Ca$h Money

In response to a request from some of our readership (Thanks Chris!), I’ve pulled together some rough numbers to address the question of the financial sustainability of the project.  It is true, that the products we’ve been using are not the cheapest options.  LED lights that we use cost UGX 10,000, or twice as much as available florescent 12V bulbs, and the deep cycle batteries that we purchased at UGX 400,000 are maybe eight times as expensive as the car batteries that most people use in similar situations (note: these car batteries are between a third and half of the capacity of our batteries, so it’s not exactly a direct comparison).  However, the lifespan and functionality of the items we’ve been using prove their worth against cheaper options, and it’s not too difficult to see profit in spite of some pretty high start-up costs.

The Malembo Micro-Grid

The Malembo micro-grid is expected to near full capacity (50 lights powered) by the time I leave in early August.  This means that the group would have to invest UGX 500,000 in LED lights at UGX 10,000 each, UGX 65,000 in fuses at UGX 1,300 each, and UGX 90,000 in spools of wire at UGX 15,000 each.  This gives a grand total of UGX 655,000, or about $262 USD.  This is by no means a small sum, and when you consider the investment in the micro-grid by Julian’s and my summer funding as well as the Foundation for Sustainable Development (2 solar panels at UGX 450,000 each, 1 100 Amphour battery at UGX 400,000, and smaller, assorted items), the cost of the system nears $800 USD.  We were lucky that we had the access to kick start development with the capital we brought with us and gained through an FSD seed grant, but ultimately it’s not an unreasonable sum to pay off.

When it comes to earnings, a grid supporting 50 clients earns UGX 15,000 each day.  With these earnings, the group’s investment will be paid off in 44 days of operation.  This doesn’t include the earnings from charging phones during the same month, and the 200 watts of panel and 100 amphours of battery have been calculated to be capable of providing for the current phone charging demand as well as the fifty lights.  After the group pays off its initial investment (and they have managed to set up an agreement with a shopkeeper in Kalisizo to pay for lights they purchase after they earn enough money using them to do so), they will earn UGX 450,000, or $180 USD each month, and in a single month, they could earn enough to add a third solar panel.  In two months, they could purchase a solar panel and another battery.  A day of powering lights for 50 people earns enough money to buy another light and add another customer to the system.  The nice thing about this system is that there are no costs to maintain it; all profits can either be taken as just that, profits, or put towards further expansion of services and profits.

Internet Café

The internet café in Lwemodde will be a little different in that it does have a recurring cost: the internet plan.  The way internet works in Uganda is it is service provided by cell phone companies, the most popular being Orange’s internet plans, which come on an “Orange stick.”  Orange sticks resemble flash drives and just plug into a computer’s USB port, providing internet based on the monthly or 3-monthly plan that you purchase.  We are not using Orange internet, and will be using Airtel’s service (another phone company) because there is an Airtel tower visible from Lwemodde.  This makes service better regardless, but also it is easier to use a satellite dish to enhance the signal since there’s a clear sight line.  Airtel also uses similar devices (although they don’t seem to have a catchy name like “orange stick”) which they offer for UGX 60,000, and they come with 500 MB of data for one month.  This would be a one-time purchase, and then each successive month would require purchasing a data bundle.  However, since these devices only serve for single computers, we’ll be purchasing a router, which is Airtel’s other option for internet services.  The router serves up to 20 computers, so we should be fine with the two we plan on using.  It costs UGX 180,000 and comes with a 2 GB, 1 month plan, and while it is more expensive than buying two Airtel sticks for our computers, it’s ultimately cheaper because you don’t have to buy two separate internet bundles.  The way in which we plan on using the internet, I expect that will soon run out of the initial 2 GB and the ultimate bundle that the Lwemodde Youth Group will use is the 1 month unlimited plan, costing UGX 290,000 per month.  With this assumption in place we’ve done some basic calculations.

Unlike Malembo, all startup costs have been provided for by Julian’s and my summer funding, or from a seed grant from the Foundation for Sustainable Development.  This includes the solar panel, the battery, the computers, and the assorted circuitry/wiring we’ve been prototyping with. 

In internet cafes in larger cities, twenty minutes of internet can be purchased for UGX 500.  I sat down in Addam’s Videography and Internet Café yesterday in Masaka (an hour plus trip from Lwemodde) to test one out, and it’s actually not a bad system; they even have software that locks you out of a computer after exactly 20 minutes, then can be reset to allow an extra minute as you log out of whatever you were using or decide to purchase more.  That internet café in Masaka had eight computers, six of which were full when I was there at 4 P.M.  Junior has insisted that with two computers in Lwemodde, demand will be constant and we’ll have two customers constantly for ten hours a day.  Realistically, I think we can expect about 8 hours of internet purchases per day, because between 11 A.M. and 7 P.M., it seems as though few people are working (people generally go to the fields very early and later so it’s not unbearably hot or sunny) and there are consistently five or six people hanging out in the shop itself, and another fifteen hanging out under the tree across the street.  If you can count on eight hours of internet purchases per day, that’s sixteen hours of internet time between the two computers, which divides into 48 twenty minute segments.  At UGX 500 for each twenty minute segment, that’s UGX 24,000 per day and UGX 720,000 per month. 

I’m still hesitant to assert that demand will be totally constant (although people are getting excited about computers!), but even if you round that figure down to UGX 600,000 each month, that’s more than enough to cover a fee of UGX 290,000 for unlimited internet, and in fact two months of operation would mean more than enough profits to purchase another computer.  The computers we bought totaled UGX 400,000 including shipping, and so two months down the road, the Lwemodde Youth Group could have a third computer and a cool UGX 220,000 to go with it. 

Yes, each purchase that we’ve made has been an investment, especially in this financial environment where a bottle of Coca-Cola costs $0.40 USD.  However, once momentum has gathered, both endeavors have huge potential for profit.  Having a lot of capital to provide for the high initial costs was a great benefit, but “earning back” those costs as an organization will not take long which could allow for continued expansion if the demand for services is there.