Power from mini-grid breathes new life into struggling businesses
Newly available power from a mini-grid is creating economic opportunities on the island of Ukara in Tanzania. New businesses are being established, including a modern bakery, providing bread to seven villages across the island.
Located about 70km from the regional capital Mwanza, the island’s economic activity is mostly based on farming and fishing. But despite the high demand for baked goods, the business owner failed to fully tap into this market due to lack of reliable and affordable power.
The situation changed earlier this year, when the first ever solar hybrid mini-grid was installed on the island by Tanzanian company JUMEME Rural Power Supply Ltd, with the objective of powering 1000 households and 350 businesses. The arrival of the power source, coupled with Energy 4 Impact’s productive use support, reinvigorated one entrepreneur’s dream of running a modern bakery.
I opened my bakery early 2013, which operated a firewood oven, but unfortunately I had to close it later that year due to high operational costs. After that, people had to import bread all the way from Mwanza.
- says Gasper Mkama, entrepreneur on Ukara Island.
Gasper Mkama’s business is located in the village center, which is just few meters from the lake’s shore. This area is the only entry point to Ukara Island and is connected to seven other villages in the island, making it the perfect location to serve customers from other communities.
Energy 4 Impact partnered with JUMEME and played a key role in developing the productive use demand by working with a range of businesses to build their capacity to effectively use the new source of power.
Gasper was assisted in preparing a viable business case to qualify for JUMEME’s financing facility, enabling him to purchase a Baraya Infrared Electrical Single Deck Oven on credit at the cost of $1400 (TZS 3.1M) over 12 months. Energy 4 Impact also undertook a demand assessment study to better understand market demand for baked goods on the island.
We have also helped Mkama improve his product, adhere to health standards, develop his brand, establish good distribution networks and expand.
- says Energy 4 Impact Project Manager Fredrick Mushi.
More than 100 loaves are now produced daily and delivered to customers, with more than 3000 loaves produced since the installation. Sales have resulted in an 80% increase in profit, bringing monthly intake from $46 (100000 TZS) to $230 (500000 TZS). To cope with the growth of the business, a new baker and sales person were hired.
This bakery is quite a life changing opportunity. The steady income has enabled me to repay the loan for the stove and reinvest part of the profit into the business.
- says Gasper.
The arrival of the mini-grid brought with it many business opportunities for the local community. Energy 4 Impact was of great support to businesses wanting realise the economic benefits of the new power supply.
- says Lazaro Kabunga, Chairman of the Village Power Committee.
Energy 4 Impact has been helping 44 businesses in Ukara make efficient use of electricity to enhance their productivity and reduce production costs. This in turn stimulates local economy, and increases the economic viability of the mini-grid.