KOKO Expands Into Rwanda in Bid to Replace Charcoal With Ethanol
KOKO Expands Into Rwanda in Bid to Replace Charcoal With Ethanol
(Bloomberg) -- KOKO Networks, a startup targeting sub-Saharan Africa’s $47 billion cooking-fuel market, plans to enter Rwanda in its first expansion outside Kenya where its bioethanol cookers are used by 1.5 million people.
KOKO together with Dalberg Ventures, which is taking a minority stake in the project, will spend $25 million on a network of cooking-fuel dispensers. The company founded eight years ago aims to slash the use of charcoal and wood in the East African country and replace it with cleaner, renewable fuel.
“Rwanda is targeting universal access to clean cooking by 2030,” the companies and the Rwanda Development Board said in a statement on Tuesday. This will help tackle “indoor air-pollution deaths caused by the use of charcoal and wood for cooking,” they said.
Charcoal production is the leading driver of deforestation in Africa and endangers the estimated 850 million to 900 million people who use solid fuels, including charcoal and firewood, for cooking on the continent. It’s blamed for shortening the lives of more than half a million Africans every year as its produces carbon monoxide, a hazardous gas, and particulate emissions, according to the World Bank.
While the Rwandan venture is a first step for KOKO out of Kenya it eventually targets boosting its ethanol stove manufacturing capacity 10-fold and expanding globally with about 60 countries suitable for its products, according to Greg Murray, its chief executive officer and co-founder.
The company is currently able to manufacture 10,000 cookers a week at a plant owned by KOKO in India.
Under the agreement, KOKO will establish a network of cooking fuel distribution points in Rwanda, while the government will waive value added tax and import duties on the cookers and the fuel.
That will help cut the cost of the cooker and the imported fuel, said Murray. A cooker, canister and an initial fuel allocation costs $18 in Kenya.
“Charcoal, which is part of the informal economy, has none of these taxes,” Murray said. “The objective is to undercut the price of dirty fuel.”
The World Bank estimates that the bulk of the annual $47 billion spent in sub-Saharan Africa on cooking fuel is on charcoal and wood, with just 18% of people using electricity, kerosene or liquefied petroleum gas.
KOKO expects to get its project up and running in Rwanda in about a year and may grow over five years to serve almost half of the country’s 2.2 million households, Murray said.
Murray said he aims to announce expansion into two more countries this year. The company is talking to governments and other parties about a potential entry into other markets in Africa and South East Asia.
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