New energy
entrepreneurs

 
Francis Yamba
describes a programme which brings sustainable development by supporting businesses pioneering energy solutions in developing countries

Living in Lusaka, Fredrick Musonda noticed two things. Increasing demand for the most common fuel, charcoal, was supplied by native trees ‘carbonized’ in simple, but inefficient, earth kilns. And the local sawmill, using logs from eucalyptus plantations, simply burned the waste from its operations. So he started a company to manufacture charcoal from sawmill waste in more efficient kilns.

This was an important step in a country where demand for charcoal, already 900,000 tonnes a year, is rising by 4 per cent annually. This growth, together with inefficient production methods, increases deforestation – and the associated soil erosion, water pollution and biodiversity loss – leading Zambians to an unsustainable energy future.

The new company, called KBPS, successfully serviced an initial market. Mr Musonda wanted to expand but was stopped because, as is often the case in developing countries, conventional forms of finance were not available. Then he heard about an innovative UNEP programme – the African Rural Energy Enterprise Development (AREED) initiative, supported by the United Nations Foundation and E+Co, a United States-based, non-profit investor. AREED works with local partners to combine business training with small amounts of start-up capital for entrepreneurs who want to deliver better, profitable energy services to rural people in Ghana, Mali, Senegal, Tanzania and Zambia.

Mr Musonda sought AREED’s help both in planning his business expansion and in providing the seed capital to fund it. AREED was interested because his enterprise could help to solve an energy problem and an environmental problem at the same time by producing charcoal from the waste product of a renewable forestry practice. KBPS could demonstrate how charcoal can be made without causing or exacerbating deforestation – offering great potential for replication elsewhere.

Moreover, charcoal production is employment intensive, and the more efficient kilns can reduce environmental damage, for example by cutting carbon dioxide emissions by almost 33,000 tonnes a year in this project alone.

Efficient production
Mr Musonda worked with the local AREED project officer from the Centre for Energy, Environment and Engineering in Zambia and an E+Co investment officer to structure a commercially viable and profitable venture with minimum risk. They determined that KBPS should construct 15 additional brick kilns specially designed to be more efficient than traditional earth ones. These would enable the company to produce about 2,000 tonnes of charcoal in the first year of operation – or about 1 per cent of total demand in the targeted area – rising to almost 3,000 tonnes of charcoal in the subsequent four years.

The team then completed a comprehensive business plan to guide KBPS’s expansion and AREED lent it approximately $75,000 for five years at 12 per cent interest. By the time it received the final loan instalment in February 2003, KBPS had constructed ten new kilns and others were being built. Charcoal production had increased to approximately 960 tonnes a year.

Continued support
The company, however, faced several new challenges that required a change in strategy from the original business plan. AREED was there to help with post-investment services – crucial elements in the design of programmes that combine business dimensions with sustainable development. It will continue to support KBPS in implementing the venture.
An enterprise-led programme can be the missing link to sustainable development
This is just one of 15 enterprises which AREED has provided with development services and nearly $1 million in start-up capital. They offer energy services ranging from industrial energy efficiency to solar-powered electricity and the supply of liquid petroleum gas.

Following its success, a similar programme, B-REED is operating in Brazil and has already invested in companies supplying solar-powered irrigation pumps and creating wood fuel from plantations for brick manufacture. Another, CREED, has just started in China’s remote and biologically diverse Yunnan Province in partnership with The Nature Conservancy.

Together, they are demonstrating that an enterprise-led programme, supported by business development services and small amounts of start-up capital delivered through local and international partners, can be the missing link to sustainable development


Francis Yamba is Director of the Centre for Energy, Environment and Engineering in Zambia.

Additional resources: Open for Business: Entrepreneurs, Clean Energy and Sustainable Development, a 32-page UNEP publication describing the REED programmes; The REED Report, September 2003, a four-page summary of the latest REED news.

PHOTOGRAPH: AREED



This issue:
Contents | Editorial | Key to development | The energy challenge | Plant power | Bioenergy: doing well while doing right | New energy for development | People | Delivering Change | Benign growth | Green energy | At a glance: Energy | Sustainable Dreams | Brightening the future | Greening oil | Blue-sky thinking | Books & products | New energy to assault poverty | New energy entrepreneurs | Time to get serious | Breaking the ice | In my lifetime – 100% renewable| Slimming the waste

Complementary issues:
WSSD, 2002
Energy, 2001
Poverty Health and the Environment, 2001
Climate and Action, 1998