Challenges partners with Uganda Solar Energy Association to enhance services

USEA Uganda Challenges Group

The off-grid solar energy sector is an exciting and fast-moving arena that Challenges is excited to be working in. Our Challenges team in Uganda has partnered with the Uganda Solar Energy Association (USEA) as part of its mission to grow solar energy businesses in Uganda and the East African region.

Founded only a few years ago in 2016, USEA is an independent non-profit business membership body that was formed to act as a driver for the development of the off-grid solar energy sector in Uganda. It also seeks to push for improvements of solar energy standards, and to attract new entrants to the solar energy sub-sector.

Challenges Uganda is working with USEA to better understand its potential to act as a broker of business development services for its members. Most recently, we conducted needs assessments of 25 USEA members, giving us detailed insights into the sector as well as each business’s individual needs, as well as their future investment strategies, risk profiles, and whether they have the appetite for USEA’s support in connecting them to business development services. Data from this research has now fed into the construction of a pilot training programme in organisational leadership and sales and marketing, which will be offered at a subsidised rate for USEA members. At the same time, we’re also working with USEA to enable it to operate this training and business support model in the long-term without outside assistance.

We hope that by the end of this project USEA will be equipped with the training and tools to develop an in-depth understanding of the needs of its members, and that it can use this information to construct impactful business development service and investment pipelines. Like us at Challenges, USEA wants to significantly boost the ability of the solar energy sub-sector to reach the many Ugandan households who do not yet have access to electricity.

Image courtesy of Uganda Solar Energy Association.

 

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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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