Archive for January 2015

Somali energy market research

Spark and DutchSom recently supported Ayaanle Cawaale, a Somali Diaspora entrepreneur in the renewable energy sector, with his market research in Somalia.

Ayaanle, why did you do the market research? Based on my previous experiences on the local situation I prepared a business plan. In order to improve my business plan I needed to test my initial ideas to the current local reality. I also knew that there are many ongoing activities in the Somali energy sector and that the local situation is changing fast. It is therefore important to scan the market before entering it.

How did you experience the market research process? I found it adventurous and challenging experience. During the preparation process Spark challenged me to make a short research description, with planning and think of potential risks related to the market study. Upfront thinking about the potential risks related to the market research helped me to improve my planning and smoothen the process.

Can you elaborate on few research risks and how you mitigated them? A major risk is the lack of factual data on the market. There are not many statistics on market size, energy usage and prices available. In case you find information it is also difficult to validate it with other data. To mitigate this I did a desk research in the preparation phase and in case information was not available I made fair estimations.

With the lack of statistics and market data you become more dependent on Somali industry experts or representatives of parties that are active in the local energy sector. The most knowledgeable persons in the sector are often dynamic businessmen with full schedules. Therefore there is a risk that the sector experts are not available during the period I was conducting the market research. To mitigate this risk I relied on Spark country representative Khaalid Hassan who helped me with arranging the meetings before my departure and advised me to build in more buffer time in the field research timeline. Extending the market research period with multiple days and the buffer time helped me to cope with unforeseen events. I luckily met all market experts I planned to meet.

What did you learn from the market research? I got more insights of the energy sector. The need for energy increased significantly after my last visit of few years ago. A large part of the surge in energy need is related to the growth of the Somali private sector. More and more companies are set-up in the country and this puts pressure on the current energy supply that is delivered through basic transmission lines.

There is a supply and demand dis-balance which increases the prices per kilowatt. I also learned new players in the market, visited ongoing project sites that will influence the energy supply of next few years and got better insights of the market outlook.

What would you advice other entrepreneurs on doing market research? There is a saying that goes as follows: “good preparation is half the work”. So prepare well before you go to conduct your market research. With the support of Spark and their local partner that collects market data we were able to plan all meetings and gather basic market information upfront.

You can try to arrange everything yourself or with persons you know but you can also find and build on capable local partners. The downside of conducting the research alone (or almost alone) is that there is higher chance of coming back with uncolored or unfinished market picture. For me relying on Spark during the market research was like walking on a cleared path instead of making an own path by cutting the trees. So avoid reinventing the wheel during the process to conduct the research!

Thank you Ayaanle, for sharing your valuable Somali energy market research experience!