This is the second installment of a two-part series on one company's effort to cut Africa's reliance on charcoal. Read part one here.
Selling Africa on Clean Cooking FuelMaputo is Mozambique's sprawling capital, much of which is barely paved. The vast majority of the city's 2 million residents cook with deadly charcoal—inhaling the smoke causes a host of respiratory woes; some are fatal—and they live on $1-2 a day. Because this practice is pervasive across the continent, there's a concerted international effort underway to introduce cleaner cookstoves across Africa.
Most Maputo residents cook on cheap, poorly made charcoal stoves, and many do so indoors. If CleanStar wants to sell them cassava ethanol, they're going to need to sell a new kind of stove, too. So, CleanStar put together team of Mozambican marketing strategists and salesmen and developed a brand called Ndzilo, which means "fire" in the local dialect. The flagship store is on a corner by Hero Square, near a violently colorful mural depicting the nation's war for independence.
Cleanstar has adopted a sort of "Avon lady" strategy to make the pitch for a stove that would last longer, burn cleaner, but cost about ten times more—the stoves are subsidized by the company, and still cost $30 a pop.
"The charcoal stoves may be cheaper, but they break down in a month. People have to keep buying new ones," CleanStar chairman Greg Murray said.
The Ndzilo team makes house calls throughout the city, targeting Maputo residents in the low-to-middle income range. They demonstrate how the stoves burn cleaner, create less of a mess, and, importantly, heat up instantly—charcoal stoves take between 20 and 30 minutes to fire up. The team barely mentions the health and environmental benefits, because like just about everywhere, that's just not what sells. Once the stove is sold, the fuel itself is more competitive with coal. Ndzilo sells 1 liter of cooking fuel for 50 Mozambican meticals, or about $1.75. 5 liters is just over $8, and can last a week.
So far, the company has sold 3,000 cookstoves—the team's projections call for 120,000 sales when scaled up to the next level. But a major push lies in store—every single person I interviewed, through a translator, in Maputo's sprawling markets used coal to cook and said they were generally satisfied doing so (read more about Maputo's charcoal markets in this previous dispatch). Also, buyers will have to pay a sales tax on Ndzilo fuel, unlike charcoal, which is sold on the informal market. But the 3,000 orders have already exceeded expectations; the sales team is enthused and confident.
The Carbon Market
One last important piece of this puzzle is the international carbon market. Bank of America sunk a seven figure investment (CleanStar nor Abyd Karmali, the bank's carbon markets chief, would specify) into CleanStar Mozambique, and they did so by buying futures in the carbon credits the project will generate.
"That was an important moment," Novozymes CEO Steen Riisgaard said. "That was when I became confident that this project could work."
The dollar value of the credits, which will be traded in Europe's carbon market, is still being finalized in an accreditation process. But they've already provided a mechanism for a major bank to invest in a relatively small but potentially powerful project, where there might otherwise not have been an opportunity to do so.
If CleanStar Mozambique proves successful, a lot stands to be gained. Slowing deforestation, getting charcoal out of the living room, and increasing incomes for farmers—if it scales up as planned, we'll see progress in three important arenas. Now, there's always going to be an element that makes you a little queasy whenever you have a bunch of rich white guys in suits huddled together trying to solve Africa's problems. But to its credit, CSM has shaped much of its marketing and business strategy by reaching out to, engaging, and hiring Mozambicans like Thelma Venichland, their gregarious and talented director of marketing.
So there's just one more thing this venture has to do: it has to turn a profit.
"It has been our premise that only if every part of the value chain makes money does it have a chance to survive," Riisgaard says. "It will be the next two or three years that will be the test."
And that's coming from the CEO of the project's largest strategic stakeholder. And he's right: there will be difficulties. It will, for example, be a challenge to coordinate the farming and biofuel production with the cookstove salesmanship; either end could succeed or fail and muck up the other. Some of the sales projections for the cookstoves seem pretty rosy; it may be more difficult than anticipated to penetrate a market with such a pervasive social norm as charcoal cooking. Logistics could be maddening, especially in the early stages, and so on and so forth. In other words, there's plenty that could go wrong.
But there's plenty that should go right, too. And you've got to hand it to CleanStar Mozambique for taking on such an enormously ambitious venture, and for striving to thoroughly mitigate each of those risks outlined above. Because if this works, it could change the game not just for tens of thousands of Mozambicans—it could establish a model that Africans and foreign investors alike might embrace to speed the demise of charcoal.
"The hope is that we can make money," Riisgaard said. "We can make money with this, not a lot, but there are literally thousands of places where this would be a fantastic idea."