Call us on 010 288 1194

New solar solution brings resilience & growth for spaza shop owners

New solar solution brings resilience & growth for spaza shop owners

Daily Entrepreneur 22 August 2024

As South Africa grapples with a prolonged energy crisis, small businesses in underserved communities face significant disruptions due to frequent power outages. Particularly hard-hit are small and micro enterprises like spaza shops, which are vital to the township or Kasi economy and the communities they serve.

In response, an innovative partnership between Wetility, a local renewable energy fintech company specialising in solar-as-a-service solutions, and A2Pay, a fintech company focused on empowering informal retailers, is set to make sustainable energy independence and financial resilience a reality for these small but crucial businesses.

Spaza shops are lifelines in their communities, offering essential goods and services where formal retail outlets are scarce. They contribute about R150 billion annually, or 5.2% of South Africa’s GDP, and employ approximately 2.6 million people. The broader economic impact of these informal convenience shops is valued at around R600 million in constant GDP terms.

However, they face significant challenges due to unreliable electricity supply caused by load-shedding, cable theft, and infrastructure issues. Outages lead to increased operational expenses, reduced sales, substantial losses in perishable stock, and business closures. In some instances, a damaged transformer can leave a community without power for several weeks, exacerbating the situation for local businesses and residents.

The partnership between Wetility and A2Pay is an innovative collaboration aimed at bringing tailored, sustainable energy solutions to spaza shops. The initial roll-out will see Wetility’s solar solution offered to A2Pay’s existing network of over 6,000 merchants in communities that have historically lacked access to reliable electricity and affordable renewable energy solutions.

Solar Energy: Economic & Community Impact

Athy le Roux, Chief Operating Officer (COO) of A2Pay, believes the collaboration is a game-changer for spaza shops and will support the growth and development of the informal retail sector in South Africa. “Now spaza shops can remain operational during power outages, reduce their losses, and maintain steady business operations.

“With Wetility’s innovative solar technology and our established infrastructure, small business owners can address both their energy needs and economic challenges. This will have a ripple effect on local communities by improving access to essential goods and services, fostering economic growth, and stimulating job creation.”

Johanna Horz, Wetility’s Director of Strategy and Emerging Business, explains that up to 64% of township businesses halt operations during load-shedding: “The only solution for many is to rely on even more costly and environmentally unfriendly generators, further straining operational sustainability.

“In addition, these locally-owned establishments are deeply interwoven into the fabric of their neighbourhoods, serving as essential hubs for daily necessities while fostering community cohesion. Approximately half of South Africa’s urban population and 38% of the country’s working-age citizens live in townships. The continued operation of small businesses like spaza shops is therefore particularly important for supporting economic growth in communities where unemployment often reaches up to 60%.”

Unique Solar Product Co-developed with Spaza Shops

As part of the company’s mission to make energy independence accessible and affordable for all South Africans, Wetility has been leading the market by offering more affordable solar energy products through solar-as-a-service subscription solutions.

“To develop a solar energy product specifically for underserved communities, extensive time was invested in understanding the unique challenges and needs faced by spaza shop owners,” says Vincent Maposa, Founder and Chief Executive Officer (CEO) of Wetility.

“By addressing energy poverty through affordable solar solutions, we can offer merchants a way to ensure reliable electricity access and alleviate economic strain. The partnership with A2Pay aims to revolutionise the way these small businesses mitigate the impact of power outages, offering them both energy independence and financial resilience.”

Through extensive market research and focus groups with merchants, Wetility developed a solar energy range tailored to the unique operational needs of spaza shop owners while addressing common infrastructure challenges in townships. The company’s LUXE range is designed to minimise disruptions and ensure business continuity.

“We have created a solar energy solution that requires minimal installation time, is robust and durable, and offers comprehensive anti-theft measures,” says Maposa. “With smart features like rotational fridge and freezer power supply, it optimises energy use and helps manage operational costs effectively.”

Solar-as-a-Service: Financial Model for Energy Independence

Traditionally, spaza shops have been excluded from financing and subscription-based services due to credit assessment challenges. To address this, a unique daily subscription model was developed that enhances affordability and reduces credit risk by recognising that lower credit scores do not necessarily indicate lower affordability.

Leveraging A2Pay’s existing point-of-sale (POS) infrastructure and merchant relationships, the initiative offers tailored affordability assessments, enabling spaza shop owners to subscribe to Wetility’s solar energy service with manageable daily payments. This financial model alleviates the burden of upfront costs and ensures that solar energy solutions remain financially accessible for businesses operating on tight margins.

The partnership between Wetility and A2Pay represents a pioneering approach by social entrepreneurs to address some of South Africa’s most pressing challenges and serves as a model for similar initiatives in other developing markets. As the country navigates its energy crisis, innovative collaborations like this are crucial for driving long-term, sustainable development.

Source: New solar solution brings resilience & growth for spaza shop owners - Daily Entrepreneur SA