KOKO Networks is revolutionizing Kenya’s cooking fuel market by targeting low-income households with a cheaper and cleaner biofuel alternative.
The venture capital-backed technology company has over 700 stores in down-market areas of Nairobi that dispense cooking gas that is cleaner to burn and safer to store and handle than solid or gaseous fuels. As KOKO expands across the capital, co-Founder and CEO of KOKO Networks, Greg Murray hopes that every household will finally have access to a better way to cook: “We built a network of these stores, we rebranded them KOKO, we installed this machinery, resulting in a network within a few minutes’ walk of everyone’s front door in the city where they can get access to this fuel and a range of other things,” he says.
The continent’s urban cooking fuel market is now estimated to be worth over $20bn, but is dominated by dirty fossil fuels such as noxious kerosene and charcoal – one of the biggest killers in African households, says Murray.
“You’ve got this $20bn spending, which is mostly on charcoal which is destroying forests and contributing to 600,000 deaths per year from indoor air pollution. In Kenya, it’s 400 deaths per week and 21,000 a year, from the diseases associated with dirty cooking fuels, and most of those deaths are kids under five.”
Another popular domestic fuel is firewood, which causes deforestation and churns out soot that heats up the planet.
“The cities are growing and the forests are disappearing because people can no longer collect wood like they did in the village. They now have to buy charcoal in these lump supply chains, with charcoal prices going up because the trees are running out. So people start cooking with kerosene.”
Fresher cooker
The company is successfully doing what governments and charities have for decades been trying to do – coax people away from dirty fuel to cleaner alternatives such as electricity and liquefied petroleum gas (LPG), known as propane and butane.
For poorer households electricity is unaffordable, costing families around $200 for an electric stove, while national grids lack the capacity to cater for mass-market electric stoves.
KOKO’s two-burner ethanol stoves cost just $65, and come with a 2.3 litre refillable cannister that can be topped up at KOKOpoints with credit pre-purchased via M-Pesa.
“The cookers really efficiently burn the fuel to make it cheap. By switching, customers are able to cut the cost of their cooking energy bill,” explains Murray.
Safety and cost aside, KOKO cookers also reduce the never-ending soot caking fingernails, walls, and pots in Kenyan homes. As cities speed up, ethanol cookers are also quicker and more convenient than kindling a fire every time you need a cup of tea, Murray says.
Captive market
In partnership with multi-billion-dollar Shell licensee in Africa, Vivo Energy, ethanol used in KOKO cookers is either imported or sourced from Kenyan molasses in sugar processing plants. It is then stored in dedicated tanks at Vivo Energy depots and service stations before being dispatched by Vivo trucks to the network of KOKOpoint fuel ATMs.
KOKO has also developed a cloud software platform that enables cashless payments, remote safety monitoring, and complete visibility and control across the fuel supply chain. With a factory producing 20,000 stoves a month, the company is taking their captive market by storm.
“In this market, Kenya spends about $700m a year on cooking energy. Rich people, the top 15%, use LPG, everyone else cooks with charcoal or kerosene,” Murray explains.
“What we’re doing is attacking this segment of the market – the charcoal and the kerosene segment – with a clean fuel that is cheaper, and obviously doesn’t have any of the negative environmental or family health impacts.”
Self-styled ‘global development advisors’ Dalberg estimate that ethanol for urban cooking in Kenya has a potential market worth of between $600m and $800m. The headlines of a Dalberg report published last year also found that KOKO stoves are 40% cheaper than charcoal, 10% cheaper than kerosene and the infrastructure requirements are 1/18th of those of LPG.
“If you wanted to build LPG infrastructure to solve all of Kenya’s household cooking problems you’d need a billion dollars,” says Murray. “Whereas with ethanol you can get there with $55m because we’re using existing infrastructure. We’re dropping in new tanks in petrol stations but that’s very cheap.”
Kenya’s government has also jumped aboard the KOKO cooking fuel revolution, as it prepares to remove VAT on ethanol by the end of September this year.
Looking ahead
In its next phase, the company plans to expand beyond the city limits of Nairobi, where it operates in neighborhoods inhabited by the bottom 80%.
“Our next step is building out the rest of our micro-tankers in the rest of Kenya and another 14 or 15 of these urban networks. We want to build a countrywide network and then we’re stepping up our geographic expansion,” says Murray.
As it opens its next funding round at the end of this year, KOKO also hopes to bring safer fuel to customers in the wider region. With these come jobs at every stage of the value chain and new revenue opportunities for retailers, such as restaurateurs, whose switch to ethanol stoves can attract more customers to a cleaner and safer eating environment.
“We can’t be everywhere at once so the approach is to partner with existing strong operators.” $ads={2}