New film and report highlight success of Challenges’ flagship Rwandan Coffee Project

Watch Challenges’ new film about the Rwandan Coffee Project!

 

Challenges’ flagship Rwandan Coffee Project has reached its mid-way point. To mark this major milestone, Challenges has released the above film and published a report detailing the activity that has gone on during the past two and a half months.

Featuring voices from Rwanda and Scotland, it reveals the journey coffee takes from the farms of Sholi to the cafes of Glasgow.

In the report, we detail much of the activity that has gone on across the eight coffee co-ops we’re working with, and how we have met a range of project milestones and targets. You can read and download the report, here.

Major achievements of the Rwandan Coffee Project

Challenges Rwandan Coffee Project

  • Growing volumes of coffee beans exported by 18%,
  • Improve each co-op’s “cupping” score (measure of coffee bean quality) to 85 or higher (out of 100), and thereby achieving the “speciality coffee” accolade
  • Train of more than 800 coffee workers, smallholders, young people and women in areas such as management and leadership; quality control; business finance and operations; marketing; solar power and other clean technologies; and gender-based violence reduction. Of those taking part in training activities, 47.5% were women
  • Increase international market access, including sales visits and/or representation in Scotland and global trade fairs. This includes introductions to more than 15 new commercial buyers
  • Increase operational efficiency for most of the co-ops
  • Support the organisation of youth networks involving 850 young people and enabling increased access to business and work training, as well as support groups for women and girls to better access reproductive rights and healthcare
  • Provide accountancy software training and provide access to accounting software
  • Challenges Rwandan Coffee Project Provide functioning websites with new content, including newly commissioned photography
  • Drive clean tech innovations such as minigrid, water digesters and waste-water treatment facilities.
  • Catalyse nine start-up enterprises following business support, enterprise training and/or access to micro-finance.

Download the full report. 

 

 

 

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Challenges Malawi agribusiness project is showing early successes

VAC business training Crops
The first year of Creating Robust Opportunities for Crop Production and Sale

In October 2018, Challenges launched its Creating Robust Opportunities for Crop Production and Sale (CROPS) project in Malawi. Funded by the Scottish Government, CROPS is an ambitious five-year agribusiness programme that aims to improve the livelihoods of thousands of rural farmers and their families in four districts in Malawi.

Challenges Malawi CROPS project VAC trainers trade

VAC staff at a trade fair with CROPS products.

With a focus on business and co-operative development, CROPS seeks to increase household incomes of 6200 rural farmers in four districts – Nkhotakota, Salima, Machinga and Chikwawa – by 10% by 2023. The project is being run in collaboration with Opportunity International, a network of more than 40 organisations, with a focus on microfinance institutions.

Central to this programme is improving the value chains of a range of Malawian crops, as well as enabling and promoting value addition and processing activities, boosting institutional capacity building, and improving access to finance and reliable markets. Ultimately, increasing yields of better quality products with improved routes to markets will generate greater incomes for Malawian farmers, thus contributing to the UN’s Sustainable Development Goal No. 8 (Decent work and economic growth).

Adding Value and Early Milestones

At the heart of the CROPS project are four Value Addition Centres (VACs). These centres were set up by the Malawian government to help commercialise agriculture, but had lain dormant until the commencement of Challenges’ CROPS project.

Challenges Group Business raining Malawi

Business training in Malawi.

An early milestone of the CROPS was the training of eight farmers as machine operators to operate the VAC machinery as well as the appointment and subsequent training of four business development officers who are VAC trainers and  managers.  The project further recruited and trained 4 agriculture extension officers to facilitate agricultural trainings in order to increase crop productivity.

Within each VAC is machinery to process and package agricultural products supplied by a government project called SIVAP (Smallholder Irrigation and Value Addition Project) that ended in December 2018. The project is also working on improving crop production and rotation, providing business training to both farmers and VAC staff, and facilitation of access to markets for the processed goods. The products being processed by the VACs include, but are not limited to, rice, high quality cassava flour, cooking oil, and pigeon pea (dry tool dhall). With crop rotation and diversification a key part of the CROPS project, over the term of the programme this list will grow as new products are trialled.

As each local VAC team works to develop the capacity and efficiency of the VACs, Challenges Malawi has been working with farmers in 10 irrigation schemes to increase the productivity of their crops and enhance the aggregation of crops and enable greater value addition.

CROPS results in focus
Challenges Malawi CROPS project

Challenges Malawi CROPS project.

With the project now well into its second year, it has already achieved substantial results. During the period April to September 2019, the CROPS project delivered or enabled:

  • a 60% increase in rice yield from winter farming, from 2.5 tonnes per hectare in the baseline, to 4 tonnes per hectare;
  • an average of £1,244 gross profit achieved by each VAC. The average revenue was £2,150 with expenses of £900 per VAC;
  • the production of 191 tonnes of organic fertilizer, a more sustainable and environmentally responsible solution to chemical fertilizer;
  • the establishment of demonstration plots for farmers in each district to learn new technologies in crop production, one of which is the System of Rice Intensification (SRI). This allows farmers to increase productivity while using less water and less organic fertilizer;
  • the identification and engagement of – on average – four new commercial buyers per VAC as part of a wider campaign of marketing activity that included representation at trade fairs and buyers’ markets;
  • the increase in the price per tonne of VAC processed crops from £588 to £749 per tonne, representing 27% average increase;
  • training of 2,845 farmers (928 males, 1341 females, 550 youth, 20 elderly, 6 disabled). This included:
    • training of 150 lead farmers (63 males, 52 females, 35 youth) aimed at equipping them with the skills and experience to deliver farmer-to-farmer services that reached an additional 1,385 farmers (707 males, 678 females);
    • training of 660 farmers (317 males, 343 females) in post-harvest handling to reduce losses in crop quantity and quality for processing;
    • training – and subsequent job creation – of four agricultural extension officers (3 males, 1 female) to enable them deliver agricultural trainings to farmers;
    • training – and subsequent job creation – of four business development officers (3 males, 1 female) to enable them effectively deliver business and co-operative management trainings to VAC members. The training was conducted by two trainers from Challenges Rwanda;
    • training – – and subsequent job creation – of eight VAC machine operators (7 males, 1 male) in machine operation and maintenance in order to equip them with processing and machine maintenance skills at each of the VACs;
    • training of 15 board of directors (all males) in leadership, governance and financial management. This allowed them to provide oversight role in VAC operations, and increase transparency and accountability within the VACs. One outcome of this was that all four VACs now have a functioning Board of Directors able to conduct quarterly board meetings;
    • training of 64 members (40 males, 24 females) of VAC executive committees in leadership, governance and financial management. This enhanced their skills in day to day management of VAC activities. This led to greater transparency and accountability within the VACs by setting up accounting and administration systems.

 

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Progress for social enterprise Lilypads in Zambia after Challenges research

Lilypads Zambia Challenges Group

Lilypads is a Scotland-based social enterprise that seeks to address period poverty. As part of Challenges’ Access Africa Programme, Lilypads had engaged our Accra team to undertake a piece of consumer market research in Ghana and Zambia. This research targeted women and girls of menstruating age, and asked them about their requirements in regards to sanitary pads; whether they would be willing to use reusable pads; and their feelings towards ecofriendly sanitary pads, including how much they would be willing to pay.

Challenges identified a clear market opportunity for Lilypads, and its product and business model.

Lilypads ChallengesFollowing this market research, Challenges then looked at the practicalities of establishing a production and distribution base in a number of different locations, including Zambia. The legalities of producing pads locally, such as the requirements for establishing a factory that produces and distributes sanitary pads, was a key consideration. Costs, employment opportunities and future forecasts were also major factors.

Subsequently, Challenges Zambia engaged both the Zambia Bureau of Standards (ZABS) for the standards required for sanitary towels; and the Patents and Companies Registration Agency (PACRA) as to the legal requirements to establish Lilypads as a company in Zambia that would produce ecofriendly sanitary towels.

Challenges also engaged with a number of potential partners, identifying the One Planet Café Zambia, a business in South Luangwa that produces and exports banana paper branded One Planet Paper. This sustainability focused social business was receptive to partnering with Lilypads to produce ecofriendly sanitary pads.

Challenges is now working to raise capital on behalf of Lilypads in order to run a pilot in Zambia.


The Access Africa Programme

The Access Africa Programme enables Scottish social enterprises and social entrepreneurs to explore and expand into African markets. It provides market research and business development support, funded by the Scottish Government, to enterprises and individuals who have an idea, product, service or model that could make a real impact in Sub-Saharan Africa. 

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Sales and jobs growth at Kachema Meat after enterprise analysis by Challenges Zambia

Kachema Meat Shop Challenges Zambia Enterprise Analysis

In 2018, business consultants from Challenges Zambia were engaged by Kachema Meat Supplies Ltd, one of the country’s leading integrated meat companies to undergo an in-depth enterprise analysis. 

This was part of the business linkages programme, a DFID-funded project in partnership with Private Enterprise Programme Zambia (PEPZ), to support growth enterprises in Zambia. 

The 360enterprise diagnostic involved a robust investigation and assessment of Kachema Meatbusiness operations, sales and marketing, and financials. This was achieved by using a range of Challenges diagnostic tools including questionnaires, interviews, observations and feedback from consumers and retailers. 

Kachema Meat Challenges Zambia Enterprise AnalysisBuilding on a legacy of sustained growth and a turnover of $(US) 10 million a yearKachema management clearly understood the importance of product quality and branding, and had a history of investing in these areas.  

Launched as a meat wholesaler in 2000 catering to retailers in the Copperbelt, in 2003 Kachema Meat Supplies moved to Lusaka and began opening retail outlets selling direct to the public. With a staff of about 120, it now has some 14 retail outlets, contributing significantly to the growth on the business over the past three years. 

Engaging Challenges, Kachema sought an external assessment of its product quality and branding, as well as an evaluation of:  

  • Distribution packagingpackaging systems, and audit producer  
  • Preservation packagingincluding thermoformed packaging to improve shelf life  
  • And the branding/communication messaging on the packaging 

Challenges was also invited to develop proposals for enhanced product appearance in relation to the cost of packaging. 

With a wide network of business associates built up over its 20 years of global operations, Challenges also engaged one of its consultants with a background in the meat processing industry. 

Implementing Challenges Recommendation

Combined with the Zambia team’s findings, the consultant’s final report made recommendations that, upon implementation by Kachema, were seen to coincide with the growth of sales of pre-packed and vacuumed items into new retail channels, such as Shopritethe largest retail store in Zambia.  

The recommendations also resulted in the adaptation of communication packaging, as well as increasing knowledge about vacuum packing cold meats and leakage checks. The latter has resulted in the reduction of blown offs (vacuum packed units that were not properly sealed). In addition, a number of operational bottlenecks were identified and addressed. 

Upon completion of the analysis of Kachema, Challenges Zambia subsequently followed up with an evaluation of the business. It found that both Kachema’s margins and profit had increased as a result of implementations recommended following Challenges’ analysis. It also found that sales volumes of Kachema’s processed meats increased by 124%, while the cost of damaged or spoiled products fell from 8% to 5%. Overall, the products’ shelf life increased by 3% 

Challenges intervention also coincided with increased job creation as production was stepped up to meet demand due to increased sales, particularly sales of processed meats in supermarkets. 

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Small businesses praise Challenges Zambia after training in financial management and leadership

Musika Zambia Challenges Group

Challenges Zambia has been working with the Zambian non-profit company, Musika, as part of our goal to achieve poverty reduction by ensuring agricultural markets work for all stakeholders, in particular Zambia’s rural poor. Musika is supported by the Swedish Embassy in Zambia, the Norwegian Government’s NORAD and IRISH AID, which seeks to stimulate private investment in the agricultural market and has a particular focus on the smallholder and emerging farmer sectors.

Musika’s approach to reducing poverty and creating wealth in rural Zambia involves stimulating the development of a supportive market environment that provides long-term and sustainable opportunities for farmers to invest in their own production and to use the markets to graduate out of poverty.

On the back of a survey of the sector, Musika identified gaps in financial management and leadership skills among small rural agribusinesses, aggregators and veterinary service providers, and decided upon a programme of training in financial management and leadership in order to build capacity within the sector.

Following a bidding process, Challenges was appointed to deliver a series of training sessions to small business holders in the Copperbelt and Central provinces of Zambia.

One of the key modules covered was “Meeting Stakeholder and Quality Needs”. As part of the training Challenges consultants took the participants through a series of strategic business activities and strategic assessments. These included: Understanding your Stakeholders’ Needs; Stakeholder Analysis; SMART Objectives; SWOT/PEST analysis; and Porter’s Five Forces.

  • SMART is a mnemonic used to describe the criteria for the setting of objectives. It stands for: Specific; Measurable; Achievable; Relevant; Time-bound.
  • SWOT analysis is a strategic tool for an individual or organisation to measure its Strengths, Weaknesses, Opportunities and Threats.
  • PEST analysis is a framework of macro-environmental factors (Political, Economic, Socio-Cultural and Technological) to be considered while undertaking a larger strategic analysis of a business or market research.
  • Porter’s Five Forces is a tool individuals and businesses can use to assess competition. They are: Threat of new entrants; Threat of substitutes; Bargaining power of customers; Bargaining power of suppliers; and Competitive rivalry.

Results of Challenges Zambia training

The training comprised of group activities that encouraged discussions and debates from all learners, each of whom was encouraged to use their own business experience as case studies. This was crucial as participants were able to reflect on past experiences (both successes and failures!), and consider how circumstances might be different should they experience the same in the future.

A total of 64 participants across three towns in Zambia – Kapiri Mponshi and Kabwe in Central Province and Kitwe in Copperbelt Province – took part in the training. The majority of participants did not know each other, and the interactive training created a lively environment that enabled participants to feel comfortable and to interact with both the trainers and participants.

All participants at each of the three sites received a days’ training in the following topics: SWOT analysis; PESTEL analysis; Stakeholder analysis; Stakeholder interest matrix; Empathy map; and setting SMART objectives.

Participants were excited to learn how to apply the above tools in their everyday business decisions. Examples used during the training helped them realise how their businesses would benefit from this newly acquired knowledge.

As the graphs and feedback results below show, this was a training session that was warmly received by its participants. We will in due course report

on the long-term impact on the businesses and the people who undertook the training.

Musika trainees’ comments on the Challenges Zambia Business Development training

Our key takeaway from this event:
“I have learnt the importance of management of clients, good relationship with stakeholders and customers, SWOT & PESTEL analysis for my business”
Mwape Chanda
Kitwe participant

“Before the training, I did not have knowledge on how to plan in business for it to be managed well. I can now confidently plan for my business to avoid losses.”
Benjamin Chaaba
Kapiri Mponshi Participant

Our views on the different aspects of the training:
“We all participated in the training, it kept us awake. Please continue with this type of training”
Margaret Chimanga
Kabwe Participant

“The training was good and examples were clear and time manageable. The training should continue to teach business people”
Jason Ngulukila
Kapiri Mponshi Participant

Our thoughts regarding the sessions or overall agenda:
“I very much enjoyed the PESTLE and SWOT analysis sessions as we used personal business examples and experiences to learn.”
Innocent Phiri
Kitwe Participant

“Very interesting and easy to grasp, it was very educative we look forward to more trainings delivered in this manner.”
David Mweo Musonda
Kabwe Participant

Our overall feedback for the event?
“The training was different from the usual trainings we attend where we just listen and not actively participate. It was great.”
Jess Phiri
Kapiri Mponshi Participant

“The trainers interacted well with us, it was a great training.”
Julius Chisenga
Kitwe Participant


Feedback from Challenges Zambia training

 

Graph 1 - Challenges Zambia Musika Case Study

 


Graph 2 - Challenges Zambia Musika Case Study

Graph 3 - Musika Case Study Challenges Zambia


Graph 4 - Musika Case Study Challenges Zambia


Graph 5 - Musika Case Study Challenges Zambia


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Challenges Uganda intervention encourages detergent manufacturer to clean up its financial management and sales strategies

Armour Group Uganda Challenges Group

Strong demand and a diverse portfolio should have brought success for Kampala-based Armour Group Ltd, a family-owned detergent manufacturer with 12 employees. But with little growth and challenging financials, it was clear that something was going wrong. Challenges consultants undertook an Enterprise Diagnostic on the business … with some eye-opening results, and have since been brought in to help strengthen the Ugandan business.

Armour Group Limited is a family-owned detergent manufacturing business that produces nine different cleaning and sanitising products, ranging from bar soap for the home consumer, liquid soap for businesses, and its more heavy-weight degreaser for industrial kitchens and catering businesses. Its bar soap – by far its most popular product – is made from locally sourced natural oils, and has no industrial residues.

Founded in 2014, Armour Group now employs 12 staff from its base in Najjeera in the Ugandan capital of Kampala.

Despite strong demand for its products, and in particular its natural bar soap, Armour struggled to grow turnover or increase market share. Challenges Uganda consultants were invited to undergo an Enterprise Diagnostic to analyse the business’s operations, strengths and weaknesses, and to recommend areas for change.

The Challenges intervention quickly identified huge potential for the business, but also a series of significant internal obstacles that required prompt attention.

Although demand was strong for its products, Armour was failing to capitalise on the market due to the lack of a cohesive sales strategy. The business suffered from poor record keeping, and as a result, had no internal mechanism to record expenses nor manage costs.

As a result of poor management practices, such as a lack of record-keeping and inventory management and non-existent sales strategy, Armour was subject to a poor credit situation that exacerbated its tight working capital. Despite its sales, Armour was registering a decline in profits. In the first week of our intervention, Challenges analysts highlighted a massive increase in the business’s losses, which had grown from a year-on-year loss of 18% in 2016 to an eye-watering 83% in 2017. Due to poor record-keeping, management had not realised the severity of the problem.

As part of the Enterprise Diagnostic, Challenges recommended ways to improve Armour’s financial management systems, and strategies to improving their capital position. We also worked to develop internal controls to enable better planning and budgeting: moving the financial recording to an accessible accounting platform meant that managers were better able to understand the company’s financial position.

In addition, we also recommended methods to improve internal and external communications, as well as sales reporting, forecasting and analysis.

Challenges encouraged the management at Armour Group to implement a training plan for new sales staff to drive sales and generate brand awareness. It also highlighted the need for product-specific sales strategies; consistent branding; a ring-fenced R&D budget for product development; robust market assessment; and clearer value propositions to its separate customer segments.

As part of the support, Challenges recommended Armour looked at ways to optimise production through available technology, and a more efficient supply chain. Expanding market reach into other regions of Uganda would also create new sales jobs for young Ugandans who could be trained as sales representatives, a strategy that would also make the business more attractive to impact investors.

Although the recommendations were far-reaching and made difficult reading for Armour’s management, quick adoption by Armour had a positive impact on the business, which has since recorded a slowdown in its net loss. The business has subsequently commissioned Challenges Uganda to undertake a more thorough intervention that will see Challenges staff working directly with Armour to create market linkages, give sales support and drive business development. The results of this will be published in the new year.

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Future bright for Rwandan coffee co-op after Challenges’ solar power initiative

Rwandan Meshpower Rwanda Challenges Group

In 2017, Challenges began working with eight coffee co-operatives in Rwanda as part of a forward-looking project to generate sustainable growth. With backing from the Scottish Government, this has project also pioneered the adoption of innovative solar technology, drastically improving the prospects of a remote coffee co-op severely hampered by a lack of electricity.

Since 2017, the Challenges team in Rwanda has been working with eight coffee co-operatives to build capacity, generate market links, deliver leadership training and improve sustainability.

But alongside this far-reaching project sits another innovative programme that beautifully demonstrates Challenges’ methodology of innovation, partnership and sustainability, as well as our commitment to clean energy!

Rwanda, and its large agricultural sector, is liable to be hit hard by climate change. It is something that its farmers and politicians alike are all too aware of. And as part of the Scottish Government’s climate justice campaign, capital funds were made available for a pilot programme for the innovative use of an innovative product, championed by Challenges.

Solar PV micro-grids are breaking new ground across much of Africa as individuals and organisations realise the potential for solar energy to connect difficult-to-reach communities. In 2018, Challenges partnered with Meshpower, a state-of-the-art micro- and mini-solar grid engineering company, to deliver such a system to one of the recipient co-operatives.

At Challenges’ we always measure our work by the impact it can create, the economic growth it can facilitate, and the sustainability for the future. Selecting which co-operative was not an easy task, but measured against these factors we chose Buhanga in southern Rwanda. Cut off from the national grid, Buhanga lacked electricity in its office, due in part to its remoteness and in part the expense of generators. But the business also suffered from break-ins, while the inability for staff to use laptops or other electrical equipment inhibited further growth. When we spoke to the management team at Buhanga it was clear to us all that the potential for the scheme and the opportunities it could create was significant.

The Meshpower Installation at Buhanga is a clean energy solution to a continent-wide rural problem: access to reliable energy. This installation, slated for completion in December 2018, now enables the coffee co-op to develop and open new methods of data gathering and storing, book-keeping, marketing and so on. It also gives them the opportunity for a modest secondary income as they can now charge a minimal fee for members of the local communities to charge phones or print documents. And it means that co-op staff will be trained in both the solar PV technology but also the equipment and software its adoption has enabled. The Buhanga coffee co-op now has a valuable income-generating asset that enables business growth and staff development.

As we monitor the success of this clean energy programme, as part of the wider Coffee Market Building for People and Prosperity project, we look forward to seeing this pilot rolled out beyond Rwanda, and used to create a case for ethical lenders and grant-makers to invest in similar initiatives at other sites lacking in sustainable and reliable clean energy.

When Challenges first approached Meshpower about this initiative, we had no idea this was the first project of this kind the business had undertaken. It’s also likely the first of its kind in the region … and maybe all of Africa! Who knows, maybe one day every co-operative office will hum with solar energy!

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Sales boost for pioneering Ghanaian bamboo bike manufacturer after Challenges intervention

Booomers International Ghana Challenges Group

Booomers International is a bamboo bicycle manufacturing and distribution company based in Ghana. Its vision is to grow the brand globally, pioneering its sustainable and innovative bamboo products, while also providing employment to young Ghanaians and supporting a community project that works to target poverty through greater access to education. Challenges undertook a comprehensive business diagnostic with Booomers that included a market assessment and business support and development. Following our involvement, Booomers reported improvements across a number of areas, including sales and marketing, financial management and production.

Booomers International Ltd is a Ghanaian social enterprise that produces high-quality, affordable bamboo products while maintaining a social mission that seeks to bring economic and social benefits to its customers and its staff. Launched in 2014 by entrepreneur Kwabena Danso, the business’s flagship product is its bamboo bike frames, and it has recently diversified to produce a growing range of bamboo accessories, from bike baskets to children’s trikes.

(L to R) Boadu Isaac, works as part of the gluing team. Kwabena Danso, founder of Booomers. Ampousah Boateng Selina is Deputy Operations Manager.

Now a thriving and successful SME, Booomers has produced more than 2500 bike frames and thousands more bamboo accessories, with stockists across the UK, Germany, the US and the Far East. At the time of Challenges’ intervention, the business had 28 employees, only two of whom were female. Booomers has since grown its workforce to more than 50 staff, and also indirectly supports dozens of local bamboo farmers and other young people associated with the cultivation and harvesting of the crop.

As part of our initial consultation, Challenges’ business advisers worked closely with the Booomers management team, running an in-depth enterprise diagnostic that examined a wide range of areas. As well as strength and opportunities, our assessment also looked at areas such as barriers to growth, rivals, legislative obstacles, and so on.

One of our key findings was that Booomers lacked a robust marketing strategy, and that as a result, it suffered from poor brand awareness. As part of our intervention, we supported the management team with the creation of marketing collateral and PR activity. Another barrier to Booomers growth was the high cost of transport of materials.

After the intervention, Challenges made a series of recommendations in a number of key areas.

Looking at Booomers’ organisational structure, we recommended the business standardised its training, and that it worked towards a more diverse and educated workforce. Given that Booomers was donating 15% of its profits to the Yonso Project, which works to alleviate poverty through education, we suggested greater ties with the initiative. We also recommended that Booomers shared its business mission and social vision with its staff through improved internal communications.

When it came to its product offering, Challenges’ business advisers recommended Booomers looked at diversification, and proposed a range of possible bamboo products, from laminate flooring to bike accessories. We also suggested improvements to production management, both to improve efficiencies while also reducing waste and streamlining operations.

With regards to sales and marketing, we recommended Booomers invested in marketing support, either internally through a direct appointment or externally through a marketing agency. As part of this, we encouraged the management team to create a robust B2B marketing strategy, B2C advertising campaign, and product strategy that addressed the various value chains in its different markets.

Booomers now offers an in-house training programme that gives experience and employment for young people in the local rural community. Crucially, it takes trainees through the entire manufacturing process, from the harvesting of bamboo through to the final assembly of bespoke bicycles in order to ensure they’re equipped with a diverse skill set.

Booomers continues to court success, and has also had support from the YouthActionNet program, the UK Department for International Development’s ENGINE project, the Tony Elumelu Foundation Entrepreneurship Program and the African Entrepreneurship Award. Most recently its chief executive Kwabena was selected for the Obama Foundation Leaders African Programme 2018.

Following the our intervention, Challenges has continued to work closely with Booomer, and has helped the Ghanaian business create market linkages with stockists in the UK and mainland Europe.

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Pioneering research prompts banking giant Prudential to develop bespoke insurance products for Zambia’s entrepreneurs

Prudential Zambia Challenges Group

The Challenges team in Zambia has undertaken a ground-breaking assessment of 80 small and medium enterprises across 18 sectors to understand their needs as part of an innovative partnership with global insurance giant Prudential and Zambian enterprise agency PEPZ. Their findings have helped Prudential shape a new range of financial product and services geared towards SMEs, while also deconstructing some of the negative myths around insurance.

Challenges is committed to supporting business and helping them grow, through implementing good operational and business practice, and encouraging the development of SME-centred products and services. We know that as businesses grow, everyone benefits through increased earnings and stable jobs leading to growth in the wider economy.

One of the issues sometimes overlooked by entrepreneurs and small business owners is life insurance, an area often clouded by myth and misinformation.

Aware of the potential to support Zambia’s SMEs and the need to generate greater awareness of its products, the global insurance giant Prudential partnered with the Challenges team in Zambia, tapping into their expert knowledge of the SME landscape and its extensive network of contacts and businesses. Zambian enterprise agency PEPZ also supported the project, which aimed to deliver a much-needed life insurance product to small business owners; people who were all too often excluded from traditional products and who, according to our findings, felt excluded from such offerings or felt they didn’t apply to them.

Insurance in Zambia

Market penetration for life insurance in Zambia is minuscule; for the past few years, it’s sat at less than 1% of a population of some 17 million people. But it’s not just life insurance; insurance products as a whole are only activated up by about 5% of the population.

Across many business owners, we found that there was a widespread belief that insurance was expensive, sometimes prohibitively so, while many people considered it an unnecessary cost, rather than an important asset to their business.

Aware of these issues, Prudential sought to design a product that catered to SMEs and entrepreneurs, leading to the PRU SMART Entrepreneur insurance, the first of its kind in Southern Africa.

The PRU SMART Entrepreneur is designed to provide Group Life Assurance Cover to small businesses, who, because of the unstructured nature of SME and entrepreneurs’ operations and lack of formal salaries, make them unattractive for conventional Group Life cover. The new Prudential product was designed specifically for the SME and entrepreneur, with the aim of increasing the financial inclusion of these businesses. The research undertaken by Challenges consultants was integral to the development of this innovative insurance product.

Prior to its launch, Prudential wanted to assess the product design and its planned distribution to SMEs and entrepreneurs, commissioning the Challenges team to undertake a far-reaching and in-depth market research project in Lusaka and in Zambia’s Copperbelt provinces. The research had two aims: to test Prudential’s own assumptions, and to ensure maximise the customer value that Prudential could deliver with the product, bringing greater benefit to the business people.

The Challenges researchers found that businesses are willing to pay more if they think the product gives them a truly special and significant value, and if the product is presented to them in just the right way.

The team also found that the majority of SMEs (62%) had set aside savings for when unexpected events that could affect their business, such as death, disability and critical illnesses.

Our analysis showed there was significant potential for the Prudential product, and following the research, we recommended a number of changes to the PRU SMART product. We also found that although there was clearly a market for this product, customer education and intelligent marketing would be invaluable to help the potential customers among Zambia’s SME community understand and appreciate the PRU SMART insurance. 

Key findings: 

  • Majority of SME-owners prepared for unexpected events, relying on savings, family, etc
  • Research spanned 79 SMEs across 18 sectors, ranging from renewables and health to tourism and transport.
  • Almost half of SMEs had some form of motor insurance, while nearly one in three had fire/theft insurance.
  • About one in six SMEs had no insurance whatsoever.

Two-thirds of SMEs agreed the PRU SMART product met their needs. Only 5% said it didn’t.

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