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Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households

Interesting concept. I'll be interested to see if it works. I worked with a company building AC mini grids in East Africa. They connected around 130 households in each village to a 220V grid. The expectation was that people would use the electricity for basic needs (e.g. light, cell phone charging) but also for productive uses (e.g. grinding grain to flour, air compressors, saws, etc). The expectation was that as people entered the second phase of energy use (after basic necessities) their consumption would increase as their income increased. What this company found though, was that very few customers followed this pattern. If people bought anything that increased their consumption, it was almost always a TV. This obviously didn't improve their income, so often their use would actually decrease because they can't afford the increased consumption. Last I heard, they were having serious problems getting people in these villages to use more power. Through some pricing campaigns, they discovered that people's energy use was almost directly correlated to the price. If you made the price similar to other well developed countries ($0.10-$0.30 kWh) people would use lots of energy, but the amount they paid was still relatively small. If you raise the energy price, people use much less, but end up paying almost the same amount per month. So if it costs $0.25 per kWh people will use 4kWh, but if it costs $1 per kWh they'll only use 1 kWh. Since their model included batteries to cover the night load, they couldn't afford to sell the energy this inexpensively. Hence their wish to increase day time energy use among the villagers through equipment use (e.g. welding, grinding). My expectation from this program: some small percentage of people will use the money to invest in tools and means to improve their economic situation. The vast majority though will waste the money on things which benefit them in the short term, but provide no long term economic benefit to them (e.g. better cell phone, television, or maybe a solar home system) Also from hearing the horror stories of doing business in East Africa (draconian regulations + corruption) I'm sceptical if anywhere close to 90% can make it into the hands of normal people. Hopefully this isn't the reality... Not sure why I'm getting down votes. I've worked with a company actually working in East Africa and I don't see people using the opportunity of energy to improve their economic situation. After basic necessities they seem to use it for leisure.

MicroBerto 10y ago
The pareto principle is everywhere. 90% of the productive activity will come from 10% of the people in a situation like that - if not more heavily slanted. So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations?? Do you force them to make ROI? You are being downvoted because your real world experience violates the increasingly liberal tenets amongst HN readers lately. Free money for everyone means that I get to work on my killer app idea during the day, so free money for everyone is clearly a Good Thing(TM), right?
- kogepathic 10y ago
  > So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations?? Probably not. > Do you force them to make ROI? No, because first you would have to teach them what an ROI is, and secondly because the local economy is so variable, any estimates would probably differ wildly from reality.
skewart 10y ago
Yeah, I don't think you deserve downvotes either. Your skepticism is perfectly reasonable, and you explained it well. I've never been to Kenya, but I have spent a lot of time in countries with roughly similar levels of development. I'm skeptical too. But I would love to be wrong. And I think it is awesome to run this experiment. The reason that I'm a little skeptical is that a lot of the big obstacles to entrepreneurship and investing in long-term social improvements come from big structural challenges that having more money in your pocket doesn't necessarily fix. For example, government corruption, lack of a good justice system to enforce contracts, lack of physical infrastructure to allow people and goods and people to move around the country, lack of access to banking resources. Those problems kind of need to be tackled at a higher level, and giving random individuals either money or goods doesn't really solve them. UBI seems like it could be much more effective in countries that don't face as many of those structural problems.
pbhjpbhj 10y ago
Your analysis seems largely as expected but this part to me seemed a bit wrong-headed: >The vast majority though will waste the money on things which benefit them in the short term, but provide no long term economic benefit // Things like having a TV? Do you have a TV, is it a _waste_ of money too? Would you say most of the people who own TVs would describe them as a waste of money? After you've got a bed, clean water and food, some sort of diversion from the humdrum is probably the next "need" that most people would address. TV can be a benefit, an inspiration, it's just not an obvious direct economic benefit (unless you're running the local TV shop, electrician or repairer). Part of the problem with providing utilities with an expectation of them being used to create economic benefit is surely that people don't know how to use them for such purposes? Did you address that with your projects - like if you bought this apparatus for this amount you could process millet and run a company earning this amount. Couple of questions about your electrical mini-grids - was there any cooperative buying, like setting up a TV in a communal building? How was the power being generated?
- kogepathic 10y ago
  > Do you have a TV, is it a _waste_ of money too. Yes I do, and yes, since it brings me no economic benefit and I could easily live without it, it is a waste of money. By comparison, my smartphone allows me to send emails, make phone calls, and generally communicate with my colleagues. This creates value. Watching TV or Netflix creates no economic value. It might create social value, but the OP is about creating economic value. > Did you address that with your projects - like if you bought this apparatus for this amount you could process millet and run a company earning this amount. Yes! Of course they realized that people might not have the ideal or the capital to go and buy one of these machines. They worked on a hire to own scheme with local partners, and offered a lower energy price to those who wanted to buy one. Again, only a tiny percentage of people were interested in doing this. > setting up a TV in a communal building This is quite difficult to achieve. You cannot be seen as picking favourites, it's really not something that works from a business perspective in these communities. People get envious really quickly. So, communal buildings. Well, there aren't any. The government has basically no presence in these places, and asking them to build a building would probably take 5 years, if it happened at all. The only buildings that really exist are businesses, and if you set up a TV there, the guy running it will charge people to watch it. You're playing favourites! You could give every business a TV, but then everyone will rush to set up a "business" so they can benefit from the scheme as well. This company itself cannot set up a TV or build a community structure because quite frankly, it will be vandalized for parts. Also the legal situation in these countries w.r.t. copyright and statements against the governments is appalling. So there is a huge liability toward providing services to the community (e.g. internet, distributing content on SD cards) > How was the power being generated? Small scale PV array built in the village with supporting equipment housed in a structure. The scale of these projects was <20kWp. Look. I'm not trying to sound negative. I want Africa to develop. They absolutely have the chance to be the next China and become an economic power house. Unfortunately, I don't see that happening with the current political and regulatory environment there.
jonlucc 10y ago
If I remember correctly, this charity already does monetary donations to people using the local mobile pay system (I think it's Mpesa?). If this is that organization, there is a Planet Money episode about the founders and why they went this way.
- kogepathic 10y ago
  That's probably the most efficient way to distribute the money. Unfortunately it means fat margins for the MPESA provider (typical transaction fees range from 3-10%, depending on the size of the transaction). Also it's probably going to turn into a tax nightmare for the company handling the payments. I could go on for a while about how ridiculous VAT rules are in these countries. Processing a transaction worth ~$0.005 for VAT purposes...
jjawssd 10y ago
You are being downvoted because your real world experience does not align with the idealism of the HN readers in question.
kogepathic 10y ago
If anyone wants to talk to the company building these microgrids in East Africa, because you would like to work with them, or even for investment, feel free to drop me an email: HN username @ gmail.com I'll put you in touch with these guys.

MicroBerto 10y ago

The pareto principle is everywhere. 90% of the productive activity will come from 10% of the people in a situation like that - if not more heavily slanted. So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations?? Do you force them to make ROI? You are being downvoted because your real world experience violates the increasingly liberal tenets amongst HN readers lately. Free money for everyone means that I get to work on my killer app idea during the day, so free money for everyone is clearly a Good Thing(TM), right?

kogepathic 10y ago
> So is there a better way of finding that 10% and investing in them directly, without ridiculously wasteful organizations?? Probably not. > Do you force them to make ROI? No, because first you would have to teach them what an ROI is, and secondly because the local economy is so variable, any estimates would probably differ wildly from reality.

skewart 10y ago

Yeah, I don't think you deserve downvotes either. Your skepticism is perfectly reasonable, and you explained it well. I've never been to Kenya, but I have spent a lot of time in countries with roughly similar levels of development. I'm skeptical too. But I would love to be wrong. And I think it is awesome to run this experiment. The reason that I'm a little skeptical is that a lot of the big obstacles to entrepreneurship and investing in long-term social improvements come from big structural challenges that having more money in your pocket doesn't necessarily fix. For example, government corruption, lack of a good justice system to enforce contracts, lack of physical infrastructure to allow people and goods and people to move around the country, lack of access to banking resources. Those problems kind of need to be tackled at a higher level, and giving random individuals either money or goods doesn't really solve them. UBI seems like it could be much more effective in countries that don't face as many of those structural problems.

pbhjpbhj 10y ago

Your analysis seems largely as expected but this part to me seemed a bit wrong-headed: >The vast majority though will waste the money on things which benefit them in the short term, but provide no long term economic benefit // Things like having a TV? Do you have a TV, is it a _waste_ of money too? Would you say most of the people who own TVs would describe them as a waste of money? After you've got a bed, clean water and food, some sort of diversion from the humdrum is probably the next "need" that most people would address. TV can be a benefit, an inspiration, it's just not an obvious direct economic benefit (unless you're running the local TV shop, electrician or repairer). Part of the problem with providing utilities with an expectation of them being used to create economic benefit is surely that people don't know how to use them for such purposes? Did you address that with your projects - like if you bought this apparatus for this amount you could process millet and run a company earning this amount. Couple of questions about your electrical mini-grids - was there any cooperative buying, like setting up a TV in a communal building? How was the power being generated?

kogepathic 10y ago
> Do you have a TV, is it a _waste_ of money too. Yes I do, and yes, since it brings me no economic benefit and I could easily live without it, it is a waste of money. By comparison, my smartphone allows me to send emails, make phone calls, and generally communicate with my colleagues. This creates value. Watching TV or Netflix creates no economic value. It might create social value, but the OP is about creating economic value. > Did you address that with your projects - like if you bought this apparatus for this amount you could process millet and run a company earning this amount. Yes! Of course they realized that people might not have the ideal or the capital to go and buy one of these machines. They worked on a hire to own scheme with local partners, and offered a lower energy price to those who wanted to buy one. Again, only a tiny percentage of people were interested in doing this. > setting up a TV in a communal building This is quite difficult to achieve. You cannot be seen as picking favourites, it's really not something that works from a business perspective in these communities. People get envious really quickly. So, communal buildings. Well, there aren't any. The government has basically no presence in these places, and asking them to build a building would probably take 5 years, if it happened at all. The only buildings that really exist are businesses, and if you set up a TV there, the guy running it will charge people to watch it. You're playing favourites! You could give every business a TV, but then everyone will rush to set up a "business" so they can benefit from the scheme as well. This company itself cannot set up a TV or build a community structure because quite frankly, it will be vandalized for parts. Also the legal situation in these countries w.r.t. copyright and statements against the governments is appalling. So there is a huge liability toward providing services to the community (e.g. internet, distributing content on SD cards) > How was the power being generated? Small scale PV array built in the village with supporting equipment housed in a structure. The scale of these projects was <20kWp. Look. I'm not trying to sound negative. I want Africa to develop. They absolutely have the chance to be the next China and become an economic power house. Unfortunately, I don't see that happening with the current political and regulatory environment there.

jonlucc 10y ago

If I remember correctly, this charity already does monetary donations to people using the local mobile pay system (I think it's Mpesa?). If this is that organization, there is a Planet Money episode about the founders and why they went this way.

kogepathic 10y ago
That's probably the most efficient way to distribute the money. Unfortunately it means fat margins for the MPESA provider (typical transaction fees range from 3-10%, depending on the size of the transaction). Also it's probably going to turn into a tax nightmare for the company handling the payments. I could go on for a while about how ridiculous VAT rules are in these countries. Processing a transaction worth ~$0.005 for VAT purposes...

jjawssd 10y ago

You are being downvoted because your real world experience does not align with the idealism of the HN readers in question.

kogepathic 10y ago

If anyone wants to talk to the company building these microgrids in East Africa, because you would like to work with them, or even for investment, feel free to drop me an email: HN username @ gmail.com I'll put you in touch with these guys.