Strengthening consumer protection in the off-grid solar industry – pv magazine International

In 2018, GOGLA and its members members – the de facto standard for developed consumer protection in the sector – to ensure that through rapid industry expansion, growth objectives remained fully aligned with consumer interests, so as to protect their rights and positive safeguard impacts. At the time of writing, 85 companies and investors have either made a commitment to, or an endorsement of, the Code – showing that this young and rapidly growing industry cares about its impact and is working hard to ensure consumer risks are minimised.

The Consumer Protection (CP) Code has also been adopted into eligibility requirements for major funding programmes, such as the Energy Access Relief Fund (EARF) and Beyond the Grid Fund for Africa (BGFA), which encourages more companies to incorporate the CP Principles into their modus operandi, and realise the benefits of responsible business growth.

Companies that make a commitment to the CP Code are required to undertake a self-assessment to review their performance against the 37 indicators at least every 12 months, which helps them measure, monitor, and demonstrate their performance – but most importantly, identify gaps and focus on improvements.

Together with companies and investors, we’re now taking it further.

Improving industry practice

The limitation of the existing self-assessment is that the results are subjective. The self-assessment tool guides companies through a detailed review of their practices against the six Consumer Protection Principles but cannot govern its execution. To combat this, GOGLA encourages companies to include personnel from across the business in an annual self-assessment, use evidence-based reasoning for each indicator, and use the results to inform an action plan for the next year.

Nonetheless, GOGLA has been working over the course of the last year to strengthen the assessment framework and provide additional options for companies and investors that want a more robust and independent look at how they’re doing and what they can do to improve.

For an in-depth, objective assessment of performance against the CP Principles, we’ve developed a Third-Party Assessment scheme and accredited MFR, an experienced ratings agency, to undertake the assessments. To help companies, and the industry, validate how actions are experienced by and affect consumers, we’ve created a consumer protection survey with 60 Decibels, a customer insights and impact measurement company.

Building third-party assessment

The PAYGo industry has some unique challenges. It encompasses a rural, hard to reach customer-base, a dispersed network of agents and employees, and diversity across operational models and technologies. By factoring in these challenges and learning from other industries (eg, microfinance and mobile money), MFR has successfully developed a methodology for third party assessment that allows for flexibility across organisations, whilst maintaining the rigour of an evidence-based evaluation of practices.

The consumer protection Third-Party Assessments of OGS PAYGo companies conducted so far have identified several strengths (eg product quality) as well as opportunities for improvement (eg analysis of the ability to pay). Scores are given by CP Principle and indicator, so companies can rely on independent and credible results, and track their progress over time. The main goal of the exercise is to improve consumer protection practices, which is done by using the results as the baseline and working with companies to develop an Action Plan to help them upgrade the internal systems and field practices.

The recommendations made in the Action Plan are tailored to the business model of the company, and prioritised based on what is the most material for the customers and for the company. They identify areas of work within the company’s internal systems that are likely to have a positive impact on both consumer protection and other risk management systems, in line with the company’s strategy (eg reinforcing the alignment between field practices and policies).

It is now an exciting time: the time to improve. OGS companies show high commitment to further develop their systems, and the work led by GOGLA offers practical tools to do it, including the consumer protection Third-Party Assessments. The time to prove will come in the future, when the sector and its consumer protection practices will be more consolidated.

Listening to consumers

60 Decibels used its knowledge, experience, and passion for the off-grid sector to translate the Consumer Protection Code into survey questions that could be asked of end-users. The objective is to ensure that the customer voice is part of the journey to understanding how the sector is faring in delivering on the Consumer Protection Principles. It delivered Lean Data projects with three OGS companies working in Kenya; using the survey tool to hear customers’ experiences through phone interviews. 895 customers were interviewed in local languages ​​by 60 Decibels’ team of local researchers. From here, the question set was finalized based on the pilot insights, and the Lean Data Consumer Protection Survey is now available for the sector.

Ensuring consumers have an opportunity to share their experience and using this to inform assessments of performance towards delivering on the CP Code is key to maximizing positive impact.

An excerpt from the insights: “I would like to request that when a customer pays, [Company] should share a message showing how much balance the customer has. This will even give me the energy to want to clear the balance I have.”

Customers, companies, and investors

The off-grid solar sector is still young – and should be applauded for how far it’s come since the PAYGo business model was first making headlines. But there is still more to learn. The industry is recovering from the impact of the Covid-19 pandemic and has returned to growth, but still faces challenges caused by rising costs within the supply chain and price-sensitive customer wallets hit by fierce inflation.

Despite these, we believe that putting consumers first is fundamental to the success of any off-grid solar company. Strengthening the Consumer Protection Code at this time is win-win for consumers, companies and their investors – ensuring that customers are supported in working out what they can afford, receive high quality service, and transparent repayment terms; that companies have effective risk mitigation strategies in place; and that investments are made using robust, objective information.

What’s more, the new services will also enable us to better work together as an industry to further mitigate consumer risks. We’ll be using the insights and results over time to develop industry-benchmarks for performance in consumer protection, helping us understand where the biggest risks and gaps are, and divert technical support and funding to where it is most needed.

For companies that want to take the next step in improving their practices, or investors looking for an evaluation of investee performance and improved risk management, the two new services are available now.

GOGLA is also providing co-funding for the two services to help catalyse insights, improvements and reach more companies. Co-funding is available for companies and investors who wish to support a company within their portfolio – find out more here.

About the authors

Lucia Spaggiari has been Innovation Director at MFR since 2015. She contributes to the development of new services and to the upgrade of MFR’s methodologies and is responsible for the Data Platform Project, for studies and research, and for the relationships with several investors and industry initiatives (eg contributing to SPTF and Smart Campaign methodologies evolutions). Lucia is a member of MFR’s Management Team, Rating Committee Unit, Technical Group and Innovation committee.

Kat Harrison is a Director, based in 60 Decibels’ London office, where she leads the energy and impact work. Prior to 60 Decibels, she was Associate Director of Impact at Acumen, led impact work for various social enterprises, and worked for the UN. She holds a BSc in Economics & International Development from the University of Bath and a MSc (Distinction) in Development Policy, Process & Practice from the University of Reading. Kat loves sunshine, surfing and traveling the world.

Rebecca Rhodes is the Senior Project Manager for Consumer Protection and Technology. Prior to joining GOGLA, Rebecca was the Director of Operations at Solaris Tanzania, leading the strategy and implementation of energy access activities in the Lake Zone of Tanzania. She also has experience in the off-grid sector in Rwanda and in Project Controls and Management Consultancy for large engineering projects in the UK.

Puck van Basten works as a Junior Project Manager with the Performance and Investment team. She leads the work on Corporate Governance and GOGLA’s LEAN Network, while also supporting other workstreams such as Consumer Protection and Circularity. Next to that, her focus is on increasing investment opportunities for the sector, amongst others through helping off-grid solar companies ameliorate their corporate governance structures and practices, and providing networking opportunities through GOGLA’s LEAN Network.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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