Renewable energy companies in East Africa are now turning to crowdfunding to raise money for expansion.
Firms that provide solar kits and modern cooking stoves—such as Rubagabaga Run of River Hydropower Project in Rwanda, SimGas Kenya Ltd, Eco-Charcoal Ltd and Uganda's Eco Group Ltd—are bypassing traditional financial intermediaries and turning to online crowdfunders.
Crowdfunding involves the use of Internet and mobile phone technologies to tap donations on platforms whose benefactors expect no financial return. In some cases, funders demand to exclusively sell the products from which they earn a margin.
Eco-Charcoal, which makes briquettes, is raising funds through the mobile phone platform M-Changa, to boost output at Kasigau, between Tsavo East and West National Parks in Kenya's Coastal region.
The firm, formerly known as Kasigau Tree Farm project, said it had raised more than $4,700 of the $15,000 target by the end of 2016.
Britain's Department for International Development will match Eco's capital up to $30,000, from its $1 million crowd power programme.
Eco-Charcoal's director Ian Pesa said the firm plans to scale up output from 500 kilogrammes per month to 1,500 tonnes of briquettes from pruned tree branches by 2020, while conserving the ecosystem and mitigating climate change.
"We anticipate increasing direct and indirect employment, especially for women in Kasigau area, and creating a tree farm business model in Kenya and East Africa," he said.
Eco-Charcoal will use the money raised to buy equipment and machinery, conduct research and marketing, raise awareness and run capacity building workshops on climate change for the local population.
Eco-Charcoal's co-founder Beatrice Despioch said rising demand for energy due to population growth and urbanisation has created the need for charcoal and biomass briquettes as viable cost-effective energy substitutes.
"The rising demand for energy creates an urgent need to provide cost-effective substitutes to firewood and charcoal, and meet fuel consumption needs in Kenya. This is what we aim to achieve through crowdfunding," she said.
SimGas Kenya plans to use the funds to be raised via the Lend-a-hand crowdfunding platform to give out loans to 170 farmers to buy biogas systems.
"This will also give farmers access to organic fertiliser, which can be used on their land or sold to other farmers. Our mission is to empower people by offering them the tools to improve their lives and income," said the firm.
SimGas Kenya is a subsidiary of SimGas BV of Netherlands. The firm has a deal with the World Bank for the sale of carbon dioxide rights, enabling a discount of $200 per system. Arranged loan guarantees for financial institutions are helping in setting up of clean energy businesses.
Uganda-based social enterprise Eco-Fuel Africa (EFA), which started with $500 in 2010, has used money received from the Energy and Environment Partnership Programme of Southern and East Africa (EEP S&EA) to grow its activities.
The social energy enterprise works with local communities in Uganda to convert locally-sourced farm and municipal waste into clean cooking briquettes that lessen the use of wood-based fuels that deplete the forest.
EFA's chief executive Moses Sanga said the money from EEP, had generated more than 5,800 jobs, income for over 3,000 farmers and more than 2,000 microretailers.
"The microfactories in villages are owned and managed by the microfranchise. EFA only plays an advisory role and makes money from the microfranchise through leasing the technology and training fees," he said.
Farmers burn farm waste like coffee husks, corn waste and sugarcane waste in basic kilns made out of used oil drums to create a char that can be turned into briquettes, distributed mostly by single mothers.
"EFA presses char bought from farmers into green charcoal, a carbon neutral cooking fuel that functions the same as traditional fuel-wood but costs 20 per cent less, is not smoky and burns longer," said Mr Sanga.
EFA sells its green charcoal back to communities through a network of retailers selected in partnership with local women's groups. A kiosk is built for each woman as a retail shop to sell green charcoal locally.
"EFA has already created a network of 2,300 women retailers in Uganda. Each of these women retailers earns at least $152 per month. Users of the briquettes benefit from a product that burns longer," said Mr Sanga.
Eco Group, an energy-efficient clean cookstoves manufacturer, is the latest company to benefit from Energy 4 Impact's loan guarantee scheme, designed to improve access to credit for energy SMEs, as their businesses grow.
Kampala-based Eco Group Ltd makes multipurpose innovative solar powered stoves for cooking food, lighting the home, charging phones, ironing clothes, and has inbuilt FM radio.
The stove costs about $250. Volcanic stones are added to the stove to retain heat. The reusable stones last about six months and another five kilogrammes bundle can be purchased for about $8.
Eco Group's chief executive Rose Twine said the stove reduces cooking costs, and that the firm has obtained a loan from Energy 4 Impact in order to be able to extend credit to more customers.