LAGAZEL is a leading manufacturer of high-quality solar lamps and kits, and it is the first company to manufacture solar lamps in Africa on an industrial scale. The company has been making internationally certified solar lanterns in Burkina Faso since 2016, and more recently solar-home-systems, sourcing quality-controlled components from reliable suppliers in Europe or Asia, which are then assembled, tested and packaged locally.
Its mission is to industrialise the manufacturing of solar-powered products, bringing affordable and high-quality electricity solutions to African people who do not have access to energy, while also developing the local economy and creating sustainable jobs.
With support from PREO, the LAGAZEL has been working since February 2020 to increase the local added value of its manufacturing facilities in Dédougou, Burkina Faso, expand its range of products and open a new facility in Porto Novo, Benin, thereby creating more specialised jobs and training opportunities for local people.
PREO spoke to LAGAZEL about its project’s aims and achievements, the challenges it faced and the key lessons to be learnt from the project.
Q: What problems did the project aim to address?
A: Most solar products available in African markets are imported from Asia and many of these are of poor quality. Local operations are usually limited to assembling made-in-Asia products or handmaking non-certified products.
These products are generally produced and assembled in China or India by international companies or contract manufacturers on behalf of solar product developers. The lack of local mini-grid equipment in Senegal (batteries, electronic systems) makes the systems more expensive. Other challenges relate to both R&D (a lack of consumers insight, which is needed to design products that match local needs and expectations) and manufacturing (a lack of reliable or good-quality suppliers and local manufacturing partners, as well as and limited access to growth capital to scale operations and realise costs savings).
This makes it difficult to create local jobs and develop the local economy. On top of that, based on our experience, remote suppliers can be a high entry barrier for small or medium local distributors. Often, they don’t have the funds to import containers from China, and in the downstream segment of the value chain, there are inefficient repair and after-sales services and poor recycling activities. This has a negative effect on the development of an active local entrepreneurial base in the OGE sector.
Increasing local manufacturing capacity of quality-certified products has a huge potential to generate specialised jobs, develop the economy and reduce the environmental footprint of the products.
Our approach puts local people at the heart of the project. The aim was to boost local manufacturing of solar home systems, and to support local production of a range of components and spare parts for solar products, which are currently imported from Asia.
By supporting our operations in the local upstream segment of the value chain in this way, we aimed to stimulate the off-grid electrification market in Burkina Faso and Benin; boost the development of local economy through increased productivity, professional training, skill transfer, jobs creation, and increased revenues for employees and economic partners in the value chain, including women and young people.
In addition, we sought to bring added-value in the off-grid energy value chain by developing synergies with other players in the off-grid energy sector, and the proximity of LAGAZEL to local manufacturer means that local distribution players benefit compared to importing from China. Risks of importation are limited, the proximity of production and after-sales service reassures local distributors; working capital needs are reduced, as the distributor can place various small orders instead of one big order.
Q: What did you want to achieve with this project, and how was your implementation strategy affected by COVID-19?
A: The project aimed at strengthening and developing local production at our LAGAZEL manufacturing facilities, so that off-grid products could be produced locally. This meant introducing processes, for example, that require manual rather than automated operation, such as assembling battery packs. We wanted to:
- Expand the range of products we manufacture in Burkina Faso
- Scale-up production of solar home systems and sub-components by replicating manufacturing operations in the Porto Novo, Ouémé region in Benin
- Develop synergies with other players in the industry in order to reach sufficient scale and to be competitive, by providing sub-contracting manufacturing services for the off-grid energy sector.
- Initiate R&D partnerships to co-develop a full range offer of locally made off-grid electrification products and spare parts.
Achieving these objectives involved implementing the following activities:
Phase 1: Manufacturing a first series of 250 Sobox light & Sobox power solar-home-systems (SHS) and increase production. This pre-production phase is needed in order to check quality and efficiency before increasing production and manufacturing a further 750, available for distribution in association with high quality proximity services (warranty, after-sales, proximity of stock, etc).
Phase 2: Finalising the development of components/spare parts of off-grid solar products, manufacture the first series and replicate. This range of products is aimed at distributors and installers in the OGE sector, who would then be able to source these quality products locally instead of importing them from China. The project focused on two main components: bulblights and battery packs. LAGAZEL aimed to finalise the prototypes and rate routings for both bulblights and battery packs, purchase components and train the production team to produce the first series. Once the pre-series was validated, LAGAZEL aimed to scale up by purchasing equipment, training staff, replicating in Benin, and sharing experience and best practice.
Phase 3: Conducting R&D and testing activities on new innovative products. The objective was to co-develop off-grid products that can be produced locally. During the project, LAGAZEL had regular meetings with all stakeholders in order to encourage communication between technical staff, production staff and sales team so that customers’ needs and the technical constraints of local production are taken into account.
Phase 4: Evaluating the viability of local production, impact on employability, and the direct and indirect economic and social impact. We aimed to train 20 people in the production segment of the value chain, and develop partnerships with main players in the OGE sector. Activities were conducted in partnership with local companies that comply with legal and regulatory requirements.
Q: What challenges did you face in implementing the project in Burkina Faso and Benin, and how did you overcome them?
A: The main challenge was related to the business model of local manufacturing. There’s a large number of suppliers in Europe and Asia who provide raw materials and components to Africa, making the logistics extremely complex. Lean manufacturing is difficult to implement and the model requires significant funding to meet the working capital and stock needs.
These difficulties became more pronounced in 2020 and 2021 because of the COVID-19 crisis, which led to a shortage of raw material and disrupted international transportation. One solution was to create, when possible, a buffer stock of components in France that could be sent to local facilities quickly when they needed it. In any case the COVID-19 crisis led to delays in constructing the new facility in Benin and in delivering components to both facilities, making it difficult to deliver on time.
Another challenge was insufficient commercial sales generated on the Burkinabe and Benin market. After five years of operations in Burkina Faso, we noticed that production capacity was higher than market capacity after taking into account increased competition from other solar product distributors. On top of that, LAGAZEL faced logistical and customs challenges for exportation across Africa. It is difficult for a facility in Dedougou (Burkina Faso) to sell in Senegal, for example, so targeted markets are limited to neighbouring countries.
LAGAZEL mainly sells B2B, and sales fluctuate depending on the time of year, making it difficult to secure long-term contracts for technicians. In the future, LAGAZEL will need to diversify manufacturing activities in order to optimise material and HR resources.
Finally, the research study conducted by our partner IFSRA also highlighted some global challenges. There was strong competition at the local level from cheap, poor-quality products, and international quality certification standards do not take the specifics of local manufacturing into full consideration. The current security climate, particularly in Burkina Faso, was also a real challenge for the company to operate normally.
Q: Which objectives and targets did the project achieve – for the company, the sector and/or the geography?
A: We now have the capacity to produce locally a diversified range of quality certified solar products. We enlarged the range from simple pico PV solar lamps to more powerful solar home systems (SHS) and spare parts, such as bulblights and battery packs. Despite supply and logistics challenges, 470 Sobox SHS were manufactured and sold in Benin and Burkina Faso. We designed the tools internally for drilling and for moulding bulb metal sheets and plastic parts and a pre-series of 100 units of a new version of Sobox SHS were in progress at the end of project. We also implemented new software to improve purchase, stock and production management as well as quality and traceability.
Another big result was the opening of the second production facility in Benin. The facility was inaugurated in October 2021, creating around 10 permanent jobs. The facility is already a reference for training in solar equipment production in Benin.
We also set out to increase the local value of LAGAZEL products, and we developed our own bulblight PCB in order to increase local production. We developed prototypes of battery packs and equipped a local facility so it can assemble nude cells to produce battery packs. By the end of 2021, 950 bulblights had been manufactured in Burkina Faso and Benin.
We conducted R&D and created iterative prototypes in the field, including battery pack assembling without welding, a collective phone-charging station and power bank casing. Pre-studies and requirements specifications have also been defined for assembling PV cells with resin matter and for developing a marketing and communications unit. These two will require more funding to develop further.
Finally, through a partnership with the research association IFSRA, an in-depth study was conducted to assess the viability of local production and the project’s direct and indirect economic and social impact on the local community. The evaluation highlighted major impacts of the presence of the factories:
- The creation of quality formal jobs with an effort to include vulnerable people
- The creation of training opportunities at a local level, contributing to the national effort to increase qualified manpower in the solar sector
- An improvement in living conditions for employees, retailers and end users. Replacing highly polluting and harmful products had a positive effect on health and education
- The supply of sustainable products and quality and proximity services, including efficient after-sales and an R&D department that will help evolve the products and adapt them to local needs and problems
- A local presence allows local demand to be met rapidly and reduces taxes and transport costs
- Consumers are proud to buy local products, which fits perfectly into the trend for promoting “Made in Africa”
- Replacing traditional oil or battery lamps leads to reduced CO2 emissions, less exposure to harmful fumes and fire risks and, thanks to the durability of the products, a reduction in waste.
Q. Was there anything you were unable to achieve?
A: Globally, we did not achieve the quantitative objectives we initially defined for the production of SHS, bulblights and battery packs. This was mainly down to construction and supply chain delays, but it was also because LAGAZEL produces quantities of SHS units according to demand, and demand was lower than expected. However, we are very satisfied with the qualitative results – a bigger range and better quality of products manufactured locally and a reduced production time.
Another limitation was on R&D, which was mainly conducted in France because of its proximity to our technical partners and suppliers. Testing activities in the field were reduced due to travel restrictions during the COVID-19 pandemic and feedback was mainly collected through videoconferences.
Q: What lessons have you learnt from the project implementation?
A: We learnt that local production per se is not a problem. LAGAZEL is able to produce high-quality products locally, teams are flexible and production time can be reduced (for example in Benin we have the capacity to produce more than200 SHS in five days). The challenges around local manufacturing are related to complex logistics and supply delays and exporting across Africa.
Another lesson is that conducting R&D is still a challenge when the economic and industrial environment is not favorable, as it requires regular back-and-forths between France and Africa.
And finally, the impact study highlighted some results we did not anticipate. Not only were jobs created and living conditions improved, but the study also emphasised the training opportunities that local facilities create. A significant number of trainees are regularly welcomed at both facilities. This needs to be more formalised so it can gain visibility with national and local institutions. Gaining this visibility is hugely important for the company, as, at the moment, we do not benefit from much local institutional support.
Q: How did PREO help in the success of the project?
A: PREO funding helped to launch a pre-series of new products and parts of off-grid solar products. It also contributed to the development of a new production facility in Benin and helped foster the sharing of experiences between teams from Burkina Faso and Benin. Finally, the project gave us the opportunity to conduct an external study to evaluate the impact of LAGAZEL local facilities that will be used in the future to advocate LAGAZEL’s local manufacturing model towards authorities.
The PREO funding was the only financial support we could find that was dedicated to the upstream elements of the off-grid energy value chain. As LAGAZEL is dedicated to local manufacturing, this grant was crucial to support our strategic development plan.
Q: What other transformative ideas or projects have you generated for the sector in the region?
A: We have worked on replicating local production facilities in other geographies. In Senegal, LAGAZEL has built the capacity of a training centre, PROMESS, to become a one stop centre for the establishment of other LAGAZEL local assembly facilities in the region. This has been in operation since 2021 and aims to establish 50 other local stations across West Africa. In Mali,LAGAZEL is working closely with our main distributor to implement after-sales and repair services as well as local production/assembly capacities.
LAGAZEL would also like to offer sub-contracting services to other players in the off-grid energy sector for assembling or manufacturing operations locally in Africa. This topic was discussed with players including ENGIE and OffgridSun, Novea Energie and Fonroche, but no formal partnership has yet been established.
For more information visit www.lagazel.com