Imagine: you live in a rural, off-grid village in Uganda. A few years ago, you invested your scarce savings in 5 calves. It seemed a wise investment: unlike maize or rice, cows provide income on a daily basis. However, in reality, the milk business turns out frustrating: Due to a lack of electricity and hence a cold storage facility, you can only milk once a day. Also, the traders take unfair advantage of your lack of cold storage and show up at the end of the day, offering rock-bottom prices. Instead of the $13.80/day you could potentially earn, you earn only $4.5/day.
Biogas powered fridges increase farmers revenues
“This unfair power play is exactly what motivated our first clients to sign up for our biogas- powered gas fridge”, explains Gabriel Okello, COO of Green Heat. “Many of them had never heard of biogas technology, were unfamiliar with gas-fridges and hence had concerns about the performance and lifetime of the system. However, they were so frustrated with the status quo that they took the risk and invested $3,000, a very significant amount of money. Luckily, the biogas- digester proved to be a profitable investment: 4 of the first 5 customers used the fridge to expand their business activities, by adding more cows or by producing yogurt. The good news travelled fast and in the following months, 23 more farmers ordered a system.
Sustainable alternative for firewood
Gabriel and his co-founder Vianney, established Green Heat in 2011. “The business idea all started out of laziness”, Gabriel tells laughingly. “I grew up in a rural village and as a kid, I spent hours fetching firewood. Over the years, as wood became increasingly scarce, I had to walk further and further. I then decided that I wanted to offer an alternative to biomass, so kids could spend their time playing and having enough time for homework instead of collecting firewood. Our first clients were private schools that spent significant amounts of money on firewood for cooking. A biogas- dome combined with bio-latrines, offered 2 solutions in one, namely cleaner, more sustainable and cost-effective cooking fuel and more hygienic and durable latrines. Our slurry separation system installed with the biogas system enables the biogas owners to save up to 80% of fresh water used in the digester and provides a more solid fertiliser which increases food production by 60%.”
Potential to impact 250 farmers in 2 years
In order to set up the pilot project among dairy farmers, mid 2016, Green Heat sought $50,000 in investment capital. The amount was meant to serve as a revolving fund, allowing dairy farmers to pay for the biogas system in instalments. A flexible payment plan is important, to make the system more financially accessible, but also to provide credibility to Green Heat as a supplier. Via BiD Network, Green Heat received the required capital of a consortium of 3 informal investors. Thanks to this loan, Gabriel and Vianney have gained the experience, learnings and track record to now upscale and sell 250 systems to dairy farmers in the next two years. Gabriel explains: ”The loan has helped us streamline our operations/business model thus reducing the cost of the system from 3,000 USD to 2,300 USD. The loan has also helped us increase the number of dairy farmers who can benefit from the Green Heat credit system/revolving fund. Our goal is to raise 180,000 euros to enable us reach our goal of 250 farmers in the next 2 years.”
Are you keen to learn more about Green Heat and the follow-up investment they seek, please contact our Investment Director Laura Smeets at email@example.com.
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