Powering Small Businesses: Productive Use of Energy is a Win-Win for Ugandan Entrepreneurs and Utilities
The U.S. Agency for International Development (USAID) and Power Africa are supporting electricity utilities to enhance productive energy use to local businesses, benefiting both entrepreneurs and utilities and creating positive ripple effects for communities.
With a small coffee farm under cultivation, Joel Rusubika invested time and hard-earned money to establish a coffee bean hulling plant in his rural home town of Rwesande, Kasese District, in Western Uganda. Mr. Rusubika is an agriculture extension worker who helps small-scale farmers achieve better yields for various crops, including coffee, Uganda’s most valuable agricultural export. He purchased a commercial-scale hulling machine but lacked the costly three-phase electrical connection to operate it. Discouraged by salespeople who took financial advantage of him, Mr. Rusubika soon abandoned his plans and the machine sat idle.
Energy is critical to commerce and to national economic growth, but megawatts are meaningless without entrepreneurs who know how to harness them for better business. The productive use of energy (PUE) — for example, the electrification of coffee hulling machines, cold chain storage devices, welding equipment, hair salon tools, kitchen appliances, etc. — is how energy expansion translates to improved livelihoods, as seen in rural communities like Rwesande.
Promoting Productive Uses of Energy through Local Utilities
Power Africa is tapping into local utility companies as a sustainable vehicle to promote PUE among Ugandan entrepreneurs, with advantages for both the utilities and their customers. By engaging local entrepreneurs on the ways that PUE can support their businesses, utilities increase their energy sales and gain new customers who benefit from boosted production and profits.
In 2021, Mr. Rusubika participated in trainings supported by Power Africa and facilitated by Ugandan company Clean Energy Enthusiasts (CEE). CEE led trainings for 280 entrepreneurs in across the service territory of local electricity utility Kilembe Investments Limited (KIL) in Western Uganda. The trainings tackled some of the greatest obstacles to PUE, such as lack of awareness about potential benefits, cost-benefit analysis for PUE technology adoption, general entrepreneurial skill gaps, and access to finance for business investments.
The trainings reignited Mr. Rusubika’s motivation; with new knowledge and skills, he sourced financing for the necessary electrical connection and opened the coffee bean hulling plant. “I probably would not have started this business,” he says, “if it was not for the training and support we received from USAID and Power Africa.”
Mr. Rusubika cited the training modules in recordkeeping, customer care, and business management as very useful, and has incorporated these new skills into his business, increasing his chances for continued success.
Mr. Rusubika’s coffee hulling plant now supports more than 75 small-scale coffee farmers in his region, whose hulled beans fetch triple the market price of unhulled beans. The farmers previously traveled several kilometers over rough terrain to have their coffee hulled by the nearest machine, but they can now save money on travel and labor thanks to the new plant. With PUE, Mr. Rusubika is serving his community and his country at a pivotal point in the coffee value chain. “I am glad that I am not the only beneficiary,” he says. “This plant is also benefiting the other coffee farmers in Rwesande and surrounding areas.”
Boosting Demand for Life-changing Electricity
Similar to other East African nations, Uganda currently produces more electricity than it consumes. Domestic demand is just more than half of Uganda’s 1,300 MW of installed electricity generation capacity. Power utilities have the capacity to serve more high-consumption customers, but demand is low. Many entrepreneurs are apprehensive about investing in powered equipment due to perceptions about electricity costs and connection fees, the lack of access to efficient PUE equipment, and a shortage of business advisory support to fully tap into their potential. PUE and related trainings are a meaningful way to increase demand for electricity while strengthening economic growth.
Rural utilities like KIL are responsible for last-mile services to customers and represent a critical component of the energy chain. They interact regularly with the communities they serve and are a trusted source of information on electricity use. These local utilities are best placed to promote PUE among community businesses, and energy sales through increased PUE enable small utilities like KIL to stay in business.
Power Africa supported CEE training of KIL management and staff on PUE promotion and produced a PUE promotion strategy for KIL to maximize its reach. The strategy includes customer mapping, finance “matchmaking” between PUE entrepreneurs and local finance institutions, and business training for PUE entrepreneurs in the KIL service territory.
“The involvement of [our] board, management, and staff in the PUE trainings was a key strategy to enable us to include [PUE] among our operational activities,” stated KIL Chief Executive Officer Jane Birungi. “Many areas outside the grid have heard about this and are eager to [take] part…PUE is the way to go for utilities to remain sustainable.”
