Project News

Leveraging PREO funding, Simusolar is set to build distribution partnerships, expand into new markets and harness surplus energy
How-Simusolar-leveraged-PREO-funding

Simusolar is an agricultural equipment company providing solar-powered water irrigation pumps to smallholder farmers in East Africa. Given that only 3% of farmers in Tanzania and Uganda currently have access to irrigation technology, with the vast majority using inefficient, high carbon diesel pumps, Simusolar’s water-pumping solutions have the potential to sustainably increase productivity, as properly irrigated crops achieve higher yields and allow farmers to grow additional harvests during the dry season. Through many years of experience of working with smallholders, Simusolar has identified ways to make their products affordable to low-income farmers.

With the aid of funding and technical support from PREO, Simusolar has expanded from Tanzania into Uganda, where the company has managed to set up innovative distribution partnerships and engineer solutions that use surplus energy from solar water pumps.

PREO recently caught up with Marianne Walpert, Co-founder of Simsusolar, to reflect on her project experience and to identify key learnings for the benefit of the sector.

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

A: We initially proposed a project to PREO to experiment with a business model whereby the last-mile delivery of solar water pumps is transferred to a farming collective. In this model, Simusolar would hand over the products and sales tools to the farming collective and build their capacity to market and sell the solar water pumps, as well as provide after-sales services to the customers. Simusolar would supply the solar water pumps, offer financing to customers, track sales and quantify the economic benefit of this model for both parties.

The initial proposal was to start with the coffee value chain, as this has growing commercial value for smallholder farmers in Uganda and there is already a coffee cooperative with a wide network of smallholders and hubs across the country.

This cooperative of coffee growers expressed a strong interest in bringing our solar water pumps to their farmers. Initial indications suggested that the economics were attractive, with farmers increasing yields by 50% on average. Ten of their hubs would become demonstration sites to introduce solar water pumps to the farmers, and we would train the members of the cooperative to sell and, eventually, install the solar water pumping systems.

In addition, since the coffee farmers would not need 100% of the solar water pumps’ power year-round, we felt that there would be some aspect of the post-harvest coffee processing that we could power with their solar array when it was not needed for irrigation.

Q: What were the challenges you faced during the project implementation phase, and how did the business model pivot to reach the planned targets?

A: The primary challenge we faced was that, contrary to what we had expected, the coffee farmers were not able to realise significant revenue gains through the addition of a solar water pump, so the economics of the project at the farmer level were not very encouraging. Uptake of the solar water pumps was low among this large group of coffee farmers.

When this became clear to us, we instead decided to consider other agricultural value chains that had a higher demand for water and more frequent planting-to-harvest cycles. We found great potential in horticulture and livestock value chains, whose value proposition for solar water-pump systems appeared to be strong. We decided to focus on targeting partners with a good network of farmers in these value chains. These included Palm Corps, UCCCU, Omia Agribusiness, CEPA, Allison Consults, Vida Verda, Holland Green Tech, CURAD, EKR, Celebrate hope SACCO, Anuel Energy, Access Energy, FAIDAH and Spark Agro. We are grateful that PREO was flexible enough to support our strategic change of direction.

We changed the nature of our partnerships so that Simusolar would continue to control the sales tools and carry out demos through the partners’ field sites, while also managing sales, installations and payments. The partners would help build a pipeline of customers through marketing the solar water pumps, running demos in their field sites, and stocking the solar water pumping systems. The partners also provided some after-sales support to farmers depending on the technical nature of the support.

Since we were not working with coffee farmers, we also needed to revisit the add-on technology that would be viable in the market. After a market survey of our existing customers, we found that a PAYG water dispenser seemed to be the most valuable additional asset for our customers, so we set out to demonstrate that technology. For farmers, selling water to their neighbours gives them an additional revenue stream from their solar water pump system.

Q: What did you end up achieving through the PREO project? What have been the key lessons coming out of the project for the solar water-pump sector?

A: PREO funding and technical support enabled us to expand our solar water-pump distribution and service business into Uganda. We worked together with PREO on the completion of a market assessment which included analysing client data to identify opportunities for growth and formulating a viable business development strategy. This research and development stage

enabled us to learn a lot about which Ugandan agri-value chains benefit most from solar water pumps.

For example, farmer networks in Uganda have a wider reach and are more actively involved in agricultural activities than what we saw in Tanzania – an insight that has been invaluable as we penetrate the Ugandan market. Farmers in Uganda also have slightly different technical requirements for their solar water pumps, often dictated by the size of their farms and the depth of the water sources. We have seen a rise in the demand for smaller and shallower pumps than those we distribute in Tanzania. We have also learned a lot about quantifying economic benefits to farmers across the different value chains.

We are also very happy with the number of partners that PREO enabled us to engage. Over the course of the PREO programme, Simusolar (or Tulima Solar as we are known in Uganda) engaged more than 25 partner organisations that are helping us reach and educate farmers about solar water pumping technology. We are still learning about the economic benefits and value proposition of the PAYG water dispensers and hope to gather more data from the first five demonstration installations.

The knowledge we acquired through the programme enabled us to devise the following methodology:

Monitor solar water pump utilisation in water dispenser installations: Average pump utilisation is about 45% (pumps water 45% of the time to meet irrigation needs). The additional functionality of PAYG water increases pump utilisation as well as the farmer’s income. We will track utilisation and income over time.

Water usage tracking and reduction of water losses: For customers who are already involved in the water-selling business, the water PAYG capabilities minimise losses (spillage and theft) through remote monitoring and timely reporting. We will track income with PAYG vs income without.

Track additional employment through PAYG water: PAYG water creates direct employment through agents that sell water credits to customers. We will track direct and indirect jobs created through this service.

Report additional community water access points: Creating additional water points in the community gives more people access, helps prevent disease and increases overall community productivity. We will report water points before the business rollout vs after one year, two years, etc. against other impact metrics. 

Q: Venturing into a new market often comes with challenges What lessons have you learned in the two years that you have been operating in Uganda?

A: The biggest hurdle has been the initial education and customer acquisition effort for our business model and technology in Uganda. We underestimated the amount of time and financial resources we would spend to tell farmers about our unique offering and solar water pumps in general. We needed a substantial investment in market awareness to acquire the critical mass of early adopters that would spur growth. We believe we will get over this hurdle and greatly reduce customer acquisition costs in a couple of years at the current funding level.  The scale up can be achieved more quickly with more upfront investment.

The second notable challenge has been the country-wide lockdowns due to the Covid-19 pandemic. Restrictions in movement for the whole population have curtailed farmers’ access to markets. The has meant a decrease in farmers productivity and incomes, which has contributed to slower solar water pump adoption. A lot of leads we had signed up are waiting for an improvement in the economy before they make their purchase.

Lastly, government and NGO micro-scale irrigation programmes have distorted solar water pump’s prices in the market and eroded our traction for the past couple of years. Some customers have opted to make use of the subsidies (35% to 65%) these programmes offer. It would be nice to build in pricing flexibility for discounts or subsidies when we enter new markets in the future. 

Q: What demonstration effect did this PREO-funded project enable you to achieve, and what are the project’s outcomes?

A: The 10 demonstration solar water pumps we installed across Uganda helped us acquire four lead-generation partners that contributed to 16 of the 192 solar water pumps sales. The demos also helped us attract a USD 30,000 revenue-based financing with GIZ, which has been key in funding our customer-acquisition activities, and a B2B partnership with NEC (National Enterprise Corporation) AGRO SMC, which has signed a Memorandum of Understanding with Tulima Solar to purchase 2,000 solar water pumping systems over the next three years.

Virtually all of the solar water pumps sales made in Uganda are a direct result of the PREO funding, which enabled us to launch the business in Uganda.  In addition, the traction we have in Uganda has helped Simusolar to raise USD 1.5 million from ElectriFI to grow the business in both Tanzania and Uganda.

Q: What does the future hold for Simusolar in terms of serving the agricultural sector in sub-Saharan Africa?

A: Simusolar and Tulima Solar will continue to develop the market for solar water pumps in Tanzania and Uganda. We will be looking for additional partners in these countries and will look to expand into other countries when the conditions are right.  We are continuing to raise equity and debt and see a very big potential for growth in the productive use of energy sector. We will continue to expand our product offerings to develop financed, solar-powered equipment that will bring income-generating capacity to the off-grid communities in sub-Saharan Africa.

For more information visit www.simusolar.com

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