Business Training for Rural Solar Entrepreneurs

Competition Finalist

This entry has been selected as a finalist in the
Leveraging Business for Social Change: Building the Field of Social Business competition.

Great Lakes Energy (GLE) distributes low-cost solar energy products, through local entrepreneurs branded as Akira Urumuri (Receive the Light). These products are designed and priced for rural homes which are currently burdened with the high operating cost and dangerous health-hazard of kerosene lamps.

About You

Organization: Great Lakes Energy Visit websitemore ↓↑ hide↑ hide

Section 1: About You

First Name

Samuel

Last Name

Dargan

Country

Rwanda, KV

Section 2: About Your Organization

Is your initiative connected to an established organization?

Yes

Organization Name

Great Lakes Energy

Organization Website

Organization Phone

+250728656025

Organization Address

BP 1373 Kigali

Organization Country

Rwanda, KV

Is your organization a

For‐profit

How long has this organization been operating?

1‐5 years

Your idea

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Name Your Project

Business Training for Rural Solar Entrepreneurs

Describe your Social Enterprise

Great Lakes Energy (GLE) distributes low-cost solar energy products, through local entrepreneurs branded as Akira Urumuri (Receive the Light). These products are designed and priced for rural homes which are currently burdened with the high operating cost and dangerous health-hazard of kerosene lamps.

Country your work focuses on

Rwanda, XX

Innovation

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What makes your innovation unique?

Our innovation is our distribution model. We have put an Akira Urumuri solar entrepreneur in almost every major village in Rwanda. They are selling products that are designed specifically for this market and priced accordingly, ensuring that clean energy is available for 8.5 million people living without electric lighting. This scale of distribution for renewable energy products has not been attempted or reached anywhere in Africa.

Our structure allows for a small management team to maintain a network of 148 independent dealers who actively market solar products and provide basic after-sales support. Our unique model allows for rapid scaling and growth while maintaining low overheads.

We provide these local entrepreneurs with 100% credit so that they can grow their business without capital restrictions. The credit facility also allows us to focus our selection criteria on behavioral and attitudinal traits and not on financial capability.

We recognize that our dealers are our foundation and our key to success, so we channel as many resources to their training and development as we can. We invest on them in the form of credit, training, logistical support and we provide them with branding and marketing materials. No one has approached the energy challenge in Africa with the scale of investment in rural entrepreneurs as we have.

The direct connection to our dealers provides us with rapid knowledge of market trends, mitigates against the potential for surprise changes in the market, and allows us to respond quickly to potential market changes

Do you have a patent for this idea?

Impact

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Tell us about the social impact of your innovation. Please include both numbers and stories as evidence of this impact

We have 148 dealers selling solar products in all Rwanda. From June 2009 until May 2010, 1.584 products have been sold. Each product sold impacts 6-8 people (household size).

Through our distribution model we manage to reach an important part of the people living in rural areas with no access to any other source of lighting but kerosene, candles or wood. Clean and affordable solar energy brings many benefits to this population.

Economic impact

- Our dealers. We contribute to job creation and business development in the emerging solar sector. In addition, by distributing our products, they dramatically increase their earnings potential.
- Local Businesses: We contribute to the local economic development encouraging entrepreneurial cottage industry expansion by extending the functional length of the workable day. We stimulate further economic activity in rural areas.
- Households: Traditional light sources such as kerosene lamps are expensive and inefficient. Using solar lamps means potential savings for families and therefore, poverty alleviation.

Education

Using solar products results in an improvement of studying conditions for low income households since light provided by kerosene lamps is not sufficient for studying. Enhancing educational performance increases students’ possibilities to contribute to economic development for themselves and their families.

Health

Clean solar energy improves child/family health by replacing unhealthy energy sources and improves the quality of health care delivery by providing solar power for rural community health care facilities.

Environment

Our products contribute to protecting the environment through greatly reducing the CO2 emissions, by replacing fossil consumption with clean solar energy utilization, and by reducing tree cutting thus preventing soil erosion and saving essential wildlife habitat.

Our first dealer, Teresa, was distributing airtime in a borrowed space in a shop. When she started working with us she was able to rent a small shop for herself and sell various products. Nowadays she has 2 locations selling our products. Due to the increased earnings she has made, she has been able to send her 3 kids to school.

Problem: Describe the primary problem(s) that your innovation is addressing

The main problem we are addressing is the lack of access to clean and affordable sources of lighting that millions of people are facing.
By making solar products available to almost everyone in the country we address the problems stemming from the use of the only available sources of lighting for population living in off-grid, remote areas, such as kerosene lamps, candles and wood.
- Rural families spend up to 30% of their annual income in these expensive and inefficient sources of lighting.
- Kerosene lamps, candles and wood do not provide enough lighting for studying.
- Use of kerosene increases risk of respiratory diseases, especially for women and children, the most exposed to kerosene vapors, as they are the ones who spend most time inside the house. In addition, the use of kerosene lamps inside houses involves high risks of fire accidents.
- Use of wood and kerosene contributes to deforestation, soil erosion and CO2 emissions.
- Women in rural areas spend, not only an important part of the household annual income for kerosene or wood, but also time and effort that could be used for other activities.

Actions: Describe the steps that you are taking to make your innovation a success. Include a description of the business model. What might prevent that success?

- Dealers training. We are aware that our foundation is our dealers and the stronger we make them the stronger we will be. We invest heavily in training.

We need each dealer to sell 10 products per month for our enterprise to be a success. The key factor in achieving this target is the business skill of the entrepreneur. Our coaching becomes the most important aspect of our management.

- Right product, right price. There is enormous demand for home and small business lighting. All products undergo thorough quality and marketing testing. We make products available and affordable to almost everyone.

We have translated our solid understanding of the market into a business model that allows us to reach out to consumers with methods appropriate to local conditions and preferences.

- Low overheads. We have efficient methodologies for managing our distribution network with very low overheads.

Each of our four Territory Managers is responsible for managing 30-50 independent rural dealers. GLE's fixed costs in this structure are limited to the core company. This financial efficiency is a major factor for the sustainability of the business. The model is extremely scalable in Rwanda and other markets. We can add more dealers/products with no/minimal increase in overheads.

Our most significant risk is that the product is not accepted or that potential customers will still struggle to afford the entry level cost.

To mitigate this risk, we have done extensive market research to ensure that our product is designed to meet the market demand and expectations. It is imperative for the long term sustainability and profitability of our project that our products are accepted in the market; hence we have incentive to continually conduct thorough market research.

We have also developed tools to address consumer´s financial problems or uncertainty related to the quality of the products. Under certain circumstances, we have a sale mechanism that allows 3 payments that make our products affordable to almost everyone. In addition, our dealers let clients use the product for one week before they have to pay for it. Both systems are working well so far.

Results: Describe the expected results of these actions over the next three years. Please address each year separately, if possible

Products sold/lives impacted
From June to December 2009 we have sold 562 products. From January to May 2010 we have sold 1,022 products. If we continue to increase at the same rate, by December we will have sold 6,500 products in 2010. About 39,000 people lives will be impacted and GLE business will become sustainable. To be able to achieve this objective we need to continue investing in our dealers training.
Considering a 0% monthly growth on sales from December onward, projected sales for 2011 will be 12.000 products sold. It is more likely that sales continue to increase at the rate of 30%. In this case projected sales for 2011 will be 17.000 products sold.
Greatest contribution would be GLE proving this a profitable market. Each company that can do this (none has done it yet) will attract many other investors to this market, making it more competitive, more innovative, more consumers will have access to a greater variety of clean energy products. More products for this market will be developed.

Dealers created / profits realized by entrepreneurs
Once the majority of our dealers are sustainable, we will add 30 more dealers in Rwanda. We expect to do this in February 2011. Sales rate and availability of products in Rwanda will be increased.

A dealer that sells 10 products per month makes a significant amount of profit for a rural entrepreneur and this stimulates localized economic development. Some of our dealers already sell 20 - 30 products per month. As a village develops economically our business in that village will also increase. This economic development is a foundation of our strategy.

GLE business is sustainable and is scaled to other areas.
When the Rwandan operation is cash-flow positive, GLE will expand into other countries in Africa with this same distribution model and same product line.

How many people will your project serve annually?

More than 10,000

What is the average monthly household income in your target community, in US Dollars?

Less than $50

Does your innovation seek to have an impact on public policy?

Yes

If your innovation seeks to impact public policy, how?

The major policy barrier to the adaption of solar products in Rwanda is that they are not exempted from VAT. If we can prove the viability of the market and show the Rwandan Revenue Authority that more money can be collected through income tax than through VAT, they will agree to exempt solar products from VAT, which will allow solar companies in Rwanda to lower their prices by about 20%.

Sustainability

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What stage is your Social Enterprise in?

Operating for 1‐5 years

Does your organization have a board of directors or an advisory board?

Yes

Does your organization have a non monetary partnerships with NGOs?

Yes

Does your organization have a non monetary partnerships with businesses?

No

Does your organization have a non monetary partnerships with government?

Yes

Please tell us more about how partnerships could be critical to the success of your Social Enterprise

We work with co-operatives, banks, international NGO’s, and other businesses. The World Bank- IFC- Lighting Africa Program is an important supporting network for us

In addition, our suppliers are crucial partners: G24 Innovations (UK), Barefoot Power (Australia), Base Technologies (UG) and African Energy (USA). They ensure we have exclusivity for Rwanda and they support us in any way they can.

These partnerships and supporting network help us achieve our objectives.

New sources of external funding are needed in order to allow us to focus on training our local entrepreneurs.

Our biggest partnership need is for an investor. We are in discussion with several potential investors currently.

We would like to learn more about how your initiative is financially supported. Please explain your business plan/revenue model

We have reached the point where, in the short term, the initiative still needs external financial support to fund stocking needs. This required financial support will come in the form of a credit line from our main supplier which is currently being negotiated.

Availability of additional financial resources that allow us to complete our dealers education is major factor for the business to hit its targets and achieve sustainability.

Each dealer only needs to sell 10 products per month for us to start making profit. Once we hit the point of all dealers selling this amount of products per month, the initiative will be sustainable and it will be financed solely by revenues. Some dealers are already selling 20-30 products per month.

We will continue growing through increasing the number of products sold by each dealer and we will add 30 more dealers in Rwanda in early 2011.

The Story

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What was the defining moment that led you to this innovation?

I spent my first 3 years in Africa living in a remote off-grid village in Northern Rwanda, working as the infrastructural engineer for a hospital. During this time I gained a strong understanding of the energy needs of rural institutions, in particular health facilities, and much experience with solar power in rural Africa through the installation and maintenance of solar power for the hospital for which I worked, and surrounding health centers.
In 2005 I started Great Lakes Energy in an effort to solve the energy burdens of rural homes and institutions with solar power. It was clear from the start that the only way to achieve significant impact was through a sustainable business model. Thus Great Lakes Energy was born.
At first we struggled to get rural clients and thus we grew the business from sales to institutions and large NGO’s. I continuously studied and experimented with methods for reaching the rural home market. The business model described above is the result of these years of study and trial and error.
GLE created the brand Akira Urumuri for the purpose of distributing and marketing solar products to rural homes.

Tell us about the person—the social innovator—behind this idea.

I came to Rwanda when I was 20 years old .In the hospital, my role was diverse and involved managing engineering projects, road maintenance, construction, ambulance driver, operating/surgery assistant, maintenance of medical equipment, logistics, and ensuring energy supply for the hospital.
I recognized the pressing need for a clean energy alternative to kerosene soon after my arrival in Rwanda. The obvious solution for both the hospital energy demand and the millions of rural homes was solar energy and I began an intense 3 year self-study in renewable energy engineering.
I founded a technical school in the village where I lived. The purpose of the technical school was to train students on a range of technical skills, including solar energy. The activities were constantly limited due to shortage of funds, and fundraising in the US proved to be an inefficient and frustrating activity. This, amongst other experiences, led me to believe that the only sure way to achieve progress in development was through sustainable business models.
In 2005, I decided I would stay in Rwanda and wanted to contribute towards the development of the country that I now called home.
I have learned much since starting GLE. It is now a functional operation, with 9 staff, an upstanding reputation in the African solar industry, and the most ambitious distribution model for low-cost solar products in Africa.

How did you first hear about Changemakers?

Web Search (e.g., Google or Yahoo)

If through another source, please provide the information

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193 weeks ago victor Bernstein said: Sam-- You know you have my vote. You are there, in Rwanda, yes, spending your sweat and blood, and we know it will all be worth it. about this Competition Entry. - read more >
193 weeks ago Samuel Dargan said: Thanks for your question Violeta. I cannot speak with authority for social enterprise in general, but I can discuss the challenges to ... about this Competition Entry. - read more >
193 weeks ago said: A brilliant venture in every sense of the word. Dargan is illuminating lives in rural communities with safe, positive energy. His ideas ... about this Competition Entry. - read more >
194 weeks ago said: After pooring thousands of dollars and years of his life into setting up rural energy businesses, it's about time this young man got ... about this Competition Entry. - read more >
194 weeks ago Daniel O'Harra said: Well done Sir. After careful research and deliberation amongst all the entries, your company has garnered my vote. Sincerely, ... about this Competition Entry. - read more >
194 weeks ago Stewart Craine said: Best of luck - one more vote added. about this Competition Entry. - read more >
197 weeks ago Violeta Bendersky said: Dear Samuel Dargan, According to your experience what are the main barriers or challenges so that social business model can ... about this Competition Entry. - read more >
201 weeks ago Samuel Dargan updated this Competition Entry.
202 weeks ago Samuel Dargan submitted this idea.