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Fuel efficient injera stoves in Ethiopia
www.Garosolo.com
Teklu Birhanu Desta with wood stove -
Fuel efficient wood stoves consume 60% less firewood.
The objective of this business plan is to start a commercially successful company that will manufacture and sell fuel-efficient injera stoves in Ethiopia. With the fuel-efficient stoves, the company expects to contribute to the reduction of poverty, the protection of the environment and the improvement of health of the Ethiopian community.
In Ethiopia, 50% of the population has an income that is below the poverty line. Even today, in some parts of Ethiopia, people regularly suffer from starvation. The people in Ethiopia rely on injera as their primary source of food. Injera is a flatbread made from teff that is baked upon a griddle, which is most often heated by means of an open wood fire. Baking injera accounts for over 50% of all primary energy consumption and over 75% of all household energy consumption. Due to the shortage of firewood in growing Ethiopian communities, baking injera on open fire is becoming increasingly expensive. Women and young children have to walk many miles a day to collect firewood to feed their families. By buying fuel-efficient stoves, commercial clients and households can reduce their firewood consumption by approximately 60% and make a considerable saving on their financial budget. At the current market prices, the fuel-efficient stoves have a payback time between 2 and 3 months for an average household family.
In Arba Minch, a town approximately 350 km south of the Ethiopian capital Addis Ababa, the need for firewood of the rapidly growing population has resulted in serious deforestation and erosion of land. Gantha hill, an area that was covered with forest less than 50 years ago, is now completely barren. The need for firewood poses a serious threat to the unique bio habitat of the local Nech Sar national park where poachers illegally collect firewood to sell on the local markets. The fuel-efficient stoves will contribute to the protection of the Nech Sar national park and the rest of the environment in Ethiopia by reducing the need for firewood consumption. Using the fuel-efficient stoves will also have a positive impact on the housing environment and the health of women and children by reducing open fire smoke in the kitchen.
The business plan is financially very sound. The required investment to start up the company is only 25.000 Euro and the company will generate profit already after the first year of operations. The company is expected to consistently grow in the first five years and have a 38% income from operations before tax in the first five years of operation.
The Business
Key customers are households, hotels and restaurants and specific organizations (e.g. university, prison, etc.) that cook injera in the Arba Minch area. The two main reasons for clients to buy the stove is reduction of the use of expensive firewood and health improvement due to less open fire smoke in the cooking area. The fuel efficient stoves have a 3 months payback time for clients depending on the type of stove they buy and their current firewood consumption.
The injera stoves will be designed and manufactured by local entrepreneurs in Arba Minch. The entrepreneurs will sell the products to a specific marketing & sales department within the company that will be responsible for educating the clients on the benefits of the stoves and making the sales. A financial solution will be provided so that customers can pay the stoves using monthly payments. This will reduce the upfront investment for clients needed to buy a stove and make the stoves profitable for clients starting on the first month of purchase.
The business is feasible. Fuel efficient injerra stoves are already succesfully sold in Addis Ababa, the capital of Ethiopia. The business plan will bring the stoves to other area's of Ethiopia, starting in Arba Minch where some fuel efficient stoves have already been imported and sold in the last year.
The stoves will be marketed and sold through a specific sales department in our company. An advertisement campaign including posters and flyers will be held in the Arba Minch area. Demonstrations of the stoves will be done at the local markets and a number of stoves will be given for free for the first people that bring in five new customers.
Currently one local competitor exists in the Arba Minch area. The competitors products are however 20% more expensive and his electric stove does not run on normal household connections. In the future, the sales organization might buy products from the competitor if capacity issues occur in the manufacturing of the own stoves.
The African Parks, Forum for Environment, and Arba Minch university will be local partners for the business plan.
Funding will be done by the bid challenge partners and private investors. An NGO has also expressed interest in partnering with the new company.
Development
The business start-up will generate employment for up to 20 people in the first 3 years when stoves are mainly produced and sold around the Arba Minch area. After the second year, the market for fuel efficient stoves in other area’s will be investigated. Assuming the stoves can be sold in other area's, employment of up to 40 people can be expected in the next 5 years.
The plan will have a positive impact on poverty reduction because clients that buy a stove directly benefit from lower wood consumption which will payback the monthly costs of the stoves directly from day one. The use of the stoves will also greatly improve the health of the people due to reduction of open fire smoke in the kitchen area. On the long term, the plan will make people less dependent of firewood and free up time for education of children en empowerment of women.
Assuming the introduction of the fuel efficient stoves is combined by a (commercial) reforestation program, the environment around Arba Minch will be restored. The Ethiopian government has already agreed funds to the local Forum for Environment to replant indigenous trees on 50 Ha of land.
2 comments
Icco shows serious interest in business plan injera stoves.
In September 2006, Icco expressed serious interest in the business plan for injera stoves. Icco sent out a formal statement for support the business plan to the press. Visit www.icco.nl for more information.
Business support services provided by IntEnt. Still seeking for financiers.
BiD Challenge 2006 Follow-up Team