Thursday
May 24
2012

Kyla Yeoman

Lighting a Pathway for Solar in Rural Uganda

Editor’s Note: This article is the second in a three-part series featured on Global Envision, a website and blog community managed by Mercy Corps that spotlights global resource issues and market-driven solutions to poverty. The series explores the role Mercy Corps played in facilitating a solar power market in rural Uganda. The first article detailed Mercy Corps’ market analysis efforts and part three investigated bringing products to market. This is the second article in the series, which investigates how Mercy Corps connected suppliers to shops, and shops to customers by building buzz about solar. This article has been cross-posted with permission.

How demand meets supply

Mercy Corps didn’t give out a single solar lantern. It didn’t give out any grants to buy solar panels. But, what the international nonprofit did do was bring solar to rural Uganda.

How? Market facilitation. It’s a mouthful, but it’s kind of like matchmaking, and it’s a key role nonprofits can play to boost local economies. It involves figuring out who all the players are and what they each want: displaced families returning after fleeing war and ready to restart their lives, farmers with savings that fluctuate with the harvest seasons, solar companies based in urban centers wary of customers who live on a couple of dollars a day, entrepreneurial local shop keepers interested in boosting sales but with little business training, and microfinance institutions with smart payment plan options.

With this lengthy list of players and armed with information from the comprehensive market analysis we conducted, Mercy Corps was ready to light the way for solar commerce. Here are a few things we learned in the process:

1. Have a product demo

Consumers

Before buying an expensive product, no matter how amazing and life-changing it claims to be, most people want to touch it. They want to push its buttons, hold it, see a demonstration, hear others’ experiences with it. They want a product demo.

To satiate this need and build up demand, Mercy Corps set up sessions under mango trees in major trading centers throughout the District. Representatives explained how solar-powered lanterns work and demonstrated the mobile phone charging component. To help people conceptualize how much they’d save by switching from kerosene to solar, the team helped families add up how much they typically spend on fuel and phone charging over a week, a month, a year, a few years. When they saw how much their incremental spending added up to, people were shocked.

Shop owners

The shop owners who attended the mango tree sessions saw that people were interested in buying solar products. To boost the supply side of the chain, Mercy Corps hosted a ‘meet and greet’ under a tent in Pader District’s main commercial center for the shop owners to develop personal connections with the Kampala-based solar companies. The solar companies shared more details about their products. Financial institutions, like Agaru SACCO, also were on hand to talk about small loans for the upfront costs of buying inventory. And Mercy Corps shared results from its market analysis to estimate how many solar products a small business could expect to sell and how much profit they’d make.

(Product demos in town centers helped build up demand from consumers and from shop owners who wanted to add the products to their shelves. Photo credit: Kim Beevers/Mercy Corps).

2. Develop good partnerships

If anything turns off a consumer to a new type of product faster, it’s a product that doesn’t work. The results are called ‘market spoilage’ and it happens with products sold in stores everywhere, from Wal-Mart in Idaho to the corner shop in rural Uganda. Mercy Corps needed to ensure that if families were convinced to allocate their kerosene budget to solar, the solar products, in fact worked. If the products didn’t function well and support wasn’t available for maintenance, disillusionment would replace curiosity and solar wouldn’t stand a chance. Given this need, Mercy Corps identified two respected companies to collaborate with on the pilot, which meant working with two different models of distribution.

Barefoot Power

Barefoot Power’s distribution model gives shop owners two options: become a distributor or a microfranchisee. Microfranchisees can buy fewer products upfront and enjoy a larger profit margin over the long term than distributors. In order to become a microfranchisee, however, Barefoot requires entrepreneurs to enroll in and to pay for a special five-day business-training course, as well as to cover their own transportation, food and lodging costs throughout attendance. Because the courses are managed by Barefoot, the company can be assured its products will be sold by people with both basic business know-how and a comprehensive understanding of the technology. This results in stronger sales and better customer service. Significantly, all the shop owners that chose to sell Barefoot products and participated in the training also chose to become microfranchisees.

To make things a little easier on new trainees, Barefoot moved its training course from the capital, Kampala, to Gulu, a northern town closer to most of the shop owners’ villages. Shop owners received training in basic accounting, general finances, creative sales and marketing, basic solar product function and maintenance, as well as details on how to order more inventory.

“The community members who subscribed to Barefoot Power’s entrepreneurship training have grown into successful microfranchises who employ other community members,” said Anne Kayiwa, Barefoot Power’s Uganda sales and marketing director.

“With the Mercy Corps partnership and promotional efforts, the number of Barefoot Power distributors in the area increased from two to 10. For us that meant more outreach, more sales, more customers and users, more market penetration, and more awareness of Barefoot Power solar products. It was a multiplier effect.”

D.Light

D.Light took a different approach to its distribution model. When a local savings and credit cooperative institution, Agaru SACCO, attended Mercy Corps’ meet and greet, they were so enthralled with the product and the idea that they decided to become D.Light’s “dedicated distributor.” Agaru pledged to exclusively sell D.Light’s products and to couple their sales with a microloan to families who needed a payment plan to purchase one.

3. Start marketing

Now that we had shop owners trained to sell solar (along with some handy business skills, too), a microfinance institution at the ready, two solar company partners, and curious consumers. To put the final solar puzzle pieces together, Mercy Corps had one last chore: Build buzz around solar.

Rather than getting behind any one company, Mercy Corps made sure it promoted solar power itself as the brand. On the supply side, the team produced promotional materials like posters, created “how-to” pamphlets and hosted discussion groups about marketing, and developed special business cards for shops that distributed solar. On the demand side, the team gave presentations at schools, community organizations, and to government officials about the benefits of solar and the new availability of the products at local shops.

The African Media Development Initiative found that almost 48 percent of Ugandans report the radio as their main source of news while only 1 percent report print media as their main source. Knowing radio’s extremely high penetration, the Mercy Corps team featured every shop that signed on to sell solar in a radio infomercial that gave listeners the shop’s address and phone number.

And then Mercy Corps stopped. That was it. The team had played the role of the market facilitator, creating relationships on the supply side with marketing materials to push out, and pumping up interest on the demand side through education. At this point we had to sit back and watch to see if it would work.

To find out what happened next, check out part three of the series here.

Categories
Energy
Tags
nonprofit, solar, supply chains