What barriers might hinder the success of your project and how do you plan to overcome them?
Potential risks include the likelihood that poorly engineered copycat products will be introduced, which will spoil consumer markets. Another potential threat will be entry of new firms to compete for the same customers and resources. This rivalry may intensify if the firms have similar market share, leading to a struggle for market leadership. There is also a danger of inventory stock outs leading to the adverse consequences of stock outs and long-run loss of revenue from the shift of customers to more reliable sources of supply.
Warranties and branding are being used to mitigate bad publicity from these inferior products. We are using three strategies (cost leadership, differentiation, and focus) at the business unit level to create a competitive advantage. This strategy is positioning our firm to leverage its strengths and defend against the adverse effects of competition. We are avoiding stock outs by having regularized replenishment of inventory as stock out become eminent.
Another potential barrier which is out of our reach to solve , but again which is a blessing in disguise ,is the problem of the inflation which has reached two digit levels at 16% in Uganda due to the high fuel prices ( One liter of paraffin costs U$1.2) . It is a blessing in the sense that , it is compelling households to scramble for our solar lantern in order to cut down on their fuel budget.
Tell us about your partnerships
Green light Planet’s successful product development and marketing efforts have already been proven in a pilot project on the ground in India. Green light planet’s biggest challenge was in establishing retail chains in Africa to stock and advertise the products. This is Michael’s core competency. Online and phone contacts between Michael and Patrick Walsh (CEO) of Green light Planet started two years ago when Michael came across Patrick’s Green light Planet’s solar flare products across the Internet, and immediately discovered that the Solar Flare product pipeline could provide a suite of quality of life and income generation solutions for the Uganda’s rural poor segment, and could also be sold to a wide audience of existing traders and retailers in Uganda.
The above initial collaborative efforts have lead to completion of a consumer acceptance pilot project. During the pilot project, Green light planet has been the partnership‘s product supplier, while Michael through WIRDA provided a crucial grass-roots link to micro-entrepreneurs in local communities thus, which not only provided an avenue for distribution, but also established levels of contact with individual community sales people that would not otherwise be established. Michael‘s other role during the pilot roles have included collection of quantitative and qualitative data that measured the effects of the SolarFlare’s introduction on quality of life.
Explain your selections
Almost all Ugandan Solar projects are primarily, and almost exclusively implemented on fee for service basis, since the majority of their customers are institutions and/or business focused. However, our project is grassroots based, and pro-poor and therefore allows; a) households to pay with small incremental expenses like they already do for kerosene; b) households not have to worry about product servicing and replacements; c) mark-ups for the delivery networks to allow sustainability and growth.
We are incubating the idea through a micro-credit financing mechanism in community settings by utilizing and building upon the strength of exiting VCCs. Working through VCCs is ensuring mobilization of own-community resources to purchase solar, high repayment rates and effective advertising thus creating a community driven supply chain and reliable market. Community buy-in through sensitization and awareness outreaches is driving the sustainable introduction of solar LED technologies on a commercial basis and at level accessible to average community households.
In every Ugandan community there is some form of VCC structures, and VCC members access services and goods and make payments promptly. The government encourages the formation of SACCOS and fully supports them. There is a Uganda Postal bank, which supports VCC by giving them loans at lower interest rates. As VCC are located in remote rural areas and charge lower interest rates to their members, using them has enabled many people to have solar lanterns.
How do you plan to strengthen your project in the next three years?
We are financing the project through VCC members own capital contribution, which is expected to increase each year thus, providing the necessary capital for growth and expansion of distribution channels. In the first year, annual project net sales/re-investment revenue is expected reach approximately US$ 270,000 based on annual sales of approximately 13,000 solar flare products, increasing to approximately US$ 1.8 million in year two, based on annual sale of approximately 83,000 solar flares.
The project expects to break-even within two years with reasonable profit margins. This will allow growth of sales, and attract loans /investors to scale up project operations.
However, the project will also make an appeal to CoopAFRICA, an affiliate of the International Labor Organization, (ILO) which supports Ugandans SACCOS to create jobs, generate income, and reduce poverty. The project idea resonates well with CoopAFRICA requirements, and a US$ 50,000 grant-funding request has already been submitted to CoopAFRICA for funding consideration.
The project idea also addresses pollution reduction, an area of interest to the Global Environment Facility(GEF) 's Small Grants Programme in Uganda and already a grant proposal request of US$ 50,000 have been submitted to GEF. Additionally, VCCs will be mobilized to utilize the Uganda Government solar subsidy on the equipment, which enables the consumer to only pay up to 70% of the solar system while 30 % is paid by the Uganda government owned rural electrification agency.