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Beyond Financial Services - Marketing Solar Lamps Through Savings Groups in Uganda  Image

Promoting Inclusive Markets and Financial Systems

Beyond Financial Services - Marketing Solar Lamps Through Savings Groups in Uganda

Beyond Financial Services - Marketing Solar Lamps Through Savings Groups in Uganda


This case examines how two Ugandan NGOs have used Savings Groups (SGs) as a platform for social marketing, using three separate models. Uganda Women’s Effort to Save Orphans (UWESO) and Community Organisation for Rural Enterprise Activity Management (CREAM) are among the leading facilitating agencies of SGs in the country; both are innovative practitioners that have positioned SGs at the core of their development efforts, because as organised networks of rural residents they provide a good entry point for service delivery and are thus attractive to public and private entities. 
UWESO was formed in 1986 to assist orphans and other vulnerable children and maintains a nationwide programme in four core areas: food security and nutrition, health, education, and socio-economic empowerment. Although SGs come under its socio-economic empowerment programme, UWESO has positioned them as the foundation and point of entry for all four core areas. Of the 38 districts where UWESO operates, 27 have active, funded SG projects that serve over 50,000 members. 
CREAM, operating in the remote West Nile region, began as a CARE project in 2000 and registered as a local NGO in 2002. It was the first Ugandan promoter of SGs. From 2006 to 2010, CREAM has launched 2,100 SGs counting over 63,000 members. 
Both UWESO and CREAM are selling solar lamps imported by BASE Technologies, a Ugandabased subsidiary of the solar products company, Barefoot Power Limited. Its principal product is a kit consisting of a standalone lamp with rechargeable batteries in the base and an accompanying solar panel. The kit, which sells for approximately USD 25, can also charge a mobile telephone. Consumers are unanimous in their preference for solar lamps over the ubiquitous paraffin (kerosene) lamp used by 90 percent of rural households in Uganda. With its open flame, the smoky paraffin lamp poses health and safety risks while providing little light. 
Both UWESO and CREAM have used their SG networks as platforms to sell lamps; their community-based trainers have assumed the role of sales agents marketing to SG members as well as non-members, who represent a growing market as word of the lamps spreads. 
UWESO originally followed a microfranchise model, in which one of its staff served as the link between BASE, the lamp wholesaler, and the UWESO field staff/sale agents. The microfranchisee controlled the supply, distribution and commissions paid to the field agents. 
In contrast, CREAM has adopted a model where the NGO inserts itself as an active intermediary between the wholesaler and its community-based trainers (CBTs) who sell the products. CREAM supervises lamp sales, wholesale orders, delivery, and sales commissions. 
Finally, in 2010 CREAM initiated a third model that relies on village agents. These are exCBTs whose contracts with CREAM expired at the end of the project under which they were employed. Selected for their strong performance, these independent agents now earn their living by selling lamps and organizing new SGs. CREAM pays them commission for lamp sales and SG members pay them a fee for their training services. 
The study documents the advantages available to facilitating agencies through the use of SGs as platforms for social marketing, including: 
  • Access to a large rural market that is not easily reached by other means; 
  • The ability to reach groups of people who meet regularly at known times and places; 
  • Familiarity with and trust of the CBT or village agent, who lends credibility to the product; and 
  • Access to lump sums to finance a lamp purchase. 
The study also revealed several methods by which group members finance lamp purchases, including: cash out of pocket, loans from the group, and funds from the annual shareout. Researchers also found two unexpected methods: loans from the group’s social fund and the creation of a Rotating Savings and Credit Association (ROSCA), wherein all members contribute a set amount which is combined to cover the cost of one lamp. As per the ROSCA format, all members contribute according to the predetermined time and amount, and the funds collected are given to one member, continuing until all members have purchased a lamp. 
Determining the sustainability of these three marketing models (the microfranchise model, the NGO as intermediary to the CBTs, and the village agent model) is complicated. Two of the three marketing models were only possible because of on-going support from donors, most notably in the case of the NGO intermediary-CBT model, wherein the costs of the CBT’s time and transport to reach the groups is covered by donor funds. The third model, relying on village agents, shows some promise of sustainability. 
Both CREAM and UWESO conceive of their own sustainability largely in terms of their ability to attract donor support indefinitely. In their respective strategic visions, SGs are assets to be cultivated; the NGOs can market themselves largely because they have access to a large network of rural people who are otherwise difficult to reach. To this end, both institutions follow a ‘train and retain’ model of group creation; that is, they seek to maintain relationships with their SGs indefinitely. Likewise, retaining the loyalty and occasional services of their CBTs is a priority, even in periods when there is no external funding to cover their salaries. The ‘train and retain’ approach to group formation does not necessarily undermine SG sustainability or independence. Both organisations aim to enable SGs to learn how to collect savings and manage loans within months and thereafter respect the autonomy of the groups. However, there are situations that many groups only encounter after several years of operation – examples include investments, officer rotation, and linkages to external capital – where the support made possible by the on-going organisational relationship can be useful. The purpose of the additional training and visits could be described as helping groups move from competency to mastery. Marketing solar lamps, especially using the village agent model, may allow CREAM and UWESO to pursue their train and retain approach, maintain their most effective CBTs irrespective of donor funding, and use effective CBTs to cultivate their most strategic asset: networks of organised groups. 
While the marketing of solar lamps in Uganda is promising, it requires CREAM and UWESO to enter into a commercial arena in which they have little previous experience. The sale of affordable solarpowered technology is a business with both growth potential and positive development impact. However, to operate effectively in what will inevitably become a more competitive market, the local NGOs will have to consider and address all the elements required for a new business to succeed, including finance, inventory management, sales and service. The importance of a comprehensive approach to the sale of solar lamps is evident in the problems faced by UWESO and CREAM, as both NGOs focused on sales without developing aftersales service and repair. 
Ultimately, this case study highlights lessons learned about the use of SGs as a platform for social marketing. First, there is no substitute for clarity and transparency; the microfranchise model suffered from the lack of both. Second, the legal status and organisation of the agency selling a product (whether non-profit, commercial, or cooperative) is less important than that institution’s ability to develop a sustainable business model, capitalise on its competitive advantages, understand the elements of the marketing chain, and execute its business plan effectively. Third, it is impossible to disassociate the product from the marketing channel. Solar lamps have such clear and exceptional benefits over paraffin lanterns that it is likely that everyone will benefit from their sale. But caution is urged about generalising from the case of solar lamps to other products with more complicated impacts on the consumer. 
Brief also available.

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