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Revolutionising access to solar refrigeration in Nigeria: Lessons from Koolboks’ PREO funded project
Nigerian man with a Koolboks unit

Koolboks, a sustainable cooling company founded in France in 2018, is on a mission to provide accessible cold storage solutions to businesses across Africa. Led by Nigerian-born CEO Ayoola Dominic, Koolboks recognises the critical need for reliable refrigeration in Nigeria, particularly among fish traders operating in open-air markets and small kiosks.

The lack of reliable refrigeration across the country leads to approximately 30% of fish products going to waste. Intermittent grid connections and the high cost of backup diesel generators leave fish traders without power for extended periods, resulting in rapid spoilage of perishable goods and significant impacts on sales and profitability.

To address this pressing issue, Koolboks has developed Koolhome, an off-grid solar-powered unit that serves as both a refrigerator and freezer. This innovative technology can maintain a cool temperature for up to four days, even without power or sunlight. The units also feature LED lighting bulbs and USB ports for mobile phone charging.

In 2021, with funding from PREO, Koolboks set out to develop a sustainable B2C (direct to consumer) business model specifically for low-income female fish traders in Nigeria. Through partnerships with local organisations in Lagos, Koolboks introduced a lease-to-own product package, enabling traders to pay in instalments for affordable solar-powered refrigerators. This project enabled Koolboks to assess consumer response and evaluate the broader social and economic impact of solar refrigeration.

Following the completion of the project at the end of 2022, PREO had the opportunity to interview Natalie Casey, the Chief Business Officer at Koolboks, to gain insights into the valuable lessons learned during the project’s implementation and to explore the company’s ambitions for scaling up across sub-Saharan Africa.

Q: Please outline the project background and the initial targets it set out to achieve

This PREO-funded project aimed to create a sustainable business model to empower female fish traders and provide them with affordable cooling solutions to store fish and other frozen goods (i.e. chicken, etc.) in Lagos, where there is a high demand for solar refrigeration products. Our ultimate goal was to empower over 200 female fish traders with 300 solar-powered Koolhome refrigerators across 12 markets in Lagos.

Since in other countries we sell to businesses, which then sell it on to their customers on a lease-to-own basis, this project gave us the opportunity to also pilot and demonstrate a business to customer (B2C) model for financing our Koolhome refrigerators where we deal directly with our end users. Our primary focus was to pilot, demonstrate viability and to grow our B2C business model case.

Q: What strategy was employed to achieve those targets?

In our efforts to maximise customer outreach and engagement, we adopted several strategies. Firstly, we prioritised launching numerous market activations, aiming to connect with as many potential customers as possible. By casting a wider net and funnelling customers towards our offerings, we sought to increase the onboarding rate significantly.

Recognising the importance of educating and empowering our customers, we invested effort in creating comprehensive product manuals and conducting customer training sessions. These efforts served to enlighten customers about the long-term environmental and financial benefits associated with our Koolboks products. Through these initiatives, we aimed to foster a deeper understanding and appreciation of our offerings among our clientele.

Acknowledging the pivotal role of innovation in driving customer satisfaction, we decided to boost our Research and Development (R&D) budget. By committing more resources to R&D, we sought to ensure that our customers receive nothing but the best products, consistently meeting their expectations.

Moreover, we understood the vital role our sales agents and engineers play in shaping the customer experience. As they directly interact with customers, we emphasised the importance of comprehensive training for these teams. Equipping them with in-depth product knowledge and the ability to address any customer queries effectively, we aimed to instil confidence and trust in our customers’ minds.

Q: What were the biggest challenges faced during the project implementation?

During the project implementation, several challenges emerged, each requiring careful attention and proactive measures to overcome.

One notable factor that impacted the implementation cost was the occurrence of additional expenses beyond the initially budgeted amount. These unforeseen costs encompassed various aspects such as permit fees for activation points, logistics for transporting freezers, accommodation arrangements, transportation expenses, as well as carriage and shipping costs. Careful financial management was crucial to address these additional expenditures, especially at the early stage of testing the business case.

The transition from a limited number of B2B distributors to a B2C approach marked a significant shift for our company. The resulting increase in client volume and the demands of intense customer acquisition efforts posed a formidable challenge. Building the necessary capacity to support these efforts and establish a robust sales pipeline required strategic planning and resource allocation.

As our operations expanded, the availability of adequate office space became a pressing concern. The introduction of new roles, the growth in staff numbers, and the evolving needs of our team necessitated resourceful solutions to overcome space limitations and ensure a suitable working environment.

A sudden surge in maintenance requests and other post-sale service activities created initial delays in our service capacity, presenting an additional challenge to be addressed during the project implementation.

Furthermore, the shift from a primarily B2B model to a B2C model introduced challenges related to cash flow management. While the previous B2B approach involved upfront payment collection, the B2C model required offering payment plans extending up to 24 months. This transition significantly increased our working capital requirements, emphasising the need for meticulous financial planning and effective cash flow management strategies.

Q: What pivots, if any, did the company undertake to overcome the challenges?

To generate early traction and stimulate demand, we expanded our product offerings to include a smaller 208L capacity refrigerator alongside the originally planned 538L capacity model. Additionally, we adjusted our profit margins to offer our products at more affordable prices, enabling us to cater to a wider customer base.

To ensure prompt resolution of client issues, we established a dedicated rapid response maintenance squad capable of addressing all concerns within 24 hours. Complementing this initiative, we set up a customer service point to proactively address any emerging issues. Moreover, we placed emphasis on empowering our customers through comprehensive product manuals and training programmes, enabling them to address minor issues independently.

To streamline operations, we made significant technology investments, building a robust centralised backend system capable of handling customer lifecycle processes efficiently. Additionally, we expanded our physical infrastructure, including office space, to accommodate the increased capacity requirements.

In order to maintain timely loan repayments, we scaled up our monitoring and recovery team, fostering regular communication and strong relationships with our customers. These efforts ensured a smoother and more consistent payment collection process, contributing to the overall success of our project.

Q: What were the ultimate accomplishments of the project, both for Koolboks as a company and for the community it served?

One of our proudest achievements was successfully overcoming the challenges inherent in developing a completely new business model. Despite the obstacles, we were able to complete the project within the designated timeline, selling a total of 300 Koolhome freezers.

Throughout the project, we embarked on an expansive activation campaign, reaching out to 20 Local Government Areas, 30 Local Council Development Areas, and 25 major markets in Lagos and surrounding villages facing electricity challenges. This marked a significant milestone for us, as we had never before undertaken such a large-scale market campaign.

The project’s success instilled a sense of promise for future scalability, prompting us to expand our warehouse capacity to accommodate up to 2000 units at a time. This expansion signifies our confidence in the potential for further growth and reflects our commitment to meeting the increasing demand for our products.

Q: What were the most significant lessons that the company and the sector can learn from the project?

Throughout the project, several valuable insights emerged, offering important lessons for both the company and the sector.

  1. One important realisation was that implementing more flexible pricing strategies, tailored to meet the needs and capacities of our clients, could significantly expand our customer base.
  2. The challenge of an unreliable power supply presented a unique opportunity for our product. By intensifying efforts through activation programmes and leveraging social media platforms, the reach of the product can be extended, resulting in a three-fold increase in patronage.
  3. Customer satisfaction proved to be a powerful catalyst for business growth. We learned that a satisfied client is a valuable advocate for our brand, spreading positive word-of-mouth recommendations to others in their communities.
  4. Focusing a significant portion of our efforts on off-grid areas proved to be a strategic move, as these regions accounted for 70% of our sales figures and revenue. By catering to the specific needs of these underserved areas, we tapped into a high-potential market segment.
  5. Employing a strategy of placing our equipment as a test for sceptical clients allowed us to win their loyalty in the long run. Allowing potential customers to experience the effectiveness of our products first-hand was a successful approach in building trust.
  6. Extending our reach and engagement efforts directly correlated with increased sales. The more we expanded our market presence, the more opportunities arose for customer interactions and conversions.
  7. We found that when the product performs as expected, the rate of default in repayment is remarkably low, standing at less than 2%. This highlights the significance of delivering a reliable and effective solution to customers, which in turn contributes to a higher repayment rate.
  8. Offering customers a variety of products provided them with more options and autonomy in making purchase decisions.
  9. Providing larger storage capacity of fridges – for instance 538 Liters – is key to attracting commercial users
  10. Informing customers about the available options and possibilities to make the most of our products positively impacted customer satisfaction. Awareness and clear communication of product features and benefits enhanced the overall customer experience.

Q: What are the future ambitions of the company following the completion of the PREO project?

Following the successful completion of the PREO project, we have gained valuable insights that have enabled us to enhance our operations and expand into various markets in Nigeria and other countries in sub-Saharan Africa. We have recently established a subsidiary in Kenya with the aim of penetrating different regions within the country. However, as scaling up our business requires substantial capital investment, we are actively seeking funding opportunities. Our target is to secure $33 million in our upcoming series A funding. These funds will be allocated towards critical areas such as inventory expansion, capacity building, knowledge transfer, local assembly infrastructure, strategic partnerships, research and development initiatives, as well as marketing efforts.

Project News

Revving up for e-mobility expansion: Lessons from Zembo’s e-mobility infrastructure solarisation and peri-urban expansion in Uganda
Zembos-e-mobility- solarisation with bike

Zembo is a Ugandan pioneering startup, specialising in eco-friendly e-mobility solutions tailored to the African market. In Uganda, more than 700,000 petrol-fuelled motorcycle taxis, known locally as ‘boda bodas,’ serve as a vital source of convenient transportation and livelihoods for thousands. However, their ubiquity comes at a cost as these vehicles significantly contribute to Kampala’s alarming pollution levels, ranking among the highest worldwide.

In response to this challenge, Zembo launched a fleet of electric motorcycle taxis in 2018 to boost boda boda riders’ earnings while contributing to a reduction in carbon emissions. The company takes pride in local assembly of its vehicles and offers a rent-to-own model, which enables low-income boda boda riders to gradually own them after a two-year lease. The e-motorcycles can be recharged at any of Zembo’s 27 swap stations conveniently located across Kampala, ensuring a swift and hassle-free battery exchange process. With a fleet of over 250 e-motorcycles on the road, transporting 800 passengers daily, Zembo and handles an impressive 10,000 battery swaps each month.

In April 2021, Zembo received a grant from PREO to test the viability and scalability of solar-powered off-grid stations in peri-urban areas, starting from the 120km corridor that links Kampala and the southwestern town of Masaka – the first route for e-vehicles beyond the capital. The same grant also enabled the company to assess the integration of solar power into some of its existing grid-connected charging and battery-swap stations in Kampala, with the aim of reducing energy costs and enhancing service quality.

As the project ended in 2023, PREO interviewed Elissa Ferron, V.I.E. at Zembo to gain deeper insights into the company’s pioneering pilots and valuable knowledge that can benefit the e-mobility sector.

Q: What were your original objectives for investing the funding from PREO, and were you able to realise them as you had intended?

Our primary objective was to explore and assess various sustainable energy solutions to support Zembo’s growth. To achieve this, we embarked on two key projects as part of the same PREO-funded initiative: testing of off-grid stations and implementing solarisation solutions for on-grid stations. These projects were instrumental in evaluating the feasibility and potential benefits of these concepts for our business model.

Testing off-grid peri-urban stations: The first project involved deploying and evaluating the potential off-grid battery swapping stations designed to serve peri-urban areas outside Kampala. The goal was to determine whether this approach could provide a sustainable and financially viable solution for expanding our operations into regions with limited access to electricity. To do that, with funding from PREO and GIZ (German development agency), Zembo deployed four solar-powered off-grid charging stations at intervals of 30 kilometres along the Kampala-Masaka intercity corridor. This allowed us to assess the technical feasibility of setting up and maintaining off-grid stations, considering factors such as equipment reliability, maintenance requirements, scalability, and client satisfaction. Additionally, it enabled us to track the financial performance of these stations, including revenue generation and operational costs, in order to assess the profitability and sustainability of the expansion project.

We quickly managed to expand our client base along the peri-urban corridor, but we soon realised that these stations had limited power-generation capacity.  This prompted the need for integration with the main grid to meet the increasing energy demand with a more reliable and scalable power source.

Solarisation of urban stations: The second project involved hybridising grid-connected battery-swap stations by integrating solar panels at five of our facilities. The aim was to assess whether this approach could reduce energy costs, increase energy provision, and enhance overall operations.

To measure the impact of this pilot, we closely monitored metrics, including energy cost savings, operational performance, and energy reliability. We also assessed the long-term return on investment (ROI) of the solar installations by tracking reductions in energy bills and the payback period for the initial investment. Hybridising swap stations led to over 50% reductions in electricity costs and significantly improved operational efficiency and reliability.

Q: What were the operational challenges of establishing the off-grid station network and how did you resolve them?

Rolling out the off-grid network connecting Kampala and Masaka presented substantial differences and challenges, compared to building and operating grid-connected stations in urban areas.

Operating the four stations along the Masaka corridor was more challenging, given the distance from our Zembo HQ in Kampala. To address this, we hired a dedicated technical engineer to oversee operations in this area. When the original technical engineer left, we faced staffing issues but decided to train one of the station swappers to acquire mechanical skills for maintenance, reducing our dependence on external engineers.

Another issue we grappled with was the decreased energy generation capacity of the solar systems during the rainy season, which affected the performance of the off-grid stations and motorcycle operations. Moreover, finding suitable space for installing and maintaining solar panels and off-grid charging stations became an issue, especially in more densely populated areas along the intercity corridor. To overcome this, we opted to connect the swap stations to the grid, thereby reducing capital expenditure (CAPEX) and space requirement.

With regards to attracting and scaling demand, the most significant hurdles we faced were the lack of awareness regarding off-grid charging stations and resistance to change among potential customers. People were accustomed to existing transportation methods and can be hesitant to adopt new technologies. We addressed this by undertaking proactive field marketing campaigns. A team of six salespeople distributed flyers and showcased the motorcycle prototype, effectively raising awareness and building trust among potential clients. Zembo also tailored its offerings with special pricing models for lower-income boda boda riders along the Kampala-Masaka corridor.

Q: From both a technical and financial perspective, are off-grid charging stations a viable option? What would you advise your peers to ensure successful implementation?

Off-grid stations, while technically feasible, presented scalability challenges for Zembo due to their reliance on sunlight for energy generation. Each station’s 15 kWp solar capacity allowed battery charging primarily during daylight hours on sunny days, significantly limiting daily charging capacity. If we consider an average battery usage of 2.4 kWh per charge and an energy demand of 300 swaps on average, each being charged at around 70%, the total daily energy demand would amount to 504 kWh per day. The limited energy generation capacity of the off-grid stations made it difficult to consistently meet this high daily demand for charged batteries.

From a financial standpoint, the CAPEX required for the off-grid stations would have placed a substantial burden on Zembo’s resources if undertaken independently. This is where the PREO grant came into play as a pivotal support for the project, providing the necessary financial backing to kickstart the project and overcome the initial investment hurdle.

Nonetheless, financial viability was demonstrated through a notable reduction in electricity expenses. The synergy of the 15 kWp solar capacity coupled with efficient batteries utilisation led to a considerable reduction in energy costs, cutting expenses by over 50%. These results underscored the positive financial outlook of the concept, making it more economically sustainable for Zembo in the long run.

the PREO grant came into play as a pivotal support for the project, providing the necessary financial backing to kickstart the project and overcome the initial investment hurdle.

Q: How economically beneficial would you consider the solarisation of grid-connected stations in Kampala?

Solarising grid-connected stations in Kampala has emerged as an economically attractive proposition for Zembo, bringing about substantial cost benefits driven by a few key factors. First and foremost, the high electricity costs, with a tariff of 750 UGX per kWh (including VAT), were placing a substantial burden on Zembo’s operational budget, affecting overall profitability. The decision to invest approximately 15,000 USD per station in solarisation has allowed Zembo to tap into solar energy as an auxiliary power source, reducing reliance on expensive grid electricity. Preliminary results indicate that this shift can lead to monthly cost savings of around 500 USD per station, significantly improving the company’s financial health. Zembo anticipates recouping its solarisation investment in approximately 2.5 years, marking a relatively short period for covering the initial investment through reduced electricity costs. This demonstrates the economic viability and financial advantage of solarising grid-connected stations for the long term.

Q: What were the key takeaways from this project, and what lessons would you share with the sector as a whole?

Our project experience has resulted in a number of insights that may be valuable to the broader sector:

Scalability of off-grid stations: While off-grid stations initially appear attractive for reaching underserved areas, they are not easily scalable due to specific constraints like space requirements, high capital expenditure and the logistical challenge of remote operation. Our experience underscores the importance of careful planning for companies in the sector.  It is essential to thoroughly evaluate the scalability of off-grid solutions and explore integration with larger energy infrastructure, such as mini-grids, to ensure sustainability and unlock growth potential.

Hybrid solar-grid solution for stability and cost efficiency: The projects showed that combining solar and grid electricity generation is the most effective way to achieve a stable and cost-efficient energy source. Solar energy significantly reduces electricity costs and provides a reliable power source, while grid connection offers a consistent supply. Adopting hybrid energy solutions enhances stability and reduces costs.

Focus on existing demand vs. creating new corridors: The project underscored the importance of prioritising areas with existing demand rather than attempting to create entirely new demand corridors. Investing in areas with demonstrated need is a more cost-effective and efficient strategy, allowing for faster growth and profitability. Creating new corridors can be resource-intensive and may not yield a favourable return on investment.

Q What are Zembo’s future ambitions, and how do you envision the evolution of charging infrastructure in Africa?

Thanks to PREO and following the demand of existing customers, we have opened a new grid-connected corridor to Entebbe, which is much closer to Kampala (approximately 40 kilometres southwest). As the site of Uganda’s international airport and a thriving tourist destination, Entebbe hosts a more diverse economy and, consequently, residents with potentially higher average incomes. This aspect could significantly influence the affordability and demand for services such as electric mobility.

In the future we are exploring the possibility of creating of additional corridors, for instance, in Jinja, depending on demand and specific conditions such as space for solar infrastructure, local energy demand, and appetite for electric mobility.

Furthermore, Zembo aspires to expand into other East African countries with a high concentration of boda boda riders and a green energy mix. This last point is important for us as we believe that grid stations and electric mobility must make sense from an environmental point of view.

In a wider context, we anticipate that more market players will open their customised charging stations until industry standards are established, allowing for flexibility and innovation. While this approach can create a diverse charging ecosystem, it may also present interoperability challenges. Establishing standards eventually can ensure compatibility and encourage collaboration among industry players.

Project News

From farm to market: key lessons from Volt-Terra’s KeyMaker mini-grid model unlocking economic potential in Ugandan agriculture communities
Lessons from Zembos e-mobility infrastructure solarisation

Volt-Terra is a joint venture between INENSUS, a leader in the mini-grid sector with over 18 years of experience in Africa, and Gourmet Gardens, bringing over 25 years of Ugandan farming expertise in agro-processing. This partnership focuses on researching and developing mini-grid solutions for productive use and providing cost-effective and dependable electricity to local communities, enabling them to unlock their economic potential.

In July 2021 Volt-Terra was selected to receive a grant from PREO to test the technical and economic feasibility of applying the cutting-edge KeyMaker Mini-Grid Business Model in agricultural value chains.  This model harnesses the mini-grid-generated electricity to catalyse local agro-processing activities in rural communities, creating additional income streams for mini-grid operators.

The project was implemented in the sub-county Kayonza in central Uganda, home to approximately 17,000 residents engaged in agriculture and forestry. These local farmers face challenges in crop cultivation and price exploitation due to a combination of factors, including the inherent short shelf life of most agricultural products and limited or lack of energy access to promptly process the harvest. With PREO funding, Volt-Terra developed a pilot 60kWp PV mini-grid to supply electricity to the community for farming activities. The project also supported vanilla and bird’s eye chili cultivation, establishing a supply chain for accessing value-added markets and acquiring an electric dryer for local harvest processing.

As the project concluded in June 2023, PREO had the opportunity to sit down with Andrea Cabanero, mini-grid expert at INENSUS, to hear insights on the challenges, successes, and valuable lessons learned throughout the project.

Q: Could you provide an overview of the project’s key objective and how PREO funding was put to use?

The primary aim of the project has been to establish Volt-Terra Farm & Energy Solutions using the KeyMaker Model. In this approach, a solar mini-grid company diversified its business beyond electricity generation and distribution by venturing into vanilla and bird’s eye chili cultivation and processing powered by the mini-grid. With PREO’s financial support, Volt-Terra set up a mini-grid in Nsambya village, situated in the Kayonza Subcounty of Uganda’s Kayunga District. Alongside this, we developed a farmland using a block-farming approach, in close collaboration with 45 local partner farmers. Volt-Terra not only purchases farmers’ produce but also provides training, acts as a reliable buyer of crops, and utilises an on-site heat pump dryer fuelled by the mini-grid’s electricity for processing. As the farmland becomes fully operational, increased revenue from chili and vanilla production will enable farmers to afford larger amounts of mini-grid electricity.

Bird’s eye chili and vanilla were strategically chosen due to their local abundance and the associated value that can potentially be achieved by electrically-powered processing. Processing chili directly at the farm preserves its quality and increases its value by preventing aflatoxin development. Additionally, the high value of vanilla makes it vulnerable to theft, a common challenge faced by partner farmers. Establishing electricity generation near vanilla farms allows effective monitoring using cameras, enhancing crop security. By focusing on these crops, Volt-Terra creates an additional revenue stream whilst improving working conditions for local farmers, providing them with a reliable market.

The funding from PREO was used to create a solar mini-grid connecting 71 customers and to prepare a 3.2-hectare farmland. This included planting two chili batches, constructing support structures for vanilla trees, and conducting organic farming capacity-building sessions for 45 partner farmers, with a strong emphasis on collaborating with female farmers, especially single mothers. PREO’s support also covered the procurement, shipment, and installation of an electric dryer, totalling approximately USD 9,000.

Q: How crucial is the development of new economic opportunities for farmers in stimulating increased energy consumption?

While electricity is essential, its presence alone doesn’t guarantee income growth. Identifying ways for on-site customers to enhance their earnings becomes imperative. Developing new economic opportunities for rural farmers is vital not only for driving energy consumption but also for enabling the community to advance economic development. Mini-grids, while integral for furthering access to energy, face profitability challenges in remote areas. Enhancing mini-grid profitability hinges on leveraging electricity for value-added economic activities.

Volt-Terra’s mission embodies this principle by integrating electricity use with agro-processing. Partnering with local farmer mini-grid clients, we create a mutually beneficial relationship, strengthening alignment of interests. Our shareholder, INENSUS, piloted a similar concept via JUMEME Rural Power Supply Ltd in Tanzania, successfully deep-freezing tilapia fish. With Volt-Terra, we aim to demonstrate the concept’s applicability across diverse value chains, thereby increasing economic opportunities for farmers and rural energy consumption.

Q: Could you outline the key challenges encountered during the mini-grid construction?

The project development phase has been more extensive and challenging than anticipated. Operating within these markets presented bureaucratic hurdles, and the lingering effects of the pandemic disrupted supply chains during our power generation asset procurement period. Additionally, the merging of the Uganda Rural Electrification Agency (REA) with the Ministry of Energy and Mineral Development (MEMD) created communication disruptions, affecting our access to the connection grant. Notably, we faced several key bottlenecks, including:

  • Land lease agreement closure: Securing a land lease agreement for the power generation plant and farm encountered delays as landowners unexpectedly demanded price increases. In Uganda, establishing long-term (20-year) land lease deals is a delicate process that necessitates trust-building within local communities. To meet project timelines, we downsized the planned farmland from 6 hectares to 3.2.
  • Mini-grid license exemption: Engaging with Ugandan government authorities posed significant challenges. Acquiring the building permit essential for construction and installation at the project site was a protracted and intricate process. This delay subsequently affected the overall construction phase and registration with Electricity Regulatory Authority (ERA) to secure the mini-grid license exemption. The COVID-19 pandemic exacerbated the delay due to staffing shortages and the inability to conduct face-to-face meetings. Multiple requests for additional information prolonged the registration process by several months.
  • Distribution network construction: Delays in obtaining the mini-grid license exemption directly impacted connecting households to the mini-grid. Construction couldn’t commence until the license exemption was approved, thus disappointing promised electricity access and affecting farmer engagement. The project’s credibility suffered, but relief came with the installation of connections to the first farmer in December 2022, and the rest of customers were connected in March 2023.
  • Equipment procurement challenges: Firstly, shipping equipment from South Africa for the Nsambya site was plagued by delays, exacerbated by the broader impact of the pandemic on the freight value chain. Additionally, sourcing affordable distribution assets proved to be a challenge due to elevated prices, requiring extensive efforts to identify suitable equipment sources.
  • Operational challenges further compounded the situation. The power plant faced system failures in its early stages, which were solved with the involvement of the solar containers’ supplier Sustain Solar. Communication setbacks with Airtel and delays in implementing mobile payment systems added to the complexity. Moreover, the supply of Calin pre-paid smart meters from China was hindered for several months.

Q: The engagement of the local community seemed key to the successful execution of project implementation and development stages. How did you engage with them to ensure their continued trust in the project?

True, gaining farmers’ confidence and fostering local community engagement are pivotal for a successful project implementation. Amid the challenges outlined earlier, restoring farmers’ confidence proved to be a complex task. Delays experienced in mid-2022 had eroded the community’s faith in the project. Demonstrating tangible progress became imperative. Regular milestones were vital to show that, despite obstacles, the project was advancing. The commissioning of the PV generation plant marked a crucial milestone that helped rebuild community confidence. The arrival of containers and ongoing on-site work significantly bolstered trust and community involvement. Connecting customers, after nearly two years of project development and numerous challenges, represented a monumental achievement. As a result, 71 customers in Nsambya enjoy reliable power accessible via mobile money, eliminating the need for cash transactions. Following this, Volt-Terra has employed the on-site heat pump dryer to dry locally sourced mangoes and pineapples. This not only has improved farmer motivation but also holds the potential for an additional revenue stream to complement electricity sales. We are currently seeking an off-taker for these dried products.

Increasing presence within the community through regular visits, engaging farmers participating in the block farming model, and ongoing distribution network installation have all contributed to renewed confidence in the project. Visible progress on-site has instilled a sense of optimism within the community. There’s a growing belief that the project can enhance residents’ quality of life by providing clean electricity and water, and empowering local farmers through the introduction of the vanilla and chili-based KeyMaker model.

While there is evident market demand for bird’s eye chili, and Ugandan organic bird’s eye chili meets market standards in terms of quality, its cultivation proves to be labour-intensive due to its exceptionally high spiciness. For farmers accustomed to harvesting vanilla, which is more profitable and less demanding, growing chili requires an extra layer of motivation. As a complementary incentive/payment, Volt-Terra plans to reward farmer productivity with additional mini-grid electricity access tokens for their efforts.

Q: Could you provide more details regarding the utilisation of the electric dryer in the chili value chain and its primary outcomes in comparison to other drying techniques?

Analysing operational data for gas and electric dryers/heat pump dryers reveals that, at a grid-electricity cost of 0.22 USD/kWh, the electric dryer is more cost-effective, regardless of batch size. For instance, with a smaller chili batch of 10 kg (equivalent to 33% of gas dryer capacity and 6.6% of electric dryer capacity) the specific energy cost is approximately 0.65 USD/kg input with the gas dryer, and only 0.62 USD/kg input with the electric dryer.

In terms of the business case, gas-dried chili generates slightly higher average revenue. Surprisingly, this difference is due to chili output quality, with average better-quality grade achieved with gas dryer.  Given that the electric dryer has only recently been put to use, it is reasonable to assume that optimal quality results have not yet been achieved. With current fuel costs, the electric dryer can be viable if it can achieve equal output quantity and quality as the gas dryer through optimised operation, considering that new equipment requires an adjustment and learning phase for operational staff. The lower quality output with the electric dryer may also result from systematic undercapacity use. Re-evaluating results with the electric dryer operating at least at 50% capacity is essential to validate findings.

Q: Could you share more detail on the mini-grid installation and operation?

Customers displayed eagerness to embrace electricity use once connections and the mobile money system were established. The mini-grid in Nsambya now serves 71 customers, including 22 productive use of electricity (PUE)/commercial users, with 7 of them being women. Since Q1/23, the mini-grid has operated steadily.

During this period, we’ve generated 263 electricity tokens worth approximately USD 5,900 (an average of USD 1,180 per month). Notably, 71% of this revenue comes from a key anchor client who joined in December 2022, and the rest of the community began purchasing tokens on March 31, 2023, with an average token value of around USD 2.73 per community member. The Average Revenue per User (ARPU), excluding the mentioned key anchor client, stands at USD 4.88/customer/month, which is slightly above the sector average of USD 4.44 /customer/month as per the latest AMDA report “Benchmarking Africa’s Minigrids Report” of 2022.

In terms of electricity generation, Q2/23 saw an average daily solar power production of about 120 kWh. However, the power generation unit still has untapped solar potential, expected to improve with the addition of electric fruit drying operations on-site. Meanwhile, the average daily electricity demand is approximately 82 kWh, leaving around 40 kWh of daily excess electricity for self-consumption by the power container and other Volt-Terra operations on-site. To optimise the mini-grid’s usage rates and performance, increasing daytime electricity consumption is crucial.

While revenues align with our initial expectations, we recognise the need for scaling to ensure project profitability. Volt-Terra’s current strategic focus is on securing additional funds to expedite and expand the project.

Q: What key lessons from the project do you feel could benefit the wider sector?

In our journey, we’ve found effective partner relationships to be a linchpin. Close communication and trust with project partners, especially technology suppliers, are vital for smooth collaboration, especially during unforeseen challenges like fund delays or logistical hurdles.

Additionally, establishing a local presence and conducting face-to-face meetings significantly influenced our project’s success. It garnered community acceptance and facilitated navigating administrative and regulatory matters with government institutions in Kampala.

Networking within the market played a pivotal role, especially when facing administrative obstacles. This strong network expedites project development, ultimately reducing overall timelines.

Addressing uncertainties and their impact on project timelines is essential. Factors beyond our control can lead to delays in milestone achievements, emphasising the need for adaptable strategies. Lastly, managing expectations proves to be key. Delays in our mini-grid project commissioning led to questions from partner farmers, impacting farming operations. Setting realistic milestones from the project’s outset is crucial to align an

Project News

Innovating agriculture in Malawi: Lessons from Practical Action Consulting’s project
Innovating-agriculture-in-Malawi

In Malawi, the dependence on rain-fed agriculture restricts productivity to a single growing season. Unpredictable rainfall, caused by shifting climate patterns, leads to inconsistent crop yields and produce quality. Compounded by minimal options for post-harvest storage due to low rural electrification rates, around 30% of produce is lost. This makes it difficult for many to achieve sustainable livelihoods from farming, particularly for women who face additional challenges in accessing land, finances, technologies and markets.

In 2021, Practical Action Consulting partnered with African Mini Grids and Modern Farming Technologies to pilot an innovative farming business model in northern Malawi, supported by funding from PREO. This model aimed to target each step of the agricultural value chain to address these issues. The approach involved supporting women farmers to boost their crop yield by employing greenhouses and solar drip irrigation. Additionally, a solar-powered cooling facility was set up to reduce post-harvest losses. The project also focused on establishing new market connections with various wholesale buyers, enabling women farmers to sell their produce at improved prices while reducing risks and dependency on a single buyer.

As the project came to a close in June 2023, PREO interviewed John Chettleborough, the Agriculture and Markets Lead at Practical Action Consulting, to hear the valuable insights he gained from the project.

Q: What was your intended project goal and what specific objectives did you initially set out to accomplish?

The project area, in northern Malawi, is characterised by a combination of factors that make agricultural livelihoods, the only significant source of income in the area, extremely difficult.

  • Agriculture predominantly depends on rainfall, allowing for only one harvest per year. This limitation poses significant challenges to sustaining productivity.
  • The unpredictability of both rainfall patterns and temperature has been exacerbated by the impacts of climate change. Consequently, productivity challenges have intensified.
  • Additionally, post-harvest losses ranging from 30% to 50% exacerbate these challenges.
  • Beyond its implications for food security, this situation also hinders market access for farmers, due to the inability to consistently supply produce.
  • The situation is worse for women within the community, who face challenges in accessing land, finance, and technology.

This project sought to test an ‘end to end’ business model that would secure market demand and work backwards to support solar powered irrigated horticulture by women farmers, preserve produce in a refrigerated chill plant and satisfy the market demand. It was a partnership between Practical Action Consulting (PAC) and a local Malawian social enterprise, Modern Farming Technologies (MFT), with MFT managing operations and PAC providing market, gender, and learning support.

Over a two-year period, the project set out to achieve two primary objectives: 1) enable 135 women to became commercial horticulture farmers, growing tomatoes in greenhouses irrigated by solar pumps; 2) generate enough learning to ascertain the viability of the model as a business.

Q: Could you describe your business model and highlight its distinguishing features compared to other approaches?

The business model is characterised by several key features –

  • Firstly, it operates as a ‘one-stop shop’ through Modern Farming Technologies (MFT), delivering an end-to-end solution, providing farmers with access to technology (solar pumps, greenhouses), extension services, inputs and access to markets, thus overcoming a range of challenges experienced by small farmers.
  • Secondly, it employs a contract farming and ‘rent to own’ model, helping women farmers gain access to productive assets.  Women farmers sell all Grade 1 produce to MFT, with rent to own payments deducted at source.
  • Thirdly, the model integrates an insulated solar powered refrigerated container, to preserve produce and attract buyers.
  • Additionally, it stands out for its diversified range of final produce buyers, which enhances resilience.
  • Lastly, the model allows the repaid grant finance from the ‘rent to own’ scheme to be reinvested in the inclusion of more women farmers into the project and the expansion of additional greenhouse construction.

What sets it apart from other business models is its context suitability and relevance. In this part of northern Malawi, where markets are not very developed, the presence of a singular enterprise that can provide a one stop shop to address multiple constraints, is strategically vital. In other situations, where there are many more market actors present, it may be possible to adopt a model that uses different businesses to support different functions and address different constraints.

But in both cases, there is a mutual inter-dependence between improving agricultural productivity, accessing markets, and paying for productive assets. All these challenges need to be addressed at the same time.

The ‘rent to own’ scheme, set up by MFT with grant finance, is a unique feature of this business model. Under this scheme, loans to purchase a share of solar water pump, storage tank, drip kit and greenhouses are provided to women farmer groups, who repay the loan over an expected 4-year period with 0% interest cost. This can be a simple and effective way to enable women farmers to overcome financial access problems, especially when grant or working capital is available. It can also help women build up a credit history, demonstrating to financial institutions the viability of investing in women farmers, which would ultimately provide a more sustainable solution for accessing assets such as solar pumps.

Q: Could the model be transformative for women and entrepreneurs in the vegetable sector in Malawi?

The insights garnered from the project offer valuable lessons for the development of similar models, but it is important to note that direct replication in the exact same format as the past two years might not be feasible. For instance, on a positive note, the model does demonstrate that a combination of a one stop shop and contract farming can be used to secure access to productive assets, support productivity and enable market access.

Moreover, the model shows that with production and marketing support, women farmers can generate sufficient revenue to pay for energy and agricultural assets and still take a reasonable income home. Indications are that loans can be repaid in about 4 years, assuming productivity is maintained.  

Although not employed within this project, it appears that commercial financing could viably be employed to fund pumps and greenhouses for women farmers under these conditions.

However, the model didn’t validate the commercial feasibility of investing in a cold storage plant of the scale employed (a 40-foot shipping container). Interestingly, the development of a consistent supply of high-quality produce had the effect of attracting buyers into the area. Traders are now visiting almost daily, which reduces the need for extensive storage capacity. A smaller, cheaper container would have sufficed, perhaps with the option to expand in the future, when necessary.

For the model to work well, the issue of side-selling – a common challenge with contract farming – must be addressed. As the project advanced, this issue began to emerge as a concern, potentially posing a challenge for specific entrepreneurs. The underlying issue in this instance stems from the fact that MFT has been paying a fixed price for tomatoes, in alignment with fixed-price long-term contracts with buyers. However, the price in the open market fluctuates and when it rises above the MFT fixed price, side selling can arise. To tackle this issue two approaches are recommended:

  • Firstly, ensuring that participating farmers possess an entrepreneurial mindset and understand the long-term benefits of technical support and consistent payments, as opposed to a lack of technical support and the uncertainty associated with the fluctuating pricing trends of the open market.
  • Secondly, devising a pricing structure that can accommodate some adjustment in response to the price fluctuations of the open market.

Q: Can you describe some of the challenges faced during the project and how PAC & MFT adapted to them?

Throughout the project, we encountered several challenges, which can be summarised as follows.

  • Environmental challenges: The excessive heat experienced in the area led to significant crop damage. To address this, MFT staff sought technical solutions by studying greenhouse farming practices employed by other organisations. This research prompted a redesign of greenhouses, incorporating additional shade netting.
  • Productivity challenges: The project introduced farming practices that differed from local agriculture, requiring focused efforts to maintain consistent quantity and quality, including crop hygiene within greenhouses. This has taken time to develop and has been more successful with some farmers than with others. As a result, progress has been iterative, and it has taken longer than expected for productivity to increase. The lesson learned from this is that developing a more commercial mindset takes time. It is not achieved by one-off trainings but requires ongoing support for an extended period. The provision of this support has always been part of the MFT plan, but its value was reinforced by this experience. This also highlights the significance of strategic participant selection to ensure those engaged possess the potential for mindset and capacity development.
  • Marketing challenges: Initially, a contract was secured with ShopRite, a leading supermarket chain. However, as the project progressed, ShopRite took the decision to cease operations in Malawi due to macro-economic conditions. At the same time, the anticipation of tourist lodges around Lake Malawi playing a significant role as customers was met with a challenging reality: the recovery of the sector post-COVID has been slow. In contrast, informal buyers seemed to increase in number. Although the loss of the formal buyers was disappointing, the project had adopted a diverse and adaptable marketing strategy and so it was able to pivot and replace formal buyers with informal buyers when this opportunity became apparent.
  • Side-selling: Despite being on an upward trajectory in December 2022, sales to MFT have declined since due to side-selling. This is the period of the year when tomato prices are at their highest and traders visit tomato farms almost daily.  

Q: The journey began by supporting women entrepreneurs through two greenhouses, yet by project completion, over 135 greenhouse owners had emerged, reaching out to MFT to sell their products. What factors can account for this remarkable success?

The achieved numbers align with the project’s original targets. However, the success of the project needs to be seen in more than just the number of greenhouses and the number of women selling produce. The Impact Evaluation revealed some insightful information.

Although the project’s primary focus was commercial tomato production, its ripple effects extended to various dimensions of women’s livelihoods. For instance, 71% of women farmers acknowledged increased food security and 49% went on to adopt modern farming techniques on their other farms.

The project’s impacts were also seen at household level, evidenced by 36% of women reporting increased capacity to manage family healthcare costs, 21% experiencing improved ability to cover school fees, and a 10% rise in women farmers saving from their earnings.

There was also a positive influence on gender roles and confidence outside of the household. Over 50% of the women highlighted social benefits as the most significant impact of the project, including improved decision-making and entrepreneurial skills and heightened confidence in engaging in community activities.

The success of the project can be attributed to a range of factors:

  • Greenhouse farming is appealing to women farmers due to its efficiency, requiring less time compared to traditional methods. For time-poor women, this is an important benefit.
  • The rent to own scheme coupled with the provision of extension services by MFT has effectively eliminated barriers relating to access to finance, technology, and training for women farmers. It has enabled them to start commercial farming at no upfront cost, which helps explain the increase in participant number.  But it should also be recognised that the lack of any selection process for farmers may have contributed to the side-selling challenge.
  • The fact that women are working together, in a cooperative, has helped the development of social capital which explains some of the positive gender related outcomes. Additionally, MFT’s endeavour to sensitise men as part of the initiative, fostering an enabling domestic environment, has also contributed to this progress.
  • The market demand for a consistent supply of high-quality produce and the region’s challenges in meeting this demand, explains why it has been possible to so successfully market the tomatoes produced.

Q: What lessons can other companies and the wider sector take from this project? Which unexpected lesson surprised you the most?

The significance of the informal market: It had been assumed that the main markets needed to sustain the business were formal markets. However, a combination of political issues and the COVID pandemic have demonstrated how vulnerable those markets can be. Informal traders have shown themselves to be a much bigger market than expected and one that is more resilient to these sorts of shocks. Similar initiatives should consider gathering market intelligence on the informal as well as the formal markets available.

Assumptions about refrigeration have been challenged: High rates of crop wastage often lead, as in this project, to assumptions being made about the need for some sort of storage solution. However, the experience of this project so far has illustrated that the development of consistent and high-quality produce can be so attractive to buyers that they procure it regularity, reducing the pressing need for extensive storage space. In this project a smaller refrigeration unit would have sufficed. As with most issues, this is context specific, but it does highlight the need for more detailed market research. It also suggests that an iterative approach – in which refrigeration capacity is gradually built up as need becomes apparent – is a strategy that might be worthy of consideration. This may create a case for more modular chilling unit designs. 

The importance of a self-selection process: The project was designed to accommodate anyone who wished to participate. However, as evidenced, this open approach carries the risk of attracting individuals lacking the necessary entrepreneurial spirit and agricultural commitment. Implementing a ‘self-selection’ process, wherein certain participation barriers are introduced (such as a minor upfront financial commitment), could prove effective in ensuring that those who engage are genuinely entrepreneurial and deeply committed to making it work.

Q: Looking ahead, what are your plans for achieving scale-up?

PAC will leverage these insights to inform the design of other productive use energy initiatives in collaboration with the private sector, including those that utilise small grants to catalyse new business models. We are currently scoping the potential of similar work in East and Southern Africa.

As forMFT, there has been considerable, and very rapid growth in the number of greenhouses supported by the company. This has presented challenges in terms of retaining enough control to ensure that the model works well. The recent side-selling issues during the PREO project are an illustration of that challenge. However, MFT believes in the model, and is working through the issues to make it work better for everyone.  In response to demand from customers for a wider range of high-quality produce, MFT is now developing well managed, irrigated farming in open fields.  The aim is to get the same consistent quality and consistent supply of produce as is being achieved through the greenhouse farming, and for all the produce to flow through the chill stores as aggregation and sales outlets.

Project News

PREO support enabled DRC-based Café Kivu to scale its coffee production sustainably by shifting to a solar-powered roaster.

Café Kivu is a Congolese coffee company aiming to create and capture more of the value of coffee at its origin, by sourcing beans from the northeast Kivu region of DRC, then roasting and packaging them at their facility in the regional city of Goma. Of recent, fair trade has increased coffee value primarily in the export of raw beans, creating increased value addition. Café Kivu estimates that approximately $0.86 of every dollar of coffee sold to consumers worldwide is generated outside the country of origin.

 In 2020, with funding from PREO, Café Kivu set out to test the economic and financial viability of replacing a gas-powered coffee roaster with an electric roaster powered by a solar plant. By the end of the pilot, in December 2022, the transition had enabled Café Kivu to scale their production, whilst reducing roasting energy costs by 64%. By providing more finely calibrated control of the roasting process, the electric roaster has also enabled the company to significantly improve their coffee’s quality, further enhancing their brand and market recognition. Café Kivu’s pioneering transition has paved the way for other local coffee manufacturers in the region to explore more sustainable solar-powered production.  

Despite significant operational challenges and a complex business environment exacerbated by the Covid-19 pandemic, the Nyiragongo volcanic eruption, and ongoing armed conflict within the region, Café Kivu has shown tremendous resilience in their ability to continue sourcing and processing high-quality coffee in eastern DRC. Looking ahead, the coffee production company is exploring plans to enable local consumers to enjoy their produce at affordable prices, as well as building sales internationally in Western markets (US & UK).

PREO interviewed Aaron Wolcott, CEO at Café Kivu, to learn about their experiences and capture some of the key lessons learned.

Q. Tell us more about Café Kivu and what motivated your shift to an electric roaster.

Cafe Kivu is a boutique coffee roasting company that has been operating in Eastern DRC since 2015. We purchase green coffee from local coffee producer cooperatives with a strong track record for promoting sustainable and environmentally friendly farming in North Kivu province. We then roast and package the coffee for sale in both local and international markets. Café Kivu boasts superior product quality and a valuable regional distribution network that allows us to implement a ‘route to consumer’ distribution strategy across East and Central Africa.

When we first moved to Goma, we rented a gas-powered roaster which was both costly and polluting. With no real electricity grid in place, fuel in Eastern DRC is amongst the most expensive in Africa. Given we were focussed on scaling up production, the gas-powered equipment could no longer meet our need to produce consistently high-quality coffee in larger volumes. So, we decided to partner with Nuru Sarl (a renewable energy company dedicated to enhancing connectivity in the DRC) to secure a cost-effective source of clean energy for future production.

From 2020 to 2022, thanks to the grant from PREO, we set up a new office and roasting facility in Goma for which we purchased a Giesen 6WE electric roaster. As well as improving the quality of our coffee, the electric roaster has enabled us to lower our overall operating costs, as well as to reduce the amount of smoke, odour and dust emitted during the roasting process.

Q. Do you think electric roasting will prove transformative for the coffee processing industry in the Goma region and more broadly in DRC?

The use of an electric roaster operating on solar energy, is a first for the local coffee industry, meaning Cafe Kivu is setting the standard for Congolese coffee beans roasted at origin. As we extend our reach both nationally and internationally, it is hoped that electric roasting will become increasingly popular among other local coffee producers. Given the country’s poor electrification rates, off-grid solutions are becoming a necessity.

Q. The project contended with a variety of challenges from the outset. Can you describe some of the challenges faced and how Café Kivu adapted to them?

We first experienced two major external challenges, the restrictions on movement caused by the Covid-19 pandemic and the explosion of the Nyamulagira volcano about 15km north of Goma on May 29th 2021. Both events caused major supply chain disruptions throughout 2020 and much of 2021.

Even putting such exceptional circumstances aside, DRC is a difficult market for businesses and importing equipment proved to be highly challenging. It took months to establish a transporter who was willing to carry the electric roaster from Europe to Goma, and even when ready for shipment, the transporter opted to send the machinery by sea instead of airfreight, as formerly agreed. This led to further delays and when the equipment finally arrived, the roaster had been damaged on route. The transporter agreed to replace the broken parts, but we had to wait a further six months for the new parts to arrive. Inevitably, getting production to the desired level took much longer than we had expected.

Despite the roaster being fully operational, we still faced challenges getting our finished product to markets within and outside of DRC. This is partly due to local corruption and excessively complicated administrative procedures, which held up both our green coffee supplies and certification for exporting our coffee once roasted.

Further complications arose from the resurgence of armed rebellion groups causing insecurity and instability in North Kivu since May 2022. The groups have cut off all supply routes to Goma from the northern part of the province where we typically source our coffee. The conflict has forced many businesses in Goma to shut for weeks at a time or significantly reduce opening hours due to protests. To lessen the impact and ensure business continuity, we kept in contact with our clients during the closures whilst sourcing coffee from other areas which remain free from conflict.

To succeed in such a trying environment, we learned to be extremely adaptable and flexible in our approach. For example, whilst waiting for the electric roaster, we made do with the gas-powered roaster when we first arrived in Goma so we could continue to grow our sales. Whilst we successfully overcame the logistical challenges on the production side, sales have remained a struggle in parts of the country where we don’t have a physical presence such as Kinshasa. However, we intend to maintain our flexible approach by iterating new commercial strategies to find an effective way of penetrating these markets. 

Q. Despite these challenges, the project has demonstrated strong progress. What are some of the key achievements?

Cafe Kivu is passionate about making quality Congolese coffee widely available around the world, so the fact that we have persisted in the face of such adversities is a testament to our commitment to helping to build a new future for Congolese coffee. Since moving the company to Goma, we are proud to have grown our monthly sales from almost nothing to over $2,500 each month. This revenue has enabled us to train staff on the job in general management and sales, as well as improve roasting techniques..  

Purchasing the Giesen 6WE electric roaster has been transformative for our company. Firstly, the new roaster has significantly decreased the cost of energy for roasting. With the gas roaster, we spent $1.05 in gas per kilogram roasted. With the electric machine connected to Nuru’s solar energy grid, this amount has decreased to $0.30 to $0.35 depending on the number of roasts we do per day. Given the fluctuations in coffee price over the last few years, this reduction in costs has been enormously helpful. Moreover, given the CAPEX investment for the roaster amounting to $32,000, the payback period is calculated at three years, making the roaster a sensible investment.

Furthermore, the gas-powered roaster did not allow us to track the bean temperatures and required a significant amount of manual manipulation to get the roast right. With the electric roaster, we are now able to monitor roast duration, drum speed, air flow and bean temperature in a way that assures us that we can achieve a standard roast each time we roast our coffee beans. This has in turn enabled us to give our staff better training on the intricacies of producing high-quality roasted beans. Such skills will stand them in good stead for many years to come.

We have also been able to build a much stronger relationship with the cooperatives of farmers where our coffee is grown. The cooperatives that we purchase from are certified Fairtrade and organic suppliers, for which we pay a premium, but we welcome the fact that this value is going to the farmers themselves. Additionally, we help promote the quality of the coffee on an international level which is important for the cooperatives and farmers.

The deployment of renewable energy has also made our brand more distinct: few coffee companies in the region are doing this and we are certainly the only company currently in DRC. Our hope is that we can set a trend around sustainability that new coffee companies will then follow.

Q. What learnings can other companies and the wider sector take from this project?

There are several key learnings that we are happy to share for the benefit of other players in the sector.

For a company operating in DRC, learning to anticipate and manage the constraints around supply chains is crucial to achieving financial viability. It usually takes double if not triple the amount of time to receive equipment and supplies compared to elsewhere in Africa, so it’s important that enough time is built into the project plan to allow for any delays. It has also taken us over a year to navigate the regulations and red tape around exporting to US and UK markets, but I’m pleased to say that now our coffee is available in these markets via e-commerce company Amazon. Needless to say, for companies sourcing raw materials or products within the DRC, monitoring socio-political developments that could impact supply is a must, so it is important to put contingency plans in place so the company can be resilient against regular supply chain disruption.

Government regulations can also be a major obstacle. Coffee production and distribution is overseen by different government departments: the OCC (Office Congolaise du Control), ONAPAC (national coffee and cacao regulator), the Ministry of Agriculture and the Ministry of Industry. Our advice to anyone interested in operating in this sector in DRC is to make sure they thoroughly review all the related laws and regulations and understand the implications for their business.  The banking sector is also stringently regulated due to issues with money laundering in the country, which makes connecting online sales to a Congolese bank almost impossible, so we advise other companies to investigate workarounds sooner rather than later in their project journey.  

We are also learning to lean into the most important elements of our story in our marketing and branding. For us, attaining and then maintaining the exceptional quality of our coffee has been a real achievement, as that is what makes our product stand out in both local and international markets. The use of renewable energy also enhances our reputation, particularly in the UK and the US, given consumers in those markets are increasingly passionate about sustainability. Our company has also been built around capturing the value of coffee at origin, so we know that comprises a compelling unique selling point too.

Q. Turning to the future, what are your plans for achieving scale-up?

In February 2023, Cafe Kivu received a bridge loan to push our product to US and European markets. We will also use this capital to build sales in Kinshasa and other parts of the DRC. The loan will allow us to show full proof of concept in the export of roasted coffee so that we can effectively engage with long-term investors. Once further investment is secured, Cafe Kivu plans to set up a coffee shop in Goma which will increase revenues for our coffee, as well as widen the employment opportunities we can offer to local communities.

Project News

How PREO supported ENGIE Equatorial to accelerate the transition to e-mobility for fishermen in Lake Victoria

ENGIE Equatorial is a joint venture between ENGIE Energy Access, an international renewable energy solution provider, and Equatorial Power, a local low-carbon energy infrastructure and services developer based in Kampala, Uganda.

In December 2022, ENGIE Equatorial  completed their PREO-funded pilot testing the deployment of electric outboards (e-outboards) amongst the fishing community on Lolwe, a small island in Lake Victoria. The pilot sought to understand the technical and commercial viability of replacing combustion boat engines with e-outboards that cut greenhouse gas emissions, reduce pollution, and drive down operating costs for fishermen.

The transition from petrol-powered boat engines to e-outboards not only has the potential to improve fisherfolks livelihoods, but it can also boost energy demand from the 600 kWp hybrid solar mini-grid commissioned by ENGIE Equatorial in January 2022. The mini-grid supplies affordable, reliable electricity access to more than 3,800 households and businesses on the island. It also offers fish-drying and refrigeration facilities to preserve the daily catch of fish, water purification systems for affordable clean drinking water and charging systems for electric transportation. In addition, ENGIE Equatorial provides business incubation and microfinance to support entrepreneurs operating within the fishing value-chain as they set up new businesses powered by the mini-grid.

ENGIE Equatorial’s mini-grid business model puts emphasis on stimulating the uptake of electricity across a range of commercial activities. On the one hand it helps promote the development of the island’s economy, and on the other, it attains a sizeable and predictable rate of electricity consumption from local users that the mini-grid needs to be commercially sustainable (and potentially scalable). In this context, the electrification of the fishing fleet could play an important role as it can muster substantial and flexible electricity load for the mini-grid.

PREO interviewed Abishek Bharadwaj, Chief Technology Officer at Equatorial Power, as the pilot was coming to an end to learn about their experience and capture some of the key lessons learned.

Q: What were the objectives of the PREO project and how did you plan to achieve them?

In Lolwe, as in most of Lake Victoria’s 900+ islands, people’s lives revolve around fishing, but the scarcity of petrol and its increasingly high prices weigh heavily on the small island’s residents. Our research shows that an average fishing boat uses up to 15 litres of petrol each day with the cost of petrol varying between $1.5-1.7 per litre on the island, but many additionally spend $10-$40 on engine oil. These daily outlays substantively reduce the profits of already struggling fisherfolk. In addition, their ageing, noisy and often unreliable petrol outboards consume high volumes of fuel and produce carbon emissions. With an estimated 1,100 boats in use in Lolwe, substituting some of the petrol outboards with electric models would bring tangible social and environmental benefits to the entire community.

With this project we set out to assess whether it is technically and commercially viable to replace traditional fishing boat engines with electric outboards and whether the use of electricity by the fishing fleet could provide a reliable day-time anchor-load to boost the mini-grid’s economics.

To do that, we set up charging infrastructure connected to the mini-grid and equipped 15 fishing boats with electric outboards. We then looked at various factors, for example, how the fuel and maintenance costs are reduced, the impact on fishermen’s incomes through cost-savings, the positive environmental impacts through reduced air and water pollution, and the load that the electrified fishing fleets provide for the grid.

The PREO grant provided the risk mitigation needed to run the necessary testing of both the electric fishing fleet and the new mini-grid business model which is crucial if we want to deploy the project’s vision in full and scale it up commercially across Equatorial Power and ENGIE’s pipelines.

Q: How did the fishermen react to using electric outboards and how has that informed your strategy for increasing adoption?

At the start of the project, the local fishing community took part in surveys and market research. When the e-outboards were introduced in the second quarter of 2022, approximately 50 of them attended demos and training sessions showing curiosity and commercial interest. In the following phase during the third quarter of 2022, four ambassadors were selected to test the engine in real fishing activities and create awareness among the community.

Based on the feedback, we developed a commercial offer to rent the outboards on a weekly basis at a flat fee. We trained more users and set up a stable renting activity, targeting mainly silverfish fishermen and owners of internal combustion engine boats.

What we found is that the electric outboards were perceived to be weaker than the internal combustion engines. The boats’ cruise speed was considered to be lower, and the engine not powerful enough. However, this was at odds with our technical test results, as the data collected by     GPS devices showed that the speed range was comparable to the internal combustion engines. So now the     team is engaging the community in further tests and educational campaigns to clarify that the cruise speed is only perceived to be lower because there is less noise from the engine.

Q: What challenges did you face during the project implementation phase and how did you work around them?

At the beginning, the main challenge was to size the engine and battery bank to match the internal combustion engine performance and meet customers’ expectations. We adopted theoretical approaches, but in the end, it was the experience of private manufacturers and suppliers that informed the final setup.

Gathering information about the local economy was challenging as it varies significantly according to personal behavior, type of fish, type of boat and the season. We had to put more effort into data collection and initial testing to provide more clarity on these matters.

The weight of the batteries was an issue, as they had to be loaded and offloaded for recharging every day. As a partial solution, we opted for smaller, lighter battery modules that did not exceed 30 kg in weight per module.

Another challenge was related to the maintenance of the equipment. Many of the components had minor damage in the first few months of operation and in a few cases, equipment had to be temporarily decommissioned. The engine and batteries are generally expensive and may not last 10 years as originally thought. A robust operation design is needed to prevent damage and reduce replacement costs.

Finally, fishermen travelling more than 10-15km from the island preferred to use the internal combustion engines motors to avoid reducing speed and saving energy, as timing and autonomy play key roles in this type of business and fishermen are willing to pay more for the flexibility that fuel provides. We understood that we need to tailor the technical design to the user and explore more powerful and energy-dense propelling systems for specific market segments.

Q: What are the key financial outcomes that demonstrate the positive impact of transitioning to electric outboards?

The main selling point for the average user is the reduction in operational costs. Our research found that even once the fishermen had paid a rental fee for the e-outboard and a fee to recharge their batteries, they still saved half their previous budget for gasoline.

We also found that a reduction in cruise speed of 15% would result in a battery saving of around 50%, meaning the boats can double it’s  coverable distance. And the lower costs allow the fishing businesses to pay back the high upfront cost of the e-outboard within 3.2 years, saving around $6,328 over the average 10-year lifespan of the vehicle.

Driving down operating costs also helps take the pressure off low-income fishermen who are burdened by rising fossil fuel prices caused by the war in Ukraine, enabling them to direct more of their income towards other priorities such as household expenses, education and healthcare.

Q: Which other key technical, financial, and environmental lessons can be derived from the PREO project?

We conducted a techno-economic and environmental assessment and gained lots of valuable insights. We learned that whilst e-outboards are perceived to be a life-changing technology and the concept has been proven to work, there are several issues that we still need to address to make it financially sustainable. For example, although e-outboards require less maintenance than internal combustion engines, when faults do occur there is little expertise or spare parts available on the island as it is a new technology. In addition, manufacturers and suppliers do not often have presence in Africa, and thus are not able to provide support on site or replacements.

Another problem that we faced is that energy demand from boats – and therefore revenues for Engie Equatorial – tend to fluctuate from season to season. This has implications for the business plan, as it’s difficult to make   accurate projections on cash flows. A year on since commissioning the mini-grid, the e-mobility business on Lolwe has not achieved economic sustainability. On the other hand, ENGIE Equatorial has gained a wealth of knowledge and we intend to keep testing existing and new technologies and finally reach a scale-up plan.

On the environmental side, it’s estimated that each boat can save around 3.46 tons of CO2 equivalent GHG per year, so the 15 outboards on Lolwe would save around 519 tons of CO2 equivalent over 10 years. Having said that, it’s important to also mention that these results only consider the operational phase and a detailed life cycle assessment would be needed.

Financially, we have not yet identified the right commercial offer (i.e., the right product leasing price) to achieve economic sustainability, but there are many opportunities in the market still to be explored. For example, as asset financing/micro finance institutions are learning more about the benefits of e-outboards, they see the potential of creating bespoke financing mechanisms for consumers. Not only that, but the increased demand for electricity by fishing enterprises can become a consistent anchor load for the solar mini-grid plant itself – and help to ensure the long-term sustainability of the mini-grid project.

If you would like to read more about the learnings and outcomes of our e-mobility pilot, we have written a series of four articles that are published on the Equatorial Power website linked below.

E-mobility for fishermen on Lake Victoria – Part 1
E-mobility for fishermen on Lake Victoria – Part 2 
E-mobility for fishermen on Lake Victoria – Part 3 
E-mobility for fishermen on Lake Victoria – Part 4  

Project News

The power of local – how PREO helped 1PWR bring solar energy to Lesotho and cut reliance on imported equipment
how-PREO-helped-1PWR-bring-solar-energy-to-Lesotho-and-cut-reliance-on-imported-equipment

OnePower Lesotho (1PWR) is a renewable energy startup that provides affordable and reliable electricity services to off-grid communities, helping families, schools, health clinics and local businesses to thrive. The company capitalises on technical design and vertical integration to customise, build and operate energy systems that are both economically and environmentally sustainable.

As well as being an independent power producer, 1PWR also manufactures key components of solar equipment for on-grid and off-grid projects.  It is currently Africa’s only manufacturer of single-axis solar-panel tracking frames that orient the panels towards the sun. These innovative structures can boost the power output of solar arrays by up to 20%, and 1PWR is pioneering their use in a portfolio of mini-grids in the Lesotho highland.

With funding from PREO, 1PWR aimed to increase local manufacturing capacity of solar PV trackers, smart meters and mini-grid power houses and deliver them to electrification projects in Lesotho. This reduces the country’s reliance on panel imports and helps create local employment.

By localising the production of these critical infrastructure elements, 1PWR also sought to increase the use of the local workforce and generate value for the local community. . This approach demonstrated a viable roadmap for reducing the cost of off-grid electricity supply that is scalable to rural communities across sub-Saharan Africa.

The 21-month project ended in December 2021, having successfully reached the majority of its targets. PREO spoke to 1PWR to find out what lessons can be learned from the project.

Q: What was the background of the project and what were its initial targets?

A: Our goal at 1PWR is to offer the lowest cost-reflective tariff for electricity to rural mini-grid customers. We aim to save costs by optimising systems and through vertical integration – we manufacture key components in-house. To do this we needed to expand our capacity in Lesotho to build solar PV trackers and assemble integrated mini-grid powerhouses (containing power electronics, switchgear, protections, supervisory control and data acquisition hardware and battery storage).  While much of the equipment in mini-grids, such as PV panels and batteries, is imported because it is commoditised or high-tech, 1PWR studied the key elements of the value chain and saw the opportunity to build local capacity to:

  1. Manufacture panel mount structures such as single-axis PV tracker subassemblies that boost output and reduce imports.
  2. Fabricate and integrate components into containerised mini-grid powerhouses with efficient layouts that are easy to operate and maintain.
  3. Manufacture GSM enabled smart meters for pay-as-you-go (PAYG) energy transactions with mobile money platforms (e.g. Vodacom M-Pesa).

The PREO grant funding enabled us to invest in manufacturing and testing equipment for local production of the PV trackers, powerhouses and smart meters.  It meant we could procure a CNC plasma cutter, TiG welding facility, machine tools and high throughput fabrication and assembly systems and test equipment (AC/DC load bank, bench electronic quality assurance / quality control).  These assets, in conjunction with human resources and training, will help us deploy cost-efficient mini-grids to remote areas.

Our initial targets were:

  • To manufacture 10 PV trackers
  • Assembly and quality control of 10 mini-grid powerhouses
  • Assembly and quality control of 1000 smart meters
  • To build internship collaboration with the Energy Research Centre (ERC) of the National University of Lesotho (NUL)

Q: What was your strategy to achieve those targets?

A: Let’s break it down by component:

For the manufacture of 10 PV trackers and the assembly and quality control of 1000 smart meters, we upgraded our machinery, equipment and facilities, hired technicians and production engineers, and validated our processes to reach a manufacturing capacity. We also developed manufacturing processes, including standard operating procedures.

We did the same for the assembly and quality control of 10 mini-grid power houses. We also procured prefabricated powerhouses made from shipping containers and pre-installed with equipment and systems. These powerhouses were delivered to the mini-grid site and connected quickly via a “plug and play” installation.

We also built a traditional powerhouse structure at Ha Makebe. Following a cost analysis, we discovered that traditional powerhouses are $988.04 less expensive than using prefabricated structures (not including import duties or shipping costs).

Q: What were the main challenges that you faced when implementing the project?

A. We faced a number of challenges due to COVID-19 as well as some finance related delays:

  • A delay in reaching financial close and equity and debt investment from the EU and UK due to legal challenges raised by Lesotho Department of Energy (DOE) to recognize the ring-fenced SPV as the rights holder for the project.
  • A delay by the Lesotho Central Bank to approve the loan agreement from EU and UK financiers, thus delaying disbursement of funds.
  • Public gatherings were prohibited because of the COVID-19 pandemic. This was challenging from a community engagement and environmental and social diligence perspective.
  • The cost of shipping has doubled since the outbreak of COVID-19 pandemic.

Throughout 2021 we had to expend resources, time and effort on planning for and mitigating the impacts of COVID-19. We had to invest in PPE and implement policies and procedures to observe public health guidance. There were slower response times from prospective suppliers and government stakeholders, and we faced travel and work restrictions in response to varying directives of authorities, and delayed supply chains, transport and clearing services.

Q: How did you overcome those challenges?

A: An agreement was reached on 2 September 2021 by the parties including the EU and UK financiers and the Lesotho Department of Energy, which amended obligations in existing contracts to satisfy financier requirements. A cession letter was executed.

  • 1PWR had to secure bridge financing to finance other activities while the loan agreement was being reviewed.
  • COVID-19 restrictions in Lesotho were lifted in May 2021. That meant we could proceed with stakeholder engagement at the remaining mini-grid portfolio sites.

Q: What was the ultimate achievement of the project, for 1PWR and for the community?

A: 1PWR deployed mini-grids that maximize the output of solar panels through its One Tracker product, at the same time as reducing dependence on imported products. The in-house design was built and led by the 1PWR team. We installed the first One Tracker system at Ha Makebe in 2021, and it currently serves 200 households with solar mini-grid electricity.

Six remote Partners in Health-supported health centres were also electrified, providing more than 44,5000 patients with improved 24/7 healthcare services.

We are currently designing a portfolio of mini-grids that will span 50 villages and serve more than 30,000 people, with debt and equity financing from REPP, EDFI, and UNCDF. EEP Africa grant funding will enable the company to introduce energy efficient appliances in the newly electrified communities and provide business development support for women entrepreneurs.

Q: What strategies did you use to reach these achievements? How did funding from PREO support these?

A: We adopted, developed and refined several multi-stakeholder and cross disciplinary strategies to achieve our objectives. For example, 1PWR invested heavily in a techno-economic analysis and optimisation approach to understand and improve on best practices and develop new ones where gaps existed.  This enabled us to identify economic efficiencies in deploying solar trackers to enhance output and reduce reliance on imported solar panels.  The logic was that optimised output per solar panel would lead to fewer panels being installed in a site. We identified a gap in the market for these trackers and, coupled with the benefits of localising production, we designed, built and installed them, supported by equipment and resources procured through the PREO programme grant.

Q: What were the key learnings that the company and sector could take from the project?

A: It is possible to capture key aspects of the supply chain and leverage local manufacturing to shift the balance of payments and benefits from overseas (primarily Asia) imports of renewables equipment to local content.  The financial benefits of deploying affordable energy infrastructure are complemented by the spill-over effects of upskilling local labour and developing the local economy through job creation.

Q: What is next after the PREO project? What are your ambitions for the future?

A: We intend to replicate the mini-grid project portfolio approach that we validated in Lesotho. We aim to localise the production of key components of the mini-grid supply chain in adjacent markets, by developing pipeline for three similar-sized ($10m) mini-grid portfolio projects in 2022-2023. We plan to do this by expanding and leveraging existing funding partnerships.

The long-term strategy is to build and operate mini-grids (expanding from Lesotho) at scale across sub-Saharan African markets by leveraging the cost efficiencies of vertical integration and consolidated in-house know how.

Project News

PREO helps demonstrate scalability of Mobile Power’s battery rental model to power e-mobility in Africa
Mobile-Power-ev-battery

Mobile Power designs, builds and operates energy distribution systems for the off-grid energy and e-mobility market in Africa. The company aims to make energy and transport solutions affordable to low-income communities across sub-Saharan Africa thanks to its battery-as-a-service rental model, enabling customers to replace the use of fossil fuel to power their businesses, homes, motorbikes and agricultural machines.

Over the last nine years Mobile Power has developed its rental model for the provision of electricity for households and businesses across multiple African countries, which involves three key technology components. The first component, is the MOPO Batteries that, store and transport energy. The MOPO Hub then charges the batteries and is the base for the agent operations; and the third component is the MOPO Platform that tracks the batteries through the sales cycle and manages all agent activities. This innovative three-part model removes the burdensome credit history checks and regular payment schedules, and gives customers the freedom to access energy by renting batteries on a need basis. Inspired by the success of the pay-per-use rental model, Mobile Power is now replicating the model in the e-mobility, and fossil-fuelled generator replacement sector by leveraging the same technology components.

MOPO-MOPO-50-and-MOPO-Max2
Photo credit: Mobile Power – MOPO 50 battery

With PREO’s support over the last two years, including grant funding of £107,000, Mobile Power has been able to assess the product market fit for its e-motorbikes and battery swap model in Sierra Leone. We sat down with Mobile Powers, Director or Partnerships, Jono West to hear more about the company’s trajectory as he reflects on their initial interactions with PREO and what they have achieved through our support to date.

Interviewer asks: Do you feel you achieved what you set out to do with the support from PREO?

Jono West: When the project started in 2020, we already had a successful MOPO battery swap business with our MOPO50 product, but we believed that the pay-per-use battery swap model could enable electric mobility and also displace small generators with a larger MOPO battery. The transport sector is believed to be the largest user of energy in off-grid Africa, but electrifying transport is a challenge in these markets without the right solutions.

We set out to prove that e-mobility could be profitable to us and to boda boda drivers in off-grid markets, both in urban and rural environments. Through the PREO project we brought our MOPOMax Battery to the market in Sierra Leone with electric motorcycles – the most demanding transport application for a modular battery system, both in terms of form factor and power delivery.

The rural field trial took place in a town called Bumpe where two electric motorcycles- called MOPOEVs were charged on a solar mini-grid.

The urban trial was based in Freetown, the capital of Sierra Leone, where the PREO support funded 17 of Mobile Powers’ electric motorcycle fleet. In Freetown, the MOPOMax Batteries were charged from a mixture of grid and solar power.

PREO’s funding and technical support was invaluable to undertaking those early field trials. This enabled us to iterate the technology and business model. As a result, we have developed a business model that is attractive to taxi riders (Okada) and is also profitable for Mobile Power as a growing business. 

Interviewer: Tell us about the MoPo rental model from a rider perspective?

Jono West: Riders love the MOPO EVs for their simplicity and comfort, which is an important factor when riding for long periods of time, but more important than the riding experience is the simplicity of the model.

The MOPOMax Battery swap station (MOPO Hub) is at the heart of our model, where we bundle fuel payments and vehicle payments into one payment for riders. This reduces complexity for riders, who pay as they ride. It’s also powerful as the MOPOMax swap station is an essential contact point with riders, which reduces the risk of theft/default of motorbikes, as the motorbikes won’t operate without our MOPOMax Batteries. It’s a natural extension of the pay-per-use rental model we are already operating successfully.

Interviewer: As part of the PREO project, Mobile Power tested the mobility business case in both urban and rural areas. What were the key findings relating to each type of location and where you plan to scale up?

Jono West: Commercial motorcycle taxis called Okadas are the main form of transport in both urban and rural areas. In urban areas, the Okada riders generally make more money as the cost of fuel is less than rural areas (in rural areas, the further from a town, the higher the price of fuel).

There are also different categories of Okada riders; those who are licensed to go on the main roads, those only licensed to go on the feeder roads and finally riders who are not licensed and generally stay off the main roads to avoid police checkpoints. Licensed riders are also typically organised into trade unions.

We are currently focussed on scaling in the urban locations in Sierra Leone and Liberia, followed by launching in other African capital cities. In addition, we are currently closing funding to build MOPO Hubs along roads linking major cities. MOPO Hubs will also be built on feeder roads away from main roads and support MOPO EVs even in rural areas, which will culminate in a national e-mobility network. We are leveraging our existing networks of MOPO Hubs providing household energy which will enable us to roll out e-mobility faster. 

Having a multi-purpose MOPOMax Battery that can be used in both e-mobility and generator replacement is important for profitable scalability. Non-transport use provides a natural “second life” for MOPOMax Batteries: use cases can be optimised at each MOPO hub swap station, even adjusted seasonally to further optimise revenue. Additional applications for our MOPOMax Battery include tuk-tuks, agricultural tricycles, water pumps, ploughs, refrigeration, milling and household or commercial energy. All of these applications can benefit from the flexibility of our pay-per-use MOPOMax Battery business.

Photo credit:
Mobile Power – battery swap

Interviewer: Tell us more about the synergies derived from the household energy business to Mobile Power’s recent e-mobility venture?

Jono West: Mobile Power has almost a decade of experience in battery-swap technology and has operations across Africa. Initially we focused on the off-grid household market with our first product (the MOPO50 Battery). To date we have done over five million battery swaps and this business is now very successful. This created a solid foundation on which to launch our MOPOMax Battery, as we are able to use our existing battery-swap platform and security technology. We have also built subsidiaries in Nigeria, Liberia and Sierra Leone, where our electric mobility solutions are being introduced in addition to our energy access solutions. We are installing larger solar battery swap Hubs with a range of MOPO batteries, for generator replacement for household use, e-mobility and productive use appliances. This enables customers to climb the energy ladder, renting the right size battery to power the solution they need. The same subsidiary companies are building the MOPO Hubs regardless of whether the hub primarily serves e-mobility or household energy. In lots of instances the hubs serve both markets.

Interviewer: How do you plan to scaleup Mobile Power’s e-mobility business in Africa?

Jono West: We are working with various finance partners as we scale up the MOPO business across multiple countries – both with the e-mobility and household energy businesses. However, Africa is a big continent, so we are open to working with e-mobility and finance partners who do not have the technical capability to develop their own battery swap technology and instead want to focus on other parts of the value chain. We are therefore in discussions with several organisations within the e-mobility value chain.

Interviewer: In what ways did PREO’s support help to de-risk Mobile Powers venture into e-mobility?

Jono West: PREO’s support has been incredibly valuable to us for de-risking our battery technology and business model. It has enabled us to grow and increase the rate of scale for the e-mobility business and capture learnings that now form the basis of future technology solutions we have in the pipeline, even beyond e-mobility. As a result of this PREO project and funding, we are now in discussions with several new partners across the value chain, which will be announced in due course. Find out more about projects that PREO are supporting here: www.preo.org…

Project News

How PREO support enabled InspiraFarms to devise an affordable cold-storage solution that helps small farmers sell more and earn more by keeping produce fresh
InspiraFarms cold storage solution

InspiraFarms provides agribusinesses, exporters and food distributors with solutions for handling their fresh produce, that significantly cut energy costs, reduce food losses and meet international food safety certifications. The company designs, develops and supplies modular and energy-efficient on-farm and close-to-farm cold rooms and packhouses for the horticultural sector in emerging markets, with a focus on African countries.

In Kenya there is an ever-growing demand on small-scale producers to increase the supply of fresh produce for international markets. These growers have very small plots and little access to capital loans and cannot afford their own cold storage solutions. Instead, the growers aggregate produce at central collection points, where it often sits for up to 72 hours before being collected, cooled, graded, packed and then shipped to final market. This is where most of the post-harvest losses occur.

With support from PREO, InspiraFarms set out to test a business model with corresponding technology to provide pay-per-kilo cold storage, on or near the farm, and packhouse solutions to small and medium growers of fresh produce in Kenya.

PREO interviewed Michele Bruni, InspiraFarms’ chief commercial officer, to find out which lessons were learned from this pilot project.

Q: Which challenges did you seek to address through this project and how did support from PREO help?

A: The PREO support enabled us to identify the gap in the cold chain, between production and delivery to final market, and identify a niche product that fills this gap. After several meetings with exporters and focus groups of small-scale producers, we identified the market challenges and devised appropriate client-focused, affordable solutions that meet the needs of agribusinesses, exporters and food distributors.

The horticulture export supply chains in Kenya increasingly rely on production from small scale farmers. These farmers have plot sizes as small as a quarter of a hectare and no more than 2 to 3 hectares. These growers have formed groups in their areas with central collection points for fresh produce. Produce is then sold to an exporter who has a central pack shed and cold chain infrastructure where the product is cooled, packed and exported to the UK, Europe and Middle East. Small-scale growers have very limited access to finance to invest in their own infrastructure and limited land to build on. They do, however, play an important role in the supply chain. The produce that is gathered at the collection point can wait for 24 to 72 hours before reaching the central pack shed, which is the first point at which the cold chain could be started. This means that product remains at ambient temperatures for up to 72 hours and, as a result, is exposed to high post-harvest losses (both physical and commercial). For berries and other soft fruits, every hour of delay from picking to cooling represents more than one day less shelf-life .

This means that the A-grade product is deteriorating and the growers cannot earn a revenue for their hard work. Post -harvest losses not only result in reduced revenue but losses on finance spent on inputs and labour. It was very clear that an intervention was required at the first-mile of the supply chain at the small scale grower collection points to protect the growers from these losses.

To deal with the constraints in land size and the fact that many different farming groups produce in different harvest windows, InspiraFarms designed a compact and mobile first-mile cooling solution.

The limited access to finance meant that growers themselves were not able to invest in the out-right purchase of these units. PREO’s support enabled InspiraFarms to put together an offer where cooling would be charged based on throughput. This means that cooling would become a direct cost to the supply chain and only a cost to small-scale growers during the harvest windows.

Q: Can you explain your business model of offering first-mile cooling through ‘mobile pre-coolers’? Why did you choose a B2B model over B2C?

A: Our focus is on providing cold chain infrastructure solutions, so it made sense to find a commercial partner whose core business is aggregation and marketing fresh produce. The B2B model also allows a more streamlined approach as there is just one billing party rather than trying to recover payments from 25 to 50 growers. By the end of the project, we identified and partnered with one of the largest horticulture exporters in Kenya.

Q: What were the main challenges that you faced during the project implementation phase and how did you overcome them?

A: Unfortunately, since the first mobile pre-cooling unit was installed in November 2020, no further units have been deployed. One of the main reasons for this was COVID-19 and its impact on the stability of the export supply chain. Reduced flights had a major impact on the cost of freight, which in turn led to uncertainty in affordability and demand in final destination markets. This meant potential commercial partners were reluctant to make a decision on trialling this new concept.

During the search for a committed commercial partner it became clear that the cost and long payback period could be reduced by developing a simple, functional and cost effective range of products, which could achieve the minimum standard results for cooling at the first mile. “Nice-to-have” extras such as humidifiers, remote monitoring systems and weather stations, would be marketed as “optional add-ons”.

The new units would be made from interlocking polyurethane panels and profiles (polystructures) which are light and easily transportable. Three units could be shipped in one container, reducing the shipping cost from $12,500 to $4,100 per unit. This would enable us to reduce the CAPEX cost from $66,950 to $26,076 and in turn reduce the payback period from 64.5 months to 25.1 months.

Q: What are your key achievements and impact from the project?

A: The first mobile pre-cooling unit started operating in November 2020. Since then, we’ve seen the following:

  • Buyers’ rejection rates dropped from 35% to 15% for peas and from 80% to 20% for baby corn
  • Sale price increased by 14% for peas and 50% for baby corn thanks to better quality and longer shelf life
  • Exporters witnessed an average 16% increase ($12 166) in net monthly earnings – around 11 times the lease amount
  • Large exporters have capacity to achieve maximum utilisation rates every month; 95% were witnessed in the PREO project.

Q: As well as demonstrating a B2B model for offering mobile pre-coolers, you successfully reduced the CAPEX by 60% during the project. Can you tell us how these gains were achieved, what it means for your further offerings and how it impacts the business model?

A: The unit, deployed with PREO support, allowed us to go through a “feature reduction” process. In other words, we identified a basic model offering with optional add-ons, as mentioned above. We have consolidated a more affordable range of products for smallholders with manufacturing lead times reduced from eight weeks to four to six weeks.

We focused on reducing the CAPEX for structures, reducing the mobility of the units but making the cost of rebuilding the structures, in case of relocation, comparable to the cost difference between the previous version and the current range. This refers to the change from a completely mobile container structure which can be moved by a truck with a crane to a polystructure which could be manually assembled and disassembled as needed.

Additional work was done in making some of the features (humidifiers, remote data monitoring and weather station) optional. These features add value but are not fundamental to carrying out the basic process. This way the customer can ask for additional features once the returns with the basic set of features have been generated. Lastly, by swapping the automated cooling cycle function for a manual start and stop we minimised the need for our team to create the complex automated programming to cool each different crop at different temperatures and cycle length.

Project News

How PREO supported Innovex to bring a first-of-its-kind remote technology manufacturing facility to Uganda
How PREO supported Innovex to bring its remote technology manufacturing facility to Uganda

Innovex is a Uganda-based company with a mission to transform the distribution of off-grid solar energy systems and equipment. It produces an Internet of Things (IoT) platform called Remot, which helps businesses remotely monitor and control their solar energy systems. 

The product eliminates the need for huge capital investment in last mile infrastructure such as physical branches and vehicles – users simply have to connect the hardware to their solar system. It aims to make solar systems, solar equipment and solar appliances more accessible by reducing the operation and set-up cost for installers.

This project, with support from PREO, aimed to set up a printed circuit board assembly (PCBA) and moulding manufacturing facility in Uganda, so that assembling and manufacturing the Remot technology could be carried out locally rather than in China. This would cut transport costs and delays, create jobs and boost the local economy.

We spoke to Innovex about the project, its objectives and achievements and the lessons learned.

Q: What were the key objectives of the project?

A: The main objectives of this project were to:

  • Set up a fully equipped, low-volume printed circuit board assembly (PCBA) and injection moulding manufacturing facility.
  • Identify and recruit staff 13 technical and 10 non-technical staff
  • Manufacture 1,500 remote monitoring units
  • Create and manage processes and standards
  • Report quarterly to the Carbon Trust.

What gaps and inefficiencies in local manufacturing did the project aim to address?

Before we set up the manufacturing facility for PCBAs, there was nothing of its kind in East Africa. Innovex’s product, Remot, relies on PCBA hardware. Although Innovex designed this hardware locally, we were using a contract manufacturer in China for its implementation. The PCBAs would then come back to Innovex to be assembled, programmed and tested. With local manufacturing, we could reduce product delivery times and import duty costs.

There was also a skills gap in the local workforce, which we could address by recruiting and training staff to become highly skilled in PCBA manufacturing.

And finally, the plastic casing was off-the-shelf from a local supplier, which meant the quality was variable and couldn’t be customised. The project supported local manufacturing and an improved casing design.

How did COVID-19 affect your implementation strategy?

Firstly, it affected how we went about setting up a facility because were unable to travel to China for due diligence on equipment suppliers. Instead, we sub-contracted a Chinese company to carry out the due diligence on our behalf. There was also an increase in shipping costs because of the disruption in global supply chains. Innovex addressed this by asking for a budget reallocation from PREO.

During lockdown, employees couldn’t travel to Innovex for training, so the company van, which was allowed to move, would pick up key staff from the area where they lived. Staff were also unable to travel to China for training, so we had to improvise with online training. 

The disruption also affected our third objective – to manufacture 1,500 remote monitoring units. A delay in getting 50 product samples certified meant we could not move forward with full-scale production. As a workaround, Innovex has engaged a Flemish lab, Labodenayer, to conduct testing and we are awaiting a quotation so that work can begin.

We had a problem with faulty components due to disrupted supply chains, but after a second round of procurement, this time with a focused group of suppliers, we obtained better components which we used to fix the affected hardware. We also faced delays in the procurement of components for mass production and distribution. An order for components to manufacture 500 units was yet to be fulfilled at the time of writing. However, all the plastic casings (1,500) were manufactured.

Finally, due to delays to the overall project, we had to ask for an extension for reporting to PREO. Quarterly reporting was also sometimes delayed, although the PREO team was gracious in granting us a few days’ extension when needed.

Q: What challenges did the project face, and how did you overcome them?

As well as those related to COVID-19 which we outlined above, we faced some further challenges during the project.

One was that some of the equipment manuals were in Chinese. Using online resources and support from ED&A and IMEC, the Innovex team developed its own processes and designed training on equipment operation, maintenance and concomitant manufacturing processes.

The general scarcity of chips on the external market was exacerbated by the Chinese holiday in mid-January 2022. We were expecting these components to be delivered by the end of February and will proceed to manufacture and distribute these units.

The lockdown also caused a slow-down in our usual business activity and dampened sales. This reduced Innovex’s revenue and its contribution to project costs. Innovex mitigated this shortfall by fundraising and reducing costs such as travel, negotiating pay cuts with some staff who were working from home.

Q: Which of the objectives and targets did the project achieve – for Innovex, the sector or the geography?

A: Firstly, we set up a high-tech electronics manufacturing facility in Uganda to operate the PCBA and injection moulding manufacturing lines. The PCBA line is the first in East Africa. The injection moulding line also gives us flexibility for just-in-time-manufacturing and customisations, as well as quality control of our plastic casings.

We demonstrated that local manufacturing of PCBAs is financially feasible. With the production line fully functional, Innovex manufactured 55 PCBAs. Preliminary analysis reveals a saving of at least US$10 (25%) on the baseline, based only on the cost of importing Chinese assembled PCBA vs importing components and materials.We are now working with a consultant to evaluate the cost-savings from local manufacturing, including other costs such as utilities and labour.

We created high-skilled local jobs, recruiting 17 technical and seven non-technical staff and training them in equipment operation and maintenance. The team will remain in place beyond the project timeline. We also created indirect jobs through subcontracting, including the electrical and air conditioning installation, to local companies.

We improved our products through development and testing of new firmware and design for manufacturability analysis, and we developed two new product lines: the PUMP DAVIX, in collaboration with APTECH Africa, and the cold-chain DAVIX, supported by CLASP. Fifteen pilots have been installed in Kenya and a pilot in India is in the works.

With support from our investors, we revitalised our strategy for building partnerships to support sales and the business in general. We already have more than 1,500 sales in the pipeline for 2022. Just a few of the organisations we have onboard are Village Energy, Hello World, UNCDF, Advanced Solar, Access Energy Limited and, Powerpay. We also developed 40 partnerships during the project period, including ED&A (SMT manufacturing), IMEC (SMT manufacturing and standardisation), Iungo Capital (loan), China Impact Sourcing (procurement due diligence) and Uganda Industrial Research Institute.

Q: What are the main lessons that Innovex learnt from the project?

A: The project has given Innovex huge momentum to become an industrial leader in electronics manufacturing that transforms the energy sector in Africa. Our key lessons learnt from this project are:

  • The need to continuously pursue government incentives, as evidenced by more than 40,000 in tax waivers on equipment importation.
  • The need to establish strong on-the-ground partnerships in China for equipment and component sourcing.
  • Locally manufactured hardware has enough quality to compete with that contract-manufactured in China.
  • Innovex has built competence in equipment operation and processes for both SMT and injection moulding, although further training of staff is needed. Planned training at ED&A/IMEC will help.
  • At least three months should be allowed for sourcing of components from China.
  • We need to comprehensively evaluate the cost-savings from local manufacturing, apart from the saving on components. We have procured a consultant, to undertake this.
  • More local partnerships should be identified for contract manufacturing in order to become profitable and efficiently use the installed machinery.

Q: How did PREO accelerate your success in setting up the manufacturing facility?

A: PREO provided all the funding for manufacturing equipment and supported various aspects of OPEX and human resources, including M&E and training. The PREO team were also supportive every step of the way, providing strategic guidance and support in periodic reporting. Together, we shall make sustainable energy for all a reality, in Africa and globally.

For more information visit www.innovex.org