Three Milliman consultants—Howard Kahn, Victoria Boyarski, and I—are working with a team of engineering students from an American university, who have developed a simple, sustainable technology for building solar-powered lights. The students are collaborating with a parallel team at a technical college in Ghana to bring the product to villages that have no electricity. Milliman’s role is to help the engineering teams develop a business plan for this venture.
In many third-world villages, oil- or kerosene-burning devices are the only source of lighting, but price increases have made the cost of fuel unaffordable. Candles, the traditional alternative, are not as efficient. Without good lighting, it’s impossible for people to work, read, study, or perform other tasks between sunset and sunrise—about 12 hours of every day of the year near the equator.
The simple, but effective, solution is a lantern that can be fabricated by the villagers themselves from materials that are available locally. An 85-watt solar panel charges a 12-volt car battery connected to a charging box that, in turn, charges the lanterns. A 10- to 12-hour charging session yields about one week’s worth of lighting power. A typical charging station can service about 80 lanterns each week.
The lights can take different forms, but most common is a model that resembles a camping lantern. A plastic bottle from a hair-straightening product forms the lens covering the light bulb; this sits atop either a tin can or a hollowed-out calabash (an abundant local gourd).
The American engineering team provides a kit that includes a roll-up solar panel and all the components and tools needed for assembling the charging station onsite. Their Ghanaian counterparts take the kits to villages and set up charging stations. Each station becomes a microbusiness; villagers bring their lights for recharging and pay the proprietor a small fee for the service.
And that’s where our consulting comes into play. Neither the American nor the Ghanaian engineering students had any expertise in writing business plans. If these microbusinesses are to succeed in the long run, they need to understand the financials of their business.
Much of our advice is simply clear thinking about how to set up a small business, but as actuaries, we have experience at analyzing present values of future costs and cash flows—information that’s essential to make a business succeed. Our role stops short of drawing up the actual business plan; rather, we’ve developed a pro forma that the engineers can use as a flexible model for projecting costs and revenues so that they can present a viable plan to organizations that can help them raise money for carrying out the project.
The project, called SociaLite, is an example of how a small commitment of our time can make a huge impact. Neither the technology developed by the engineering team nor the analytical work we at Milliman are doing represents the cutting edge of our disciplines, but together, we are helping to improve many people’s lives.