Solar Home System Consumer Insights in Mozambique

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Introduction

This article provides a snapshot of the SHS market in Mozambique particularly the consumer insights i.e awareness level, willingness to pay and access to finance of the consumers. For information about market size, actors active in the market and other market insights, click here.

In this article, the term SHS includes all Tier SHS, including picoPV products (below 10 W). Tier 1 is defined as basic SHS with lights and/or radio and/or USB port for mobile charging. Tier 2 includes lights, phone charger, radio and TV. Tier 3+ includes big productive use appliances such as solar pumps, refrigerators.

Solar Home System - Consumer Insights

Consumer awareness for SHS: Although there is a high consumer awareness for SHS products (68%), only 30% prefer SHS over the national grid electricity. Nevertheless, there is a significant percentage that is looking to buy solar products for lighting in the near future (37%) .

Ability and willingness to pay: On average, a rural Mozambican household spends USD 12 on energy expenses (lighting, phone charging and radio) per month. An urban household spends USD 13 (based on a 2018 survey) monthly on average. Thus, the current energy expenditure could also cover PAYGO SHS with monthly instalments as low as USD 6 for low Tier SHS. Furthermore, 60% of the households stated their willingness to pay over USD 12.5 per month for SHS with radio. Willingness to pay is highest in Nampula, Inhambane and Sofala provinces.

In general, 59% of the potential customers have unstable income due to high dependence on agriculture. This could impact their default rates especially for PAYGO. In terms of monthly expenditure, 55% stated that their expenditure is fixed.

Product profile: Most of the households own Tier 1 SHS (72%) and this could also be due to the affordability factor. The monthly instalment for Tier 1 also matches what the households pay in general for energy services. Only 20% of the households own Tier 2 SHS and 8% own Tier 3+. The common use of SHS is for lighting.

Most of the products (mostly low Tier) are bought using one-time cash payment (75%). As the consumers move to higher Tiers, there is a switch to PAYGO. The households that pay instalments also pay on average more than USD 7.5 every month.

Access to finance: Overall, access to financial services is increasing largely due to mobile money but still varies greatly from one province to another. As of 2019, 21% of Mozambicans had access to formal institutions such as banks; 22% had access to other non-bank institutes such as micro finance, saving and credit cooperatives, mobile money and pension funds; 11% to informal savings groups called Xitiques and 46% did not have access to any. For more information about access to consumer finance, please refer to this chapter.

The table below shows the breakdown of access to finance by province.

Provinces	Formal banks (%)	Other formal (%)	Informal (%)	Excluded (%)
Maputo	37	38	3	22
Inhambane	23	30	16	32
Gaza	24	30	14	32
Sofala	20	27	7	46
Cabo Delgado	23	17	12	48
Nampula	20	18	12	50
Tete	16	17	15	53
Manica	20	18	8	54
Zambezia	12	19	13	56
Niassa	14	12	13	62

Usage of mobile money: As mentioned above, PAYGO is key when a consumer wants to move to higher Tier SHS. Thus, it is important to understand the usage of and penetration of mobile phones as PAYGO can use a variety of payment systems including mobile money.

In 2019, 29% of Mozambicans used mobile money for activities such as cash withdrawals (91%), cash transfer (18%), utility payments (27%) and payment for goods (9%). This is a huge jump considering the 3% in 2014. In terms of accessibility, 55% of Mozambicans have access to a mobile phone. As of 2018, there are 43,125 mobile money agents covering all 11 provinces.

The most common use of mobile money is for cash withdrawals (most probably remittance money, 91%) and cash transfer (18%). Only 27% use it for utility payments and 9% for goods payment.

Mobile payment is still costly in Mozambique and this directly impacts the cost of the solar home system for the end consumers.

Click here to see the network coverage maps in Mozambique.

Further Information

• Mozambique Solar Hub: All information about solar home system market in Mozambique
• Mozambique Off-grid Knowledge Hub: One-stop for all information related to renewable energy in Mozambique