Uganda's energy and solar landscape
Enlight Institute's training provision and its growing focus on soft skills training
The human capital challenges faced by many solar companies
Enlight's business model and social mission
Enlight's approach to coaching as a form for employee training and development
(0:55) Jay Patel's background and how he came to work in Uganda and solar industry, following his time at Google's sales team
(3:05) Introduction to Enlight, the need for human capital, and Enlight's development of a solar academy
(5:08) Overview of Uganda, and the energy and solar industry in Uganda
(11:40) The transition of the off-grid sector from impact and philanthropy, to commercial and private sector; the challenges and dilemmas for the sector in reaching the poorest in society
(15:35) Enlight's evolution from focusing on technical skills to soft skills and on-the-job training; the need for human capital in the solar industry, and the social cost of the lack of training
(20:50) The shift in go-to-market strategy from individual youths, to working directly with companies and training their team
(24:55) Enlight based in Uganda, but looking further afield
(26:00) Technical training overview
(28:13) Enlight's business model, their use of grant funding and longer-term aim of profitable job coaching
(30:40) The challenges around high staff turnover in the sector, due to lack of training, or cultural issues
(31:55) Enlight's team and recruitment approach, from Acumen's fellows etc.
(34:20) Vertical integration vs. value chain fragmentation within the solar sector
(36:05) Challenges of financing in the solar sector
(39:13) Growing Enlight's business and using data to prove the value of on-the-job coaching
(41:00) Jay's recommended books and sources: Green Energy for a Billion Poor; Sun Connect News; Next Billion
(42:00) Advice for new entrepreneurs looking to enter the space: start engaging with the community and think about where you can add value
(44:15) Prediction for the next 5 years: the distinction between on-grid and off-grid will start to breakdown
Distributing Solar: Today we're speaking with Jay Patel, co-founder and CEO of Enlight Institute. Enlight provides solar recruitment training and assessment services for companies hiring rural youth in Sub Saharan Africa. He's also a cofounder of Village Energy, a last mile distribution company based in Uganda. We speak about the need for technical and soft skills training for solar professionals, the energy landscape in Uganda where less than a quarter of the population has access to electricity, and why there is a high need for training and investments in the energy industry.
Distributing Solar: You've started two solar companies in Africa, but your career started at Google in San Francisco. Can you tell us more about your background and how did you come to start Enlight and Village Energy?
Jay: It's been a pretty crazy story. So in university, I went to University of Pennsylvania, I did a lot of international development work. That's pretty much what I studied. And I was very involved in a conference series around clean energy projects - it has always been an area of interest for me.
After leaving Penn, I ended up doing an AmeriCorps program in New York, which I did until 2010. And then after that I jumped to Google, which was really an unexpected jump. But, the opportunity came up to join their advertising team and started off in customer service and ended up in sales where I spent about five years, working with a bunch of different brands, focusing on the small and medium business segment.
So it was definitely a very fulfilling and enjoyable time there, but as time went on, I started to get a little bit more anxious about, okay, what am I really doing with my life and what is it that I actually want to do longer term? And so in 2013- 2014 I started getting back into the social entrepreneurship world, started volunteering to help connect Google to different people and start attending conferences.
And I developed an interest in clean energy and specifically off grid solar, which is essentially a combination of international development as well as being something that's more private sector led. And Google actually has an office in Nairobi, and they were working on some off grid solar projects, which I was really interested in getting into. So I managed to convince my manager to give me a three month sabbatical and go out to Nairobi where I ended up meeting a bunch of different solar entrepreneurs and ended up coming to Uganda to meet with a few more companies and ended up meeting a social entrepreneur named Abu Musuuza, who is Ugandan. He had previously worked at Ashoka and he was an Ashoka fellow himself. And he had started a solar company with an American back in 2008 called Village Energy.
And so I was on ground and I volunteered just to help him relaunch his startup around a new business model around training solar technicians and ended up leaving Google. And it's been a crazy ride since then.
Distributing Solar: Tell us more about Enlight. How did you start the company? What do you work on?
Jay: Absolutely. While we were Village Energy, we developed this new business model around setting up a series of rural shops and training local youth in those areas to be solar technicians and salespeople who can not only sell small solar products, but also install and maintain large solar systems.
And we realized early on that human capital was a massive need, for us but also for other companies. And so in early 2016 developed this concept for a traveling solar academy that could essentially go into rural areas, train the youth and the skills that they need, and then they can be employed by a number of companies, including Village Energy, but also others because you know, we might only need one solar technician in a particular area, but there's certainly more demand from other companies. It just makes sense to train people for multiple companies rather than just one.
And I realized, wait, we don't know anything about setting up an academy. And we've done some trainings, but nothing really on this level. Fortunately, I had a friend for my AmeriCorps days and she was actually just finishing up her Master's at Columbia in International Development with a focus on education in emergency markets and so convinced her, Hey, why don't you come out to Uganda and after you graduate and help us launch this academy.
So she came out in the middle of 2016 and over the course of the next year and a half, we ran pilot trainings and eventually got connected to Signify Foundation, which is Philips Lighting. They may not know, but it's Philips and Philips Lighting now split into two separate companies, and Philips Lighting is now called Signify, so Signify Foundation. They were really interested and they essentially funded us to have a pilot, a full eight weeks technician training.
And in talking to different companies, they said, okay, we love the idea. There's definitely a huge need for training services, but you need to split out from Village Energy because you're just conflicts of interest. So that's how we came to incorporate Enlight, in early 2018 as a completely separate startup that’s really solving human capital for the entire sector.
Distributing Solar: I'd love to dive into Enlight in more detail, but if we take a step back and just think more broadly about the energy space in Uganda. Can you tell us more about Uganda as a country and also its energy infrastructure?
Uganda is a fascinating country. It's about 40 million people. It is a country that is really exploding in population. And out of 40-42 million people, right now only about 20 to 25% of the population is on the grid. Even in Kampala, the capital of the country, it's only about 50% of the population on the grid.
So you definitely have a lot of need for energy access. A few interesting things about Uganda. It is a very green country. I tell people it's like Ireland on the equator, because it has a lot of water resources. It has been a country that, unlike other parts of Africa, does not have generally a problem with food. Most you Ugandans have some access to land, to grow crops on. And so it is a little bit of a different environment. It's a much more highly dense part of the continent. Not as dense as Rwanda, which is right next door. But it's certainly a country that is quite small geographically.
Working in this country is also quite interesting, I think because it's an English speaking country. It tends to be a place where a lot of expat investment is now going into. It is definitely less developed than neighboring Kenya but it is a place that has attracted a lot of solar companies coming in to try to do something there.
And what makes it also quite interesting to be doing any sort of pilots around distribution is that because it is fairly geographically central, everything is in Kampala and then you can get to every part of the country within 10 or 12 hours by a bus versus a country like say Tanzania, which is four times the size, but only maybe 20% more people, it's much more spread out and it's much more difficult to set up a national base of operations that can cover the whole country. So in Kampala, you definitely see all of these solar companies right next to each other and it makes for a very, very, strong ecosystem in terms of entrepreneurs supporting each other.
Distributing Solar: And you spoke a bit about the lack of energy access that a lot of the Ugandan population has. So between 20 to 25% of the population has access to electricity. What are the alternatives that people are using when they don't have access to electricity?
Jay: So it depends on what they're using it for. The biggest, two areas that people really end up needing some sort of energy source for is lighting and for cooking. So with cooking, you're going to see a lot of cookstoves. It's a lot of biomass based, things like wood or charcoal. And there's a lot of companies, as many solar companies there are, there even more companies that are selling various types of cookstoves, some that are more or less efficient. Some use different kinds of briquettes or fuel sources.
In terms of lighting, you're going to be using these tabulahs, which are essentially these lanterns and the indoor air pollution is horrible. It can cost a pretty penny for the average family over the course of a year. So as bad in pretty much every possible way.
And so solar, especially at the Pico lantern level, has the ability to not only be cheaper and healthier but also leads to a lot of positive development outcomes as well.
Distributing Solar: Let's talk more about the solar industry then in Uganda and your experiences working both with Village Energy, but also with Enlight. Can you tell us more about what types of solar systems are typically being implemented, on the projects that you've worked on? Are we talking about mini grids? Are we talking about solar home systems or Pico solutions? And can you tell us more about the types of solar companies that have emerged within Uganda?
Jay: Generally you can divide the solar industry into on-grid, mini grid, and off-grid. In the African context, there is less on grid in countries like Uganda. But generally, the solar industry in Uganda is mostly focused on either mini grid or off grid.
And there hasn’t been a lot of mini-grid activities. So mini-grid is where you're hooking up a bunch of different customers to one system and you have some sort of metering or payment system. The reason that it hasn't taken off in Uganda is largely regulatory because you need to have a power purchasing agreement. You need to allow for net metering. There's just a lot of regulations around essentially becoming your own utility that have not been quite solved as well as issues like what happens, because the grid is expanding, if the grid reaches your area, how is the mini grid going to tie in to that? And what's the business model?
And what we've seen actually with mini-grids is that, even if they hook up a village, there just isn't enough energy demand. People still can't afford appliances. Uganda is actually in a very interesting area where it's utility, I believe, it's one of the only ones on the continent that's actually profitable.
But the way that it has managed to stay profitable is by focusing on customers who can actually use electricity and warrant the cost of getting a wire set up and maintained. But that does mean that a lot of poor rural customers are kind of being left out on the lurch. To give you an idea, like even if the utility pole in your front yard and the wires connected to your house, that could still be three, four, or $500, in terms of costs for the utility to actually set it up and send an engineer out and make sure the system is working.
So mini-grid has not really taken off and Uganda yet the way that it has in some other countries. So the focus has really been more on off-grid. With off-grid, it really is divided into, you have the Pico solar lanterns, so you're going to have anything from like a $5 single light that can essentially replace a single lantern and it's good for the kitchen, up to $30, $40 lanterns which are similar to what you might actually be able to buy to go camping here in the United States or in Europe that might have his phone charging as part of it, which is also what a lot of customers are looking for.
Then you get into the home system space, which is going to start at two lights, two, three, four lights, maybe a radio, maybe a fan, and that's going to be in, let's say, the $200 range, $150 to $200. And then go on all the way up, to larger systems for micro-businesses that might cost maybe a thousand or $2,000, which might include a fridge or some other aspects for productive use. And they gain all the way up into much more customized systems that can range up to $20, $30, $50, $100,000 or more.
So you have a pretty broad range. The reason the solar industry has been taken off is because starting about 10 years ago, there became this thing called a pay-as-you-go.
Home systems have become the big growth area here. So that's why you have a bunch of companies, the biggest ones being M-Kopa, but you have Zola Electric, you have Fenix, you have d.light, Greenlight Planet, Azuri, Mobisol. There's a lot of companies out there that are really focused on this home system market.
And that's where you've seen the biggest clients get up to say a million customers across East Africa. That's where most of the activity in the Africa sector has gone into home systems. So as part of that, there's been a couple of shifts. When this first started, when the companies, for example d.light, first started as two Stanford graduates who just started developing these lanterns, it was really given it seen as like an NGO driven thing, as in lanterns for people who don't actually have electricity.
There wasn't much money seen in that. Early on you had all these lantern companies and even by 2014, 2015 when I came to Uganda, you still had a lot of them out there.
Over the last five years, as this has become essentially like a mortgage market for solar systems, you're now seeing a lot of major money start to move into the space from investors, but also from multinationals, especially coming out of Europe, especially out of France. For example, Engie bought Fenix and there's been some other deals as well as you actually start to see that off-grid is actually considered a major growth area for energy companies, and it's been mostly private sector led, meaning that they're now focusing on the customers who might be able to afford a TV. And they're really, even if you're talking about the base of the pyramid, they're focusing on the top of the base of the pyramid.
You still have 30 to 40% of the population that could not even afford a lantern. Even a $5 or $6 lantern would be too much for them. At the same time, putting a chip into the lantern just cost too much money to make it worthwhile. And so you have this entire bottom 30 to 40% of the population that will never be able to be reached through purely commercial means because of stagnant income.
And so as a result, there are a lot of questions being raised, like, Hey, has the focus shifted too far to profit only and away from the impact, which was the impetus for this industry in the first place? And do we need to think about things such as subsidies, which is a dirty word in some quarters, but might still be necessary to really get to that point of universal electrification.
The second is that there's massive loan portfolios. Is this really sustainable? A lot of companies talk about people moving up the energy ladder. Oh, they started a lantern, and then they moved to a home system, then they moved to TV and then a fridge. But that involves incomes growing up. And there are energy savings, like over the course of say, three to four years and a family using a home system could probably save $50 or $100 which is definitely like a large amount of money. It means that kid could go to school but it's not necessarily going to move that family into a higher income bracket.
And so now the focus is now turning to what we call productive use of energy. So energy that leads to increased either incomes or access to services they may not otherwise get access to. So Village Energy, what we've done over the last few years is we started off by selling everything from lanterns to home systems, the largest to largest solutions, and now Village Energy is really focused on customized solar installations for productive use. Installations for schools so that schools can now have laptops and the internet and lighting. Then you have agriculture. You can start having grain milling, refrigeration and other value add additions.
For shops in rural areas, you can have power to that so you can have a fridge, you can sell cold drinks and milk and, and, and other perishable probiotics. So there's a lot of interest and excitement around productive use.
But how you finance that, how you are able to provide access to markets, there is a lot more that goes into creating a great productive use ecosystem. You can give a farmer the ability to grow more crops or to store more crops, cut the post harvest crop loss, but if you don't have good access to markets and they won't do the farmer any good and the crops will just die and then they'll suddenly have this loan for this system that isn't really leading to higher income.
So it takes more of an ecosystem based approach and bringing in different players together to figure out how we can properly support that market. But that's a market that Village Energy has seen a lot, a lot of activity in and so as time goes on over the next few years, we're going to see a lot more focus on productive use.
Distributing Solar: I'd love to speak more about productive energy use in a few minutes, but can you tell us more about Enlight and what that gap is in the market and how do you work as an organization?
Jay: When we first started, we were thinking largely around technical lines. Like we need more solar technicians, especially in rural areas where it can be difficult to find people who've gone to vocational school and even if they have, they haven't gotten any experience in solar. And so we started off by thinking this is like technically driven, but also that the solar technicians need soft and professional skills that are lacking as well.
Your solar technician is not just the technical person, it's your customer service rep. They're the person who shows up at the house to do the installation as their credibility and their communication skills that basically determine if the client is going to trust you and refer you. And so, technicians need a lot more training on that side.
When we started the Solar Academy, it was like an eight week solar, a training that we ran twice in two different parts of the country and each cloud cohort were about 15 people. And the idea was to train solar technicians and get them placed at different solar companies. And we were able to place the majority of them, or they found work on their own, within the industry. But in speaking with the companies after, I think one of the learnings was that actually it's more salespeople that the off grid energy, energy industry was struggling with more than the technical skills. And that it's really the soft skills, the professional skills, employability skills that all people needed. Technicians, salespeople, frontline managers, operational staff, headquarters staff, even upper level management there were really, struggling with a lot of these things like problem solving, timeliness, reporting.
And so across the industry, turnover is a massive issue. I know at Village Energy, we've run through so many salespeople, managers, and it costs a lot of time and it costs a lot of money and a lot of bandwidth goes into it and employees have committed fraud and ruined customer relationships. And so human capital is just a massive, massive drag. And the education system in a country like Uganda, even for university graduates, they're just not producing the level of talent that is necessary for a productive workforce.
And so with companies, who are getting these intake of graduates or even people in the village who haven't gone to university or even finished high school, there's the sense of, okay, like what do we do about this? And so what you end up seeing as a result is a company might do a training for like 20 or 30 sales agents and they say, okay, we're not going to invest a lot of money in them, our time in them, cause we don't know if they're going to succeed so that they maybe get some training on product knowledge.
And then that's pretty much it. And after two days, they're sentenced to the field to sell, and it's basically sink or swim. Who can sell in the first month keeps going and those who can't just end up dropping out. And so you see that out of a cohort of say 30 to 40 people, you might have attrition of 60% or 70%.
So it's just a few people who one way or another just happen to have those skills. And that results in a very distorted labor market where there's so many job openings yet even though the unemployment rate is so high, it's so hard to fill them. And people who do show success end up getting poached by other companies.
And so you see the same people jumping from company to company and hiring a sales manager who's effective with experience becomes incredibly expensive. We're looking at this and we're saying, okay, there's talent out there. You know, there's people who will work hard, are very intelligent, especially women, refugees.
One thing is an aside, Uganda has one of the largest refugee populations in the world from South Sudan and Congo, and even some people from the Rwandan genocide and never went back who had been in Uganda for the last 25 years. And Uganda actually has one of the most liberal refugee policies in the world where not only are refugees allowed to live and work and move anywhere in the country, but they can also get land. And so that means that what we're doing for rural Ugandans can also be applied to these refugee camps as well. So there's a unique opportunity for us to, to work on interventions that can directly impact refugees, which is really amazing.
So what we're seeing is that there is this demand for employers, for the talent. They don't know what to do. They don't feel like they have the resources to do it on their own. You are seeing this demand from youth who are looking for jobs and they're looking for income and employment opportunities. And so what can we do to really solve that gap? And that's what has led us to evolve from focusing on technical trainings to on the job coaching. Which is what we do now.
Distributing Solar: Can you tell us a bit more about how your typical engagement with a civil company would look like? maybe to take a step back, you've mentioned two modes of working.
One is to work directly with the youth, so the students, and to provide the training capabilities to them. And then the second way is to engage with a larger company and provide training for their employees. So can you tell us more about how your typical engagement in those scenarios work, if that is the right characterization? And if not, can you. explain how the structure is with the customers
Jay: In regards to your characterization, I think that's as apt and we've moved away from working directly with the youth on their own as individuals. For a couple of reasons. One, it's just really difficult to make a sustainable business model around that.
We are for profit, although we are a social enterprise. And the reason for that is that we know that productive employees and having predictive employees can unlock a lot of economic value. And so we believe that if we can figure that out, then there is a path to self-sustainability and we don't have to keep relying on donor funding for training programs.
But it's not going to be with the youth. It's really going to lie at the companies. And so we've kind of shifted focus to working with the companies. Let's say a solar company says, Hey, come in. I've just hired, or I have been employing, say, 10 youth sales agents but their sales are really lagging. And we believe that it's due in part that they don't have good written communication skills. And sometimes they're just not timely. They face some challenges with customer communication and teamwork.
Can you come in and help us? And so what we're doing is we're setting up a network of local coaches around the country that can work with these companies. So we'll go into the employer and say, okay, let's, let's figure out like what's the role, what are the expectations and the key skill sets and where do you see are there current gaps in your team?
And then we will start doing bi-weekly, one-on-one coaching with each person on that team that they want us to coach. So one of our coaches could be based in Kampala if the engagement is in the capitol or if it's in a rural area, say a five, six hour drive away, we're going to have a coach who's in that part of the country who speaks that local language.
And that coach would come in and provide one-on-one coaching to that person every two weeks it would start as maybe a three month engagement where you'd come in on the first session and say, okay, this is where your employer is saying that you're not doing this, this, and this. How does this reflect on you and how do you feel like? This paints a picture about you. Is it accurate? Is it not? And really get them started on this train of self-awareness in critical feedback but also support and this safe space where maybe they are able to open up about challenges that they would not feel comfortable going to their boss.
Because, especially in a lot of, you know, Uganda has 52 tribal groups. so every tribe has its own culture. But in a lot of tribes, especially in the central part of Uganda, there is definitely a culture where there is a reluctance to say no or to challenge authority. So if your boss asks you, ‘Hey, can you do this?’, the answer is yes. And you're afraid to admit to your bosses, you don't know how to do it. And so there is a culture where they just say, yes, yes, yes, we can do it but then they don't know how to do it. They don't know where they can turn to for help, and then they just stop showing up to work or stop answering the phone and the employer can't figure out why this employee is unable to act in a professional manner.
So I think this coaching can really help us to start unlocking these sort of fears and put in place action steps for them to implement between the sessions that can help them get better. And then we stay in contact with the employer and be calling the manager every week to be like, Hey, how was John? Or how is Mary doing on the job? How are you noticing differences in the way they're acting and their targets?
And so it is an ongoing, iterative process and we're seeing so much demand from companies. Since we launched this new model in the last few months, we've already signed up several clients. Covid has kind of put everything on hold, but we're getting a lot of interest now, even from companies outside of the solar sector. And so we're seeing that we're really tapping into this real desire to figure out a way to uplevel their staff in a way that's sustainable and scalable.
Distributing Solar: Are you focused primarily on your, gone to the moment, or are you working in other countries as well?
Jay: Right now we are focused on Uganda but we have got an interest from companies in Kenya, Ethiopia, Tanzania, and we have also gotten inquiries around our solar technical trainings for their field, for example, in West Africa. So we still want to be able to offer those technical trainings.
I think that those technical trainings will come in more handy for many good projects where, let's say you're doing a one time setup of a solar installation, maybe a 200 kilowatt installation in say a rural part of Nigeria and you need to hire 50 laborers in order to do the work. And these laborers need to be trained on how to install the panel. And so the question is, do we have our engineers come in and do this or do we have somebody come in before and kind of prep them so that we can hit the ground running in terms of installation. But in terms of the coaching for right now, we're really focusing on East Africa.
Distributing Solar: Great.
And if we can speak a bit about the technical training as well, what does a typical training program look like? What are the main skills that are lacking for some of the students or participants in your program? What are the popular misconceptions around solar that you typically encounter?
Jay: So, on the technical side, we typically tried to work with people who already have some experience. I think one of the learnings from not only the two training academies, but we've also run technical trainings on behalf of the agencies and NGOs and refugee camps and other rural areas, and what we've seen is that you need to have some sort of background in electricity. All technical training comes from why are they starting from and where you need them to be and that really determines everything.
For a lot of the off grid solar companies who are interested in our technical training work, there's not that much technical stuff that needs to be done. It's more actually like technical troubleshooting. So understanding like, okay, this is how a solar system works. This is what could go wrong, And basically training your sales agent in order to troubleshoot a system which involves, pressing buttons or cleaning the panel or something. That's something that can be taught in a few days.
But if you're talking about, say, can you install a 500W solar system on the roof, there's a lot more skillset around understanding how the wires go together. What are the different problems of the batteries. And then the next level is, can you like independently design a solar system? That's an even higher level that honestly. It takes months, if not years, to go from nothing to being able to get to that level.
So that is to say that all our trainings that we've done have been somewhat customized, but usually involve learning how the solar system works in the different components. And then, the basics of how to put the pieces together and then troubleshoot when they go wrong.
Distributing Solar: You've spoken a bit already about the change in focus and shifting from a more technical approach to a more soft skills based approach, but how else has your business model changed? And if you could speak a bit about what the overall approach is for your business model. Is it mostly driven as a social enterprise with maybe donations subsidizing the costs, or is it intended to be a fully for-profit enterprise going forward?
Jay: Yeah, it's evolved over the years. I think grant funding has been a big part of activities because in part we are working with some of the poorest populations in the world and trying to provide a high level of service to them and help underrepresented groups get into clean energy.
For example, like we did a recruitment pilot with a solar cookstove company in the fall where we were working specifically with girls age like 18, 19, 20 who had not graduated from high school but had gone through a livelihood development program. And so these are not necessarily youth that a company would have chosen to work with on their own, but we're willing to give them the chance in part because of grant funding.
So we definitely see that in our social mission around really reaching the underprivileged youth, women refugees. There is a role for grant funding and we definitely continue to work on grant funded projects. But in terms of building a sustainable business model, we're really focusing now on the coaching.
And the reason for that is because, number one, it's an ongoing process. So once you started working with the youth, it keeps going and we found that the customer's willingness to pay for coaching was much higher, in part because you're not taking the youth away from the job for long periods of time. They can keep working. They just come in.
And number two, we are making it cost affordable with our model because we're able to provide coaching for multiple people in say, at the same branch. And so there is economies of scale around this that can be leveraged to allow us to be able to provide it at a relatively cost effective price.
Organizing trainings upcountry so much of that actually goes not into what you would expect it to go into. It doesn't necessarily go into salaries or into the tools. It goes to food. Catering. Lodging for multiple people at the same time.
It gets very, very expensive. And we're finding that being able to work with the youth on the job and having a local coach who doesn't need to travel too far or stay overnight allows us to drive down the cost to the level the company's are willing to pay. And so based on that, I mean, we're really excited by the revenue potential of all of this is happening. And we definitely are pushing for self-sustainability
Distributing Solar: For the companies you've worked with so far, have you been able to have a meaningful impact on the turnover rates of the companies? And, if so, what do you think are the major driving forces for trying to reduce turnover?
Jay: Ask me again in a few months! But that is actually a key performance metric we're working one on with our clients.
I think Covid has disrupted a lot of implementation here but absolutely I think reducing the attrition rate is a very key metric that we'd be engaged in our success. Now, the reasons behind that attrition can vary. So yes, we have, for example, a turnover due to job issues such as fraud, or on productivity.
But we also have other more cultural issues. And a lot of cases we've seen women leave the job for us because they've been under pressure by their family, to get married or to have a child. Of course, when a woman has a child and she's unable to work, that also leads to them dropping out of the workforce as well.
To say that we can completely solve such a problem is I think not necessarily reasonable that we can say, okay, well all attrition is going to be reduced. But I do think that we can start to reduce it to a rate where employers are able to manage it and they're able to work around it.
Distributing Solar: And can you tell us more about your team? Where do you find your employees? What are you looking for and how do you look at your training process for them as well?
Jay: Yeah. So we've tried to have a pretty small team, for example, Village Energy, which I'm still on the board of, we have about 20 employees. And by the way, I'm also really proud to say that, you know, Village Energy is now the first solar company in East Africa that I know of where not only do we have 100% local staff, we no longer have any expats working at the company.
But the majority of the leadership team, including the CEO, is female. So it's a completely locally led female led solar company. And actually the CEO of Village Energy is actually an Acumen fellow like me. So I went through the Acumen Fellows program in 2017. Abu, the original founder of Village Energy is himself an Acumen fellow. And so being a part of that network has given us access to a network of incredible people to not only advise us but in some cases has been a source of employee referrals.
Enlight is much smaller. We only have on the ground in Uganda about five people, so my co founder, Anya, and a few other staff. Our goal is to try to stay small and lean, but also quite committed. And again, referrals through our networks plays a big role in finding good employees. And of course there's more traditional sources such as job postings.
But yeah, we are definitely trying to model inside our company what we want to implement in other companies. So a lot of the coaching and the performance management that we are helping our clients implement, we're in the process of implementing ourselves to make sure that we're walking the walk in terms of developing our own employees.
And that's an ongoing process. But I can definitely say I've been seeing huge improvements in the last year in terms of the capability of our team in order to execute well, and to, move quickly.
Distributing Solar: Great. So we've spoken a bit about some of the challenges around the upskilling that's required for the workforce, in particular in developing some of their softer skills But what do you think are the broader challenges facing the solar industry, either in Uganda or more broadly across East Africa that you think needs to be overcome in order to accelerate growth within the sector.
Jay: There are a few areas. I truly believe that human capital is one of the biggest challenges and maybe perhaps the biggest operational challenge that many of these companies are facing in terms of ability to scale because it is a very people intensive business. I think as well that there are a few debates within the solar industry and perhaps the biggest is what is the future of the industry. And perhaps the biggest is will the industry be a few vertically integrated companies that do everything from manufacturing the system all the way through to distribution or are you seeing more of say an open source model where you're going to have a bunch of different manufacturers and the financing is going to come from a bunch of different sources, and a bunch of different retailers and everything's unbundled. And I think that that is a debate that's going on right now in the industry.
In terms of number one these vertically integrated models are very complex. It's hard to be profitable while you're doing four or five things, right? And even when we're talking to some of our companies, one thing that we are seeing traction when we speak with these companies saying, look, you can hire your own in-house coaches. You can hire own hen house trainers. You might even have the money to do so, but do you really want to when you have to deal with importation, sales, supply chain management credit, and in some of these cases, managing the balance between credit and distribution is difficult.
That's why you're seeing now, there's this company Solar Now, and they've been one of the companies that has actually managed to hit profitability and they're one of the largest solar companies in Uganda, and they're actually splitting the credit business and their distribution business into two separate companies because they're seeing that it's just too hard to do both really well at the same time. And so I do see the potential for all sorts of additional unbundling start to happen and I think that something that we're gonna have to take forward to see how that plays out.
But the other question comes back to financing and it's related to the unbundling but it's also just the fact that financing these markets is a very risky business because of currency fluctuations. And you've seen the Ugandan shilling dropped by 20, 30% in the last three, four years. But most of the money that's coming in for these sort of loans is actually coming from abroad. It's coming from the US or Europe, development banks, impact investors. You're not really seeing local business get involved.
So it's still a sector that overall is very, very ex-pat and foreign driven. And how do you go from there to an industry where you have local entrepreneurs really succeeding that may not have the access to capital that an American or European does? And how do you see local financial institutions get involved? Local banks being willing to invest into the sector so that some of the profits of the sector go back into the country and help to grow the local economy.
Distributing Solar: And do you have any thoughts on what it takes for us to get to that future? Is it a matter of time? Does there need to be a greater buildup of wealth and education and training within a growing middle class which is what we typically see in other emerging markets, for example in Asia? What do you think will really help us to get to that next stage?
Jay: Well, I think you hit the nail on the head. I think it is human capital. And when you look at the China model, it kind of happened organically in part because there was so much factory work. And so you had these unskilled laborers becoming factory workers and they generate enough income to start being able to send their kids to school. Start get enough for the local governments to really make massive investments in education. And so that's kind of what I would say is the China model of development and growing into a society where you have a lot of people in middle income.
You're not seeing that for the most part in Africa, this might change and I do think Covid is starting to show the limits of global supply chains and showing the limits of not having your own indigenous industry in some of these areas. So I do think there's going to be more of a push to have more manufacturing in Africa. However, because of automation and AI, you're just not going to see the same level of opportunities for unskilled manufacturing jobs that you did in China 20-30 years ago.
It's not that there's going to be 5 million factory jobs in Uganda and you don't need a high school education. Even the manufacturing that's coming in is going to require more skills in order to be globally competitive. So I do think that the only solution for a country like Uganda or Kenya is to really, really invest in people and really gain in the skills they need to track more services industries and more high tech manufacturing.
So I do think that the way that we can even the playing field a bit is by investing in human capital. And that's why I think we're trying to do our part.
Distributing Solar: And so what are the goals for Enlight as a company? What do you hope to achieve in two years and five years from now?
Jay: Well, in the next couple of years, our real focus is on proving that not only are our interventions effective but it's also self-sustaining and profitable. And so we're really, really driving, like especially this year, driving to scale up our coaching model, and start building this data base track record of not just coaching X number of people, but also demonstrating how this investment in bumping up the skill sets in certain areas is translating to the results on the ground and increase revenue.
We really want to build that direct correlation, if not causation, that ‘Hey, if you really invest in an employee in Eastern areas, they're going to end up increasing your productivity, increasing your top line revenue by X amount.’
And so that's what we're really focusing on. And I do think that we're going to get to a profitable model in the next couple of years working with hundreds or thousands of youth. And then the next stage will be, okay, well how do we get them there to say 5 million or 10 million? And that's still a work in progress, but we do believe that a lot of it starts with collecting good data in terms of our interventions and our outputs so that that can help us chart the path forward to what a technology based solution would look like.
Distributing Solar: Great. Thank you so much Jay for speaking to us about the company. We like to end our conversations with a couple of quick fire questions just to understand more about you as a person and more about the company as well.
So to start with, where did your company's name come from?
Jay: I actually don't know. I was traveling when my co-founder actually came up with the name. They were doing a little team brainstorm around the name and that was something that stuck, but I'm not sure what was the original inspiration behind it.
Distributing Solar: Are there any books that you recommend to our listeners or books that have changed the way you think or influenced your thinking about the off-grid sector?
Jay: Well, I think the sector, like if you're interested in kind of like the early stages of the sector, there is a book about the Bangladeshi that talked about Grameen Shakti, which is the sister company of Grameen Bank, and this was back from like the late nineties, early two thousands. And it's called Green Energy for a Billion Poor by Nancy Wimmer. But the truth is that the sector has evolved so quickly that there's no book that it hasn't been able to keep pace.
However, I do recommend that for those who are really interested in the sector, SunConnect is a summary of all the different news and writers that are talking about the space. And then Next Billion is another website that has a lot of long form and very, very thoughtful posts around impact investing and also the off grid solar industry. And those, I really try to keep up to speed on.
Distributing Solar: And if someone is looking to start getting involved in the off grid solar space or in emerging markets either as an entrepreneur or as an investor, what advice would you give them?
Jay: Whew, that's a good question. I will say that first off, it really depends on where this person is. If they're a westerner who wants to try to do something in, say, Africa. To jump in without any connections, without any experience, it's not impossible, but it really takes a lot of networking and trying to understand the dynamics and where you can add value.
I do think that there is a huge amount of potential to engage the African diaspora. I do see that, especially in West Africa, there's been a lot less focus on off-grid solar than there has been in Kenya, which at this point is pretty much a saturated market. So a lot of it depends on like, okay, where is your particular area of focus? What can you provide? Whether it's money, whether it's networks, whether it's just your own expertise. And start talking to people in the space. The one great thing about the industry that I've found is that at the end of the day, it is a for-profit industry, but it's one that most of the people in the space got into it for some sort of social impact.
And so as a result, people tend to be really supportive of each other. And I'm really open to connecting. So that would probably be my main advice is to really find out who's, who's in the space, who's exciting, and start reaching out and start having these conversations and then figuring out where you can add value.
But I will say that the market is more mature now than it was, say, five years ago. Five years ago, if you were just two guys with an idea, you could get funded quite easily but now it's much more established players and you're going into a market with a lot of competition.
So I do think that if you're going to start something, a new business in the space, it should be in some of these ancillary services like software or technology or other solutions that can help support this industry rather than, ‘Hey, I want to go off and design a solar system for distribution.’
Distributing Solar: And to close, what are your predictions for the upgrade side of the sector for the next five years?
Jay: I expect that we're going to see these distinctions between on-grid off-grid and mini grid are going to start to break down. I think you're going to see a lot more people, even in developed societies, start to look at pure off grid solar systems as a good alternative to the grid, and you're going to start to see more of these mini grid/off grid systems in places like Uganda maybe start to get connected up to the grid.
I think a lot of it's going to depend on storage, batteries, technology, and can we continue to bring the price of storage down at this point. The cost problem in the solar industry is not actually about solar generation. Panels already generated power at a cheaper price than most other sources.
And that price continues to fall, but battery storage walls decreased a lot. It needs to fall much, much further for it to be economically viable as a solution. Right now, most off-grid solar systems kind of operate from the mindset of, wow, we can't get the grid but if the grid is available, typically the grid is going to be cheaper than an off grid system.
But if the battery costs fall far enough, then that could change. And if that happens, then I think the industry is going to open up in a massive, massive way.
Distributing Solar: Thank you so much, Jay. Thanks for joining us at Distributing Solar.