What is KOSAP’s Clean Cooking Solutions Facility?
The KOSAP Clean Cooking Solutions Results-Based Financing (CCS RBF Facility) will award a total of US $ 5 million (in Kenya Shillings) to actors in the supply chain of clean cookstoves and fuels. The facility will provide different methods of financial support for the effectuation of business plans and sales by manufacturers, wholesalers, retailers and last-mile distributors, to enable them to enter into business in targeted counties.
The global community has been made aware of the significant impact of inefficient solid-fuel cookstoves on health and the environment, in addition to their known negative impact on household budgets and drudgery. New, more efficient stove models have begun emerging and the promotion of access to clean and modern cooking is the priority of the Sustainable Development Goals, the SEforALL initiative, the Alliance for Clean Cooking and others. Since the 1980s, Kenya has hosted an active and innovative market for improved cooking devices. With the Kenyanization of the Kenyan Ceramic Jiko from a single imported prototype Thai bucket stove, Kenya established itself as an innovator in the field of cookstove design. However, the quality of these stove models is deteriorating and newer, next-generation manufactured stoves that offer emission reductions and energy efficiency unachievable even with the best KCJs, have emerged.
While these newer, higher-quality stoves have begun to increase market share in the core counties of Kenya, they have made virtually no in-roads into the relatively poorer, underserved counties targeted under KOSAP.
To stimulate the market for improved and cleaner stoves in underserved counties, the CCS RBF is structured to overcome market shortcomings like the ones below:
- Limited knowledge of the benefits of improved cookstoves among households and merchants.
- Insufficient interest from stove manufacturers to devote their limited working capital to the underserved counties with relatively smaller market sizes and low-perceived profitability.
- Low incomes of the target population to pay (up-front) costs for cookstoves.
- Absence of supply chains for cleaner and more efficient stoves.
- Unknown and unproven market potential in underserved counties.
The objective of the CCS Facility is to address market failures and to establish sustainable supply chains of higher-tier cookstoves or/and cooking fuels in eight underserved KOSAP counties. The facility supports the transition from low-efficiency baseline cookstoves to cleaner, higher-efficiency cookstoves and fuels. The CCS RBF is structured to address market barriers and aims to develop market-based, sustainable cookstoves supply chains for these counties.
The approach of KOSAP is bottom-up, un-proscriptive and sector driven by providing financial support to business plans, as submitted by enterprises and their related commercial entities. This incentivisation approach activates business dynamics in the private sector that leads to the establishment of supply chains of cleaner cookstoves in underserved counties.
The CCS RBF Facility avails financial incentives on the basis of proven results that are achieved before sales (ex-ante) and after the end user sales (ex-post) according to the following components:
(i) Ex-ante RBF for the Supply Chain Development
An ex-ante RBF award is providing financial support for investments that aim at generating market awareness, sales distribution networks, and especially women-led sales agents, training, and operating expenses that are directly attributable to customer acquisition.
(ii) Ex-ante RBF for Inventory
An ex-ante award to enable the actors in the supply chain to finance product inventory from eligible cookstove manufacturers.
(iii) Ex-post (results-based) incentives
Paid on a per cookstove basis, once sales are verified by an Independent Verification Agent (IVA).
The numerical target is to facilitate the sales of 150,000 clean stoves (or clean fuel units) in four years across eight counties. The end goal is to leave behind a legacy of a self-propelling industry when the project intervention end.
Lot 1: West Pokot, Turkana, Marsabit, Samburu, Isiolo
Lot 2: Kwale, Kilifi, and Taita-Taveta
Technologies under the CCS RBF Facility
Lot 2 Implementation: The clean cooking technologies eligible for participation in CCS RBF Lot 2 are: Biomass-Based technologies, LPG, Ethanol cookstoves and Electric Cooking Appliances. A separate Call for Biogas technologies shall be communicated at a later date. Click to view Eligible Technologies
The applicants must be: (i) Registered in Kenya as a company or (ii) Kenyan subsidiary of a Multinational Company and (iii) Part of a cookstoves supply chain of an eligible higher-tier cookstove model (iv) Committed to selling eligible products in the KOSAP Service Areas.
Cookstoves must be Tier 2 and above in order to qualify for the CCS Challenge RBF Facility.
Eligible Business Models
This can either be a distributor or a manufacturer. The whole supply chain will be solely managed by the individual applicant.
This model looks at consortia options which comprise partners with existing retail networks, creating their own sales forces through wholesalers, manufacturers, or distributors. Partnership agreements are key in this model.
Multiple Distribution Options (Open Agreements)
This is where manufacturers and distributors can enter into informal agreements. Innovation is encouraged in this model. A diversity of value chains is expected.
For the ex-post RBF, the verification of sales will be done by an Independent Verification Agent (IVA) contracted by the Ministry of Energy. The objective of the IVA is to verify the claim reports of the Recipients of KOSAP funds through desk, telephone and field surveys. The data will be analysed and put together in an IVA report that advises KOSAP on the numbers of (un)verified sales and the amount of incentive to be paid.