How a Low-Income Family in Central America Converted to Solar

By Carter Garber

   Maria and Jorge Gonzalez live in the mountains of Nicaragua, too far off the beaten track for electric service. Jorge is a coffee grower and Maria runs a tiny store out of the front room of their home.
   When Maria traveled to a neighboring community, she saw a small rural store lit up at night like those in the city, but she did not hear the usual dull roar of a diesel generator. She was amazed to learn the store used a solar panel system to make and store electricity. 
   Maria was interested in the cheapest system, which cost $700, until she learned that it generated only enough power to run four lights at night. She needed enough power for both her home and her store. She and her family studied various options and chose a $1200 system with twice the power.  
   Like most low-income families in Central America, they  did not have $1200 in cash. They didn’t have a savings account. In fact, the Gonzalez family had never had any reason to enter a bank. In the past when Maria needed a loan, like the time she was asked to make a lot of tamales for a birthday party or the time a child suddenly had to be taken to a distant hospital, she had borrowed from a local money lender. A $100 loan had to be repaid at the end of 7 days with $10 in interest, a 520% annualized rate.

   Maria had heard people call her a microentrepreneur and she had heard of a microfinance institution which lent small loans to very small businesses called microenterprises. She learned that it charged 32% yearly interest, which she realized was a bargain in comparison to the money lender who would charge that same amount of interest in just one month. But Jorge’s co-op offered a better deal. Maria and Jorge were able to borrow the money from the co-op’s five-year loan program at 16%, half the rate of the microfinance institution.
   Soon a man was up on their roof installing two photovoltaic panels of 55 watts each, which will last up to 20 years with proper care. He ran an electric wire inside and told Maria how to take care of the two 6 volt batteries and explained that he was putting a box called a controller on the cable between the panels and the batteries that would keep the sun from overcharging them. The shiny new box was a 400 watt 12 volt inverter, which allows the DC energy coming out of the batteries to be converted to AC energy so that she can use regular appliances like a TV, a blender, or a radio. The final part of the installation was screwing in the strange looking compact florescent light bulbs that would make her batteries provide electricity for more hours.

   Jorge’s coffee co-op is a certified fair-trade provider. A buyer of fair trade organic coffee in a U.S. supermarket pays more per pound of coffee, but the fair trade label on the front of the package guarantees that this extra price goes back to a democratically controlled co-op made up of small farmers.
   If Jorge sold his coffee to regular commercial buyers, he would be paid $100 a sack. At the co-op he gets $120 per sack for his conventional coffee and $140 a sack for organic coffee, which takes more work to grow. When Jorge sells his coffee at the annual harvest, the co-op staff deducts his annual loan payment of $366 before paying him the balance. They then bundle together the payments from the 90 other farmers who bought solar systems to pay the $32,000 per year owed to the international lender.
   Jorge produces about 40 sacks of organic coffee in a good year, about average for members in his co-op. With the $5,600 income the family earns enough to buy city-bought goods like shoes, clothes, a cell phone, and all the things the family cannot produce.
   There is enough left over to help Maria buy goods for her little store. Since this influx of money from coffee to the family comes only once a year, Maria carefully has to buy goods that will sell well then rotate that new income

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to buy additional inventory. The family never could have afforded to pay $1,200 in cash for their solar system, 21% their total income, but they can afford to pay $366 a year, 6.5% of their annual coffee income. They report that they feel a bit of a pinch once a year when they pay the $366, but the solar energy has been a good investment.
   Now when Maria and her daughter rise before dawn to prepare breakfast they no longer use kerosene lanterns that were polluting their lungs, blackening the room and their clothes with soot, and using up family income for fuel. And they don’t have to hike to a larger community to buy the kerosene or buy batteries for the flashlights and radio.
   In the evening the children are able to study and their grades are improving. When her daughter came home from the hospital, Maria was able to attend to her at night without the usual hassle of lighting a lantern, fearing that the flame might catch the house on fire.
   During the first 18 months of having the solar system, Maria has seen a definite rise in the number of customers for her store. With more income, she has been able to diversify the store’s inventory. She also invests more money in her farm, which helps to feed her family and creates surplus food to sell.
   Both Jorge and Maria feel that her business

has benefited from her being able to charge her cell phone so she can keep in closer communication with suppliers, as well as family and friends. And the solar energy also allows them to stay better informed through the radio and TV.
   When asked how much she has saved from that which was previously spent on batteries and kerosene, Maria grabs her calculator to show that part of the annual payment is paid by the savings and part by the increase in sales. Clearly for entrepreneurial women like Maria, the expense of the solar system has turned out to be a good investment that provides additional income to the family. When the loan is paid off, she will make even more.
   This new loan system and the connection between the co-op and those companies that install the solar systems was fostered by IDEAS, a non-profit organization in Atlanta, Georgia, that has worked in economic development and microfinance in Nicaragua for 24 years.
   Through this new project, TecAp (for Technology that is Appropriate), IDEAS assists rural people in increasing their quality of life and improving their productivity. In addition to solar energy for houses, TecAp is promoting solar energy to pump water for animals and crops, to kiln dry wood for

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furniture, for running motors, and for other productive activities. IDEAS is also working with the National Institute of Technology to enroll young adults in a diploma course in renewable energy so they can learn how to install and repair systems for their neighbors. After two years, the TecAp project will become sustainable, like other projects IDEAS has turned into free-standing social enterprises.

Note from the author: If you would like to help low-income families in Nicaragua to go solar, first encourage your friends and family to buy organic coffee with the fair trade label. Fair trade certification assures you that the extra price you pay goes back to small producers organized into democratically run coops. Second, you can make a tax-deductible donation to IDEAS to support this new effort in Nicaragua. Third, you can be socially responsible by investing part of your savings in loan funds that lend internationally. Fourth, you can volunteer time to assist by using your computer. To learn how to invest or to donate, contact cgarber@ideasnet.org.

Carter Garber is a Social Entrepreneur who has founded more than two dozen sustainable community economic development organizations including microfinance institutions and international socially responsible investment funds. He is the Executive Director of IDEAS and recently founded TecAp to bring solar and other appropriate technologies to fair trade coffee farmers, starting in Nicaragua. Trained as an economist, he lived in Central America for more than a decade and has worked there frequently over the last 24 years. Now based in Atlanta, he works closely with a team of Central Americans in the IDEAS regional office in Managua. Visit www.ideasnet.org.