but his obsession with electricity, and then electronics grew.
Locals in his village were somewhat surprised to see a boy dragging damaged solar panels home day after day. He learnt to rig them together that done, they would provide power for his family home. “My father had bad asthma and I would see him start coughing as soon as someone started the generator.” Seeing other houses lit with batteries and solar panels gave him the idea. “We couldn’t afford to buy panels but if we could link broken panels together, there should be enough cells still working to power a battery.” And that meant light.”
“We couldn’t afford to buy panels but if we could link broken panels together, there should be enough cells still working to power a battery.” And that meant light.”
Some distance from the boathouse, he shows us around his new factory on a small industrial estate. Waiting for his equipment to arrive, Mesafint expands with no little enthusiasm on how he came up with the idea of the solar powered pump. As anyone the least familiar with Ethiopia would have seen, queues for fuel can extend upwards of a kilometre in provincial towns. It was while visiting the petrol station that he saw farmers queuing with jerry cans. Asking what they were doing, they replied that they needed fuel for the generators that irrigated their land. This was an opportunity. He could carry on ripping apart defunct UPSs to find the components to repair other UPSs. Something that, not surprisingly, was becoming increasingly tedious, or he could venture into something a little more satisfying with its own positive social and environmental potential. “Fuel prices and repairs to old generators. I knew solar would save them money.”
He still recycles much of his electronics. “Hard currency is a problem. Electronics are just too expensive to import.” He explains. This is persistent issue in Ethiopia. Despite its status as one of Africa’s major economies, Ethiopia faces a chronic shortage of foreign currency that affects its ability to import essential goods. This and a high demand for foreign currency, in part due to a rigid exchange rate regime, and Ethiopia’s growing population and economy, creates an ever higher demand for foreign currency, leading to scarcity and rationing by the central bank.
The Ethiopian government is working on increasing the capacity of the financial sector to properly serve small enterprises with adequate financial products. Still, the current lack of access remains a key obstacle that prevents small enterprises from fully playing their role in the industrialisation process. Although Mesafint did get the land he used for his new premises from the government, access to finance to develop the land was a different matter. With a mix of indignation and humour he explains that. “In Ethiopia you can’t just get a loan. My factory would need to be built before I got the loan. That would be the collateral they want. I would need the money to construct it before they would even think about lending me the money to build it.”
It is not just a matter of collateral, banks in Ethiopia are reluctant to lend to small businesses, especially younger entrepreneurs who have neither the collateral or credit history that may mitigate their fears of default. Coupled with a volatile business environment, high transaction costs and regulatory barriers associated with lending to SMEs banks have a clear preference for lending to large and established firms or government projects that offer higher returns and lower risks.
“In Ethiopia you can’t just get a loan. My factory would need to be built before I got the loan.”
Mesafint turned to IAP for funding, on the grant he received Mesafint says. “Without the help, I would be stuck on UPS manufacturing. To be honest, with all the problems here I would have even lost land that I got from the government because I wasn’t building on it. I would have to start from scratch. I was in the middle of the design and planning when I won the contract with IAP. This is what boosted my business and allowed me to scale.”
Mesafint is keen to highlight the business side technical support he received. Explaining that without it “…the solar pump would just be a design on my computer. I really can imagine it sat there for the next ten years. It just wouldn’t be a reality. It’s the management, the documentation the planning, and yes, the financial support. But the management support was just as important.”
This is certainly an area of strength for challenge funds. Financial literacy and record-keeping skills are often cited as a barrier to growth in Ethiopia and they can play an important role in improving these skills. This type of expertise development would not only lead to better business management but would also go some way to helping increase SMEs’ creditworthiness and transparency in the eyes of the banking sector.
With 250 pumps already sold and irrigating farmers’ land, Mesafint plans to raise that number to 3500. This would save money and increase available income for some 4000 farmers. Additionally, as his business grows, he wants to move into cheaper, locally sourced, solar lighting. Expecting that these units could become affordable and reach some 9200 low-income people.
“…the solar pump would just be a design on my computer. I really can imagine it sat there for the next ten years.”
Mesafint still faces significant challenges. An inflation rate that averaged 34% in 2022, regional and European conflicts that has seen many commodity prices rise. Copper, essential to the construction of electric motors, has been an issue for him, as rising prices have seen him have to raise the price of his solar pumps from 10,000 Birr ($185.50) to 38,000 Birr ($704.90). Without the gasoline fees, a farmer will still save money but the initial outlay they face may be an obstacle.