Such an analysis fuelled a personal journey from one of the more than 40 million unemployed in developed markets to investing in and running the leading vendor financing company for domestic solar in the region. In 2008 I had just sold the Grenke Leasing franchise for the UK and was confident of continued opportunities to set up and grow another asset finance company. My particular plan was to build and use a more up to date systems platform to achieve higher levels of productivity than the incumbents. For this growth was necessary, but in 2008 growth failed, risk appetites were depressed, funds limited and appetites for building new leasing platforms non-existent. By 2010 I was out of money. Responding to a request for expertise in asset financing, I found myself in Uganda for the first time in my life.

Thus February 2010 found me engaged on a rapid learning curve which resulted in me shifting from consultant to investor by July of the same year. The opportunity that triggered the entrepreneur in me was domestic solar systems. With 80% or 500 million people living off grid, with no prospect of getting on grid, power is a major developmental barrier to growth. The issue at a commercial level is that the asset is good value over its life time, but expensive to purchase. Any solution is large-scale combining distribution, sourcing and financing. Banks and manufacturers do not see distribution and service as a core competence, and no entity is credible enough to provide either of the other two parties the reassurance they need. For me this is classic vendor finance opportunity if the equity and expertise can be brought together, so this is what myself and my partners have done in a company called SolarNow.. By November we already had €300,000 in a portfolio of 500 customers, and could grow at 40% per month, if we could find the working capital and the people.

Companies aren’t macroeconomics and statistics don’t deliver returns. My own experience in SolarNow is that learning how to hire locally, building and developing middle management, training and defining good processes, and establishing a company culture are all considerable barriers. From a customer point of view our greatest learning has been that while we viewed credit as helping our clients overcome affordability barriers, they saw it as proof positive that our service must be reliable, as we were prepared to wait for payment. There are two aspects to this. First, the appetite for quality in the market is enormous. You do not need to be educated to understand that if you and your neighbours have been sold systems that should work for many years but fail after 3 months, you have been a victim of poor quality either at the component or installation level. Second, in a market measured in tens of millions, there are many customers, and more than enough to build a business who either have enough credit to buy your product, or can afford and are willing to pay a deposit or higher interest rate, provided that you deliver quality. So in the case of SolarNow, our barriers to growth are not demand, because we designed a product and service with it in mind. Our biggest issue is taking the time to build a team that can both deliver todays results and be the managers and role models of the future.

At the time of posting, the erstwhile economically inactive 49 year old is feeling the year was well spent, and hoping his 50year old’s luck will hold.

First published in Finance World, the journal of the CSFI (Centre for the Study of Financial Innovation )

Is there another service so transformational that whole populations will adopt it?  What else is mired in government utility incompetence?  Where else is the technology at a stage where it is reliable and affordable for the majority of the worlds population?  I offer you solar panels for home generation of electricity.

The demand: Over 2billion people live off grid in areas where there is sufficient sunlight for solar to be a real alternative.  Currently using paraffin, diesel or simply enduring darkness.  Power from the national utility is either unavailable, intermittently available, available on payment of a bribe and this only in the cities.  The demand for electricity even is even more fundamental than communication.  Light is education.  Light is a longer working day. Light is entertainment. Electric power is refrigeration, phone charging.  More power will grow economies faster.

The technology: A 75Wp panel plus 100Ah battery is at the heart of a configuration costing €705-1000. This system can power a home circuit of lights and additional appliances and lasts up to 10 years.  It is easily installed and has low maintenance.  Brands are well established with reliable warranty, and future developments are likely to be in extending battery life which will upgrade, not undermine the system capabilities.

Distribution & Installation: Solar needs both to get to the customer and then be installed.  Distribution without good installation – otherwise known as DIY – doesn’t work.  The customers mix reliable and unreliable components.  Non technical customers simply stay away.  Installation without stock is an unsustainable search for good customers willing to pay in advance on a promise – not a recipe for scale.   So the new company in East Africa that has set up a distribution network with trained installers could be onto something.  How big depends on the final piece -

Equipment Financing €700-1000 is a very large outlay for an individual and realistically only in the reach of someone with a disposable annual income of €1-3000 – the rural middle class.  To reach this population in scale, some form of credit is needed.  But with a life of 5 years and good residual value up to 18 months into an installation, a robust form of hire purchase or extended credit can be designed.

I have just spent a month working with a new company called Solar Now, in Uganda.  SolarNow is a new trading and distribution company, now rolling out this integrated deliver-install-finance model in East Africa.  Take a look on www.solarnow.eu and get in touch for more information.

To fill my own yawning gaps that had emerged in the life of an unemployed financial services manager in recession, I signed up for a Master’s degree.  Back in college, I found that the place I had used as the template for creativity and modernity in my life was completely changed.  Knowledge, research and communication was 100% on line.  Within the wired community, everything was accessible, and participation was the point.

Back at home I started to look at the task of building a business or getting a job differently.  Using online sources I could move from fishing with ideas to presenting well researched and illustrated ‘white papers’ .  I joined and then participated in specialist online groups.  When I saw something relevant to my field – an article by some journalist or expert – I commented.  On my website, I began to link everything together.  It became like writing emails – something that was part of the normal day.  Soon I had a profile.  If I searched my name, I could see content I had written.  And as I saw it, others see it.  Now I am not just listening and reading – I am writing a blog.

For most of us using the new media will not result in the fall of governments.  And yet starting right now, you and I can write something that will still be around contributing to knowledge 5,10 years from now.   I noticed recently that in my field, leasing, there is just one article in Wikipedia explaining something that I have spent 15 years learning and doing.   Now, according to recent research, 26% of internet users use Wikipedia to find stuff out.  Think about all those people worldwide and over time- customers, your children wondering what you do, journalists, inspired individuals in new markets needing knowledge.  All I have to do is create an account, and start adding a little bit, expanding some details, writing a new piece about the bit that I know really well.

What do you know and what can you share?  New media is not them, its us.  Its not superficial nonsense, its an industrial and social revolution, happening now.  Pick your entry point and start typing.

1. Become innovative
2. Understand technology, don’t just finance it
3. Become asset information experts
4. Promote the product and the sector
5. Standardise documentation and securitisation
6. Modernise our organisations with talent from outside the sector
7. Do real CSR, supporting leasing in emerging market financial services
8. Ditch the product silo mentality
9. Reward in line with income recognition
10. Stop comparing with direct competitors and start benchmarking against best commercial practice

and a partridge in a pear tree….

Happy Christmas

Microfinance is the most significant innovation in development for the last 25 years.  Proving that credit in the hands of the poor is both useful and sustainable, it now provides loans to over 133 million borrowers who previously were unbanked, or paying moneylenders eye-watering interest rates.  As it matures as a sector it faces a number of issues.  Its needs other products than loans, and it would prefer if the money it lent helped to create income and not simply consumption.  Microleasing is one of the possible solutions, and global leasing companies need to step up to the plate to help get it off the ground.

My research has already shown widespread agreement that there is enthusiasm to offer leasing in microfinance institutions and funders.  Both parties however are nervous about introducing the product into a sector that has not seen it before. Expertise is needed, and that expertise is sitting in the global vendor leasing teams in Europe and  the US.

This is a great opportunity for the sector to put its expertise to really good use. We need experts on secondment, we need technology, we need doors opened to vendors and we need the kind of support that large scale financial services can mobilise.

Rarely does something come along where the quiet diligence and expertise that passes un-noticed in one part of the world can have such a visible social and economic impact in another.  Leasing – raise your hand and get in touch.

Technology automates repetitive tasks, reduces error and allows people to focus on high value add tasks.  Low skill jobs can be replaced, and people have the chance to deploy more of their skills, reaping the benefit of education and being paid more.

OK for the ’70s and ’80s in the old world, but once globalisation and a couple of generations of technological advances kick in, what used to be value add and worth a decent salary is just the starting point for emerging economies. Two key points.

First, new companies can go straight to newer technology, with higher levels of automation based on better process understanding of what has gone before. This allows them to recalibrate their organisations around which jobs are really transformational, and which ones have become the ‘techno-manual’, and not worth as much.

Second, educated middle classes are now all over the place.  However, those in the BRICs have salary expectations and living costs a fraction of their peers in the developed, old economies.  They also feel the competition around the substantial advantage of having a salaried position, and therefore are willing to accept less to have one.

Put these two together and you can create companies that can offer better or cheaper products and services based on more up to date technology, and or more profitable companies based on lower costs of production.

To compete, companies in the developed markets must look again at their organisations and re-calibrate what jobs are really worth the money.  Wherever further analytical tools, or additional automation has been provided, have the associated jobs actually changed to add extra value?  Have they simply absorbed the improvements while continuing to be paid the same for an easier job?  Were the efficiency benefits actually achieved in greater output, or cheaper inputs?

This task would be immense. In fact against a back drop of entirely understandable self interest and decades of legislation, it seems so difficult as to be unrealistic.

This is why I believe emerging markets have the edge.

Both sectors are highly consolidated, having relentlessly chased scale to improve profitability.

Both face similar technology problems of multi-jurisdictional operations; automation; on demand data; and new innovations from outside their sector that need to be accomodated.

While neither leasing nor retail banking manage to keep their core applications entirely coherent and up to date, one can at least point to the roll out of ATMs, the spread of online banking; the pipeline of customer focussed innovations designed to increase what the customer can control directly, and to facilitate straight through processing where-ever possible.

In leasing there is what can only be described as a defensive mentality …. less innovation, transaction rather than business process based systems design , and erosion of competitive advantage and barriers to entry.

Retail banking is much bigger so it’s appropriate that it gets a lot of attention. Retail banking also trumpets its spend on technology as a measure of its fitness for the future.  Leasing does not.

But somewhere there’s a CIO who owns both a retail and a leasing operation.  I’d like to hear their perspective.

• How is technology used in your job?
• What would you like to see?
• What could we learn from retail financial services …. insurance … mobile phone companies … supermarkets?

Whether you are pitching a new product or simply wishing your boss would wake up to the future, let me know what you  think.

Kevin Kennedy, Clearcape

Leasing has been an also ran in the commercial credit market for years.  A healthy sector would be rolling out strategies to win more share from loans.  It would appear we are preparing to endure rather than exploit.

A successful future will still be high volumes but these will be gained by selling the right products efficiently.   We need to charge or retain more margin, and we need to reduce costs further. Two key areas to build this future are marketing and IT.

I would get them from outside the sector.