Once a closed country, Myanmar is undergoing a huge transformation. For the first time, people in Yangon, Mandalay, Magway and other urban areas are connecting with the greater world. Curious university students are accessing new texts online. Small business owners are researching markets and commodities. School kids are following the latest Korean popstars on Facebook.
But life in rural areas remains mostly unchanged, largely because two-thirds of households outside of population centers don’t have reliable electricity, despite government attempts to expand the grid. This so-called energy poverty drastically limits economic opportunities for rural communities and forces them to spend what little they have on expensive, inconsistent and environmentally harmful alternatives such as diesel-powered mini-grids, kerosene and candles.
For the past 12 years, Pact has worked in more than 2,000 communities across Myanmar, implementing integrated, locally driven and owned programs that have made a marked difference in people’s lives, particularly in the areas of health, livelihoods, water and sanitation.
Village Development Funds, or VDFs, have been critical to that success. Used in combination with an elected village-level governance system, VDFs give communities a safe and profitable means to raise a jointly owned fund, revolve it through low-interest, income-generation loans, and provide resources for community development plans.
Through VDFs, Myanmar’s rural communities are truly leading their own development.
One problem communities were struggling to solve, though, was electrification. While villages were spending roughly 20 percent of their funds on energy options, they were very basic, providing only a couple of hours of electricity per night at best. Many households were still unable to access reliable power because of their distance from the existing electricity network and high costs of fuel and alternative energy sources, such as solar.
We decided we needed to work with communities to find a solution. Because the bulk of them were in Myanmar’s sunshine-rich and water-poor Dry Zone, solar technology emerged as a leading, renewable option.
Building on our integrated approach and with support from Chevron, Pact’s longtime partner in Myanmar, we put our heads together with VDF managers and devised a sustainable mechanism through which Pact could offer energy access loans to communities to purchase high-quality solar home systems. Communities would select participants, manage household-level loans and retain the interest to further grow their VDFs. Households would have environmentally sound, affordably priced access to electricity. Once loans were repaid, Pact would revolve the fund further to neighboring communities to continue to offer energy access in poor, rural areas.
Although this was a distinctly new way of interacting with community partners, we began with high hopes.
But early on there were stumbling blocks.
We wanted to make sure communities had both access to affordable, high-quality products as well as choice. This was hampered, though, by the fact that the existing rural market was saturated by cheap products, and most suppliers of quality solar solutions were far away and had limited transport ability. We tried to get around the problem by vetting vendors, engaging in bulk procurement and delivering units to communities ourselves.
But this led to more problems. Because of unexpected delays in both the community’s process and in procurement, we had to contend with expired warranties, unwanted products charged at a loss and safe storage limitations in small field offices. We spent a significant amount of time and energy trying to manage a highly unpredictable process. We learned a lot about solar products and market deliveries but became concerned about sustainability. Would communities become dependent on us for system repairs?
We also learned a lot about how cultural differences influenced our customers’ choices. We offered households a range of quality solar home system packages, but communities were used to larger, poorer quality Chinese models, and they equated size with power ability. Initial orders were much lower than targeted, adding to the procurement burden. Questions coming from communities quickly overwhelmed our village-level field staff who felt inadequately trained for their new roles; Pact staff who were once trusted guides and partners found themselves in the awkward role of “salesperson,” which they felt eroded trust they’d built.
Additionally, although we factored government plans for national grid expansion into our initial site selection, these and other national plans were constantly evolving, leading to high community expectations and confusion.
Knowing the demand for energy was real and based in solid evidence – communities had been voting with their own money through VDFs for nearly a decade – we were not ready to give up. But it was clear it was time for a significant re-think.
Pact’s senior staff in Myanmar took three days to re-conceptualize our rural electrification strategy, including consultations with communities and field staff as well as frank discussions with leaders in the evolving Myanmar energy market.
The result was a “pro-poor” energy approach that would provide systemic solutions and real choice for communities struggling to meet their energy needs. While renewable solutions would be prioritized, tailored energy strategies would be developed at the village level, and options would be expanded. Yes, solar home systems were instrumental in providing basic energy access that gave children more “daylight” to study and adults more working hours to operate their businesses. But communities wanted more. They wanted energy solutions that augmented and transformed local businesses and household agricultural production – something the limited capacity of solar home systems couldn’t do.
Recognizing the transformative potential of energy beyond household solutions, we’re now extending our expertise to support community-level solar mini-grids for income-generating activities, maximizing both traditional and renewable options. We’ve also restructured our approach in the solar home systems program, moving away from directly supplying chosen products and instead identifying suppliers and creating delivery channels into rural communities.
And we are doubling down on what communities told us was the most significant plus of our initial rural electrification program: access to financing options for previously unattainable energy choices.
So far, we’re seeing success. Besides developing tools and workshops to help communities create practical, relevant energy strategies, we’ll soon be thoroughly training our staff to be the best guides possible to electrification, and we plan to establish new VDFs to include more communities.
We’ve also added crucial new partners to our evolved pro-poor program, including new corporate partners, local private mini-grid developers and international organizations.
“Our lifestyle has improved,” says U Aung Myint, a business owner in Kawlin township. “The light is brighter than we used before, and we can run our grocery shop late into the night.”
In the end, this is what we were striving for – not to be direct deliverers of energy but to be facilitators of opportunity. We are connecting the evolving market to communities’ growing appetite for energy solutions that they can use productively, leading to a cycle of increased prosperity. It’s why we’ve named our initiative Energy for Prosperity, or E4P.
Imagine the businesses that will be launched or expanded when all rural communities have access to both finance and affordable power. Imagine how better incomes will mean better nutrition and health outcomes, even more resources for development, and even greater economic opportunity.
This journey has taught us a lot. We’ve learned that we must take our lead from communities and have the courage to invest in transformational solutions. We’ve learned that we must be given permission to fail together and to re-evaluate our initial thinking – perhaps multiple times.
We’ve learned that no one organization or group has the power to transform the development landscape.
Together, we are lighting the way forward in Myanmar.