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