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BOX 14: KENYA CLEAN COOKSTOVE MARKET ACCELERATION PROJECT
EnDev, a multi-donor initiative coordinated by Deutsche Gesellschaft für Internationale Zusamme- narbeit (GIZ) and the Netherlands Enterprise Agen- cy (RVO), promotes sustainable access to modern energy services for households. In Kenya, in En- Dev’s second phase, it has supplemented its sup- port for solar home systems with a results-based clean cooking component – one of the first clean cooking RBF programs in Africa. The program sup- ported a range of stoves, including charcoal, wood, ethanol and gasifier models, provided they achieved ISO performance rating at Tier 2 or above and a 40 percent fuel efficiency gain. This was tested at the Kenya Institute of Research and Development. EnDev’s eligibility criteria included a range of part- ners, including local financial institutions, cookstove manufacturers, retailers and distributors, civil soci- ety organizations and community-based organ- izations. This resulted in 29 program participants, nine of which were financial institutions. In practice, however, the financial institutions found it difficult to deliver the desired results as clean cooking firms generally fell outside their risk appetite, while their consumer credit offerings were unable to compete with nimbler, pay-as-you-go models. As is common for RBF programs, payments were dependent upon pre-agreed and independently verified results – namely, sales of cookstoves above an agreed baseline based on historical sales to en- sure business growth. The payments were capped at €100,000 (around US$90,000) bi-annually and
limited to a total of €500,000 (around US$450,000) per beneficiary. An independent verification agent was contracted by GIZ to provide independent val- idation of claimed results, including through tele- phone interviews, field visits and document review. Overall, the program was judged to be highly suc- cessful, outperforming its target of 80,000 cook- stoves by 20 percent. In addition, 20 participating cookstove distributors were able to extend their operations into new geographical areas, thereby extending coverage to all 47 Kenyan counties. Despite these successes, an independent evaluation of the program highlighted a number of challenges to be addressed in future programs, including: • Delays in the verification processes and the dis- bursal of funds to the distributors were a key con- cern for participants. • The uptake in remote and marginalized areas was low, due to high logistics and distribution costs caused by poor infrastructure connections, security issues and a lack of skilled staff. • The nature of the RBF, which requires participants to provide their own upfront investment and work- ing capital, is challenging in low-income and fragile settings. 122 • A lack of working capital was a challenge as driv- ing sales and credit provision requires adequate means.
122 MECS and ENERGY 4 IMPACT (2022) Modern Energy Cooking: Review of The Funding Landscape, Report 5 of the Financing Clean Cooking Series, https://mecs.org.uk/wp-content/uploads/2022/02/Modern-Energy-Cooking-Review-of-the-Funding-Landscape.pdf and Stritzke, S., et al (2021) ‘Results-Based Financing (RBF) for Modern Energy Cooking Solutions: An Effective Driver for Innovation and Scale?’, https://www.mdpi.com/1996-1073/14/15/4559
AN OPEC FUND KNOWLEDGE SERIES REPORT 2024
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