John Fay is a consultant and entrepreneur with over 15 years of experience designing and implementing market-led development projects in Southern Africa. He is the managing director of SVA Services International, an outsourcing services and consulting company based in Lusaka, Zambia. Previously, he was the Managing Director of VITALITE Zambia, a community distribution and service company focused on making renewable energy products available and affordable. He previously worked for Cardno Emerging Markets and investment bank FBR. John holds a PhD from the University of Cape Town’s GSB, an MBA from Cornell University and a BA from Duke University.
Inclusive Private Sector Engagement—A Key to Growth in Malawi’s Urban Cooking Transition
Inclusive Private Sector Engagement
May 27, 2020
In Malawi, where the percentage of urban households cooking on charcoal has increased from 44 percent to more than 75 percent between 2011 and 2018, a shift toward cleaner cooking is the best way to slow forest cover loss. In this case, cleaner cooking includes use of improved charcoal stoves, sustainable charcoal, alternative biomass energy, and liquefied petroleum gas—LPG. Private sector engagement, with an explicit focus on greater inclusion of local actors along cleaner cooking value chains, is necessary for both adoption at-scale and long-term sustainability.
Local enterprises, as compared to international companies, are well suited to lead this transition, replacing the status quo of inefficient charcoal stoves fueled by unsustainably harvested and illegally produced charcoal. Specifically, local entrepreneurs and other value chain actors are often uniquely positioned to deliver advantages across three essential components of this transition:
Acceptability based on social and cultural understanding: Locally-led companies have a detailed understanding of existing cooking technologies and the social and cultural preferences that inform local cooking practices. This understanding is essential to effectively create awareness of alternative cooking technologies that can be adopted at a scale capable of significantly reducing deforestation. For example, for any alternative cooking approach to become the new status quo and be maintained over the long term, it must be well-aligned to local cooking practices and have actual advantages over other options that can be perceived by the person doing the household cooking. A deep understanding of cooking practices is necessary to introduce technologies that can achieve scale and be sustained, and local enterprises often have a higher level of familiarity and trust with the customers than foreign companies.
Affordability from local cost structures: Many cleaner cooking business models depend on scale because purchases of stoves and of fuel have low potential margin per customer. This is because the disposable income of the target urban customers is often extremely low. One ramification of this is that operating costs of any business in the sector must remain low for long-term sustainability, as high overhead will reduce the likelihood that the business can reach scale within a timeframe that enables it to become financially viable. The overheads of foreign-based companies are typically much higher when compared to local companies, providing a long-term advantage for local cost structures.
Accessibility through local distribution: Last mile distribution in the urban clean cooking sector requires both infrastructure and networks to make stoves and fuel—particularly fuel—easily accessible to each urban household. Replicating the existing distribution channels for illegal charcoal presents a significant challenge to large-scale adoption. Currently, illegal charcoal is often available within a short walk from the end customer’s home. For any alternative to compete with this status quo, the process of getting fuel to urban households must be replicated. This will require co-opting existing distribution channels or creating new channels. Local companies will often have an advantage over foreign because of their ability to replicate those channels that can make the fuel accessible to customers at an affordable cost.
While local companies hold many of these advantages, they often lack market information and the access to finance, commercial or donor, needed to achieve scale. To help address these gaps the USAID and DFID co-funded Modern Cooking for Healthy Forests in Malawi project is conducting consumer market research and compiling market information that will support entrepreneurs to access the project’s results-based finance. This will be coupled with technical assistance and business linkage support to local companies to increase the probability of long-term sustainability and scale within the cleaner cooking sector.
Admore Chiumia is the MCHF Alternative Energy and Fuel-Efficient Cooking Technology (AEFECT) Specialist. An “energypreneur” and the founder of Green Impact Technologies, he has more than 8 years of professional experience working to expand delivery of energy solutions to Malawian households. Admore was educated in Energy Systems at Mzuzu University (Malawi) with supplementary training at University of California Davis (USA).
Ramzy Kanaan is the Chief of Party for the USAID and UK aid co-funded Modern Cooking for Healthy Forests in Malawi (MCHF) project. He holds an M.A. in Geography and International Development from Clark University Graduate School, and a B.A in Biology from the University of Vermont. Ramzy has more than 20 years of experience designing, implementing and managing NRM projects in Africa.