S3IDF’s mission is to expand the poor’s access to energy and other basic infrastructure services by creating and strengthening small-scale enterprises in developing countries.

Through its Social Merchant Bank Approach (SMBA), S3IDF bundles business development support, technological know-how, and co-financing to provide lighting, drinking water, cooking solutions, & income-generating opportunities for the poor.

The small-scale enterprises not only bring greater economic security to poor entrepreneurs and employees, but also enable poor consumers to save money, improve the safety of their homes, and more efficiently use their time.

Problem

Basic infrastructure services including lighting, clean water, sanitation, transportation, telecommunications, and other modern energy dependent investments and associated enterprises, provide a necessary foundation for poverty alleviation and economic development. Such infrastructure services enable those who use them to be more productive and lead healthier lives. However, almost half the global population lives on less than $2 per day and many do not have the physical access and/or financial means to overcome “first cost” barriers to achieve access.

Solution

S3IDF’s Social Merchant Bank ApproachSM (SMBA) addresses this challenge by helping local entrepreneurs create micro-enterprises that provide infrastructure services to the poor. Designed to be widely applicable, the SMBA applies the innovative financing of large-scale infrastructure projects to small-scale deals. It brings local commercial co-financing to the project by leveraging philanthropic and development capital. S3IDF supports entrepreneurs with bundled services (know-how, technology and financing) to ensure their enterprises are financially and environmentally sustainable.

Example

S3IDF facilitates a number of different kinds of pro-poor small-scale enterprises across many renewable energy sectors, including solar, hydropower, biomass/biogas, etc. One example of how the Social Merchant Bank Approach (SMBA) in action is our Street Hawker Lighting Project. Street vendors or hawkers are a common sight in most Indian urban and peri-urban areas where they set up informal markets that sell a wide variety of fresh produce and cooked food, including regional meals and snacks, and even household items and clothing such as footwear, watches, and belts. Most of these street vendors depend on these small businesses for their livelihoods and, as a result, take advantage of the evening and night hours to increase their sales, a necessary given that many of them are poor. Night sales become extremely important for those vendors who must resort to buying goods to resell on credit with interest rates that can reach 10% or more a day. To boost business, street vendors need as much light as possible to illuminate their products but often have few, if any, effective and affordable lighting options. Most vendors use kerosene lanterns and liquified petroleum gas (LPG) systems for lighting. These forms of lighting have many disadvantages, including relatively high fuel and maintenance costs, limited light output, toxic fumes emissions. To address this situation, S3IDF identified a local entrepreneur to operate a battery charging station business that uses hybrid solar photovoltaic panels that can take advantage of the sun’s rays and the grid. The batteries are charged during the day and are delivered to the hawkers in the evening for use in their shops, stalls, and pushcarts. Street vendors rent the batteries each night on a pay-per-use basis. To use the batteries, vendors simply attached their CFL lightbulbs to the batteries, yielding an average 4 hours of bright, reliable, and safe light each evening. Batteries are picked-up in the morning and recharged. The pay-per-use system provides an affordable way for street vendors to access quality lighting that provides additional benefits, including hasslefree usage (batteries brought to them and easy connection to lightbulbs), a lower heat output, brighter light, and protection from LPG and kerosene price increases. At the time of this case study, battery rental cost R.12 per evening whereas the amount of kerosene needed to power a lamp for that same length of time cost R.25.

Marketplace

Given the role that S3IDF assumes as the "active facilitator" and the challenges associated with coordinating these types of deals for small-scale enterprises, the S3IDF does not view itself as having competitors. Instead, S3IDF views many different players, such as technology suppliers, financial institutions, nonprofits, social enterprises, etc as partners who, when brought together using the SMBA, can address market failures that prevent the poor from accessing the necessary financing, technology, and business development support that is crucial for their success