Improving the market for cookstoves through market based approaches

The Government of Ethiopia and energy sector actors put came together to produce and disseminate improved cookstoves (ICS) as an alternative to address the needs of the majority of the Ethiopian people who cook in smoky cooking space using traditional stoves and fuels.

Despite these efforts, Ethiopia has a long way to go to address the needs of millions of households, most of whom can afford to have only a simple and cleaner cooking solution like ICS.

“Limited awareness on the benefits of, access to and use of ICS and alternative fuels, are the major challenges prohibiting the rural community to use the technology. In addition, proximity of manufacturing and distributing centres to the community, lack of capital to run the business, and low demand for the product are major factors associated with the low supply of ICS in IRES targeted woredas, or districts” explained Aster Mihret, IRES Project Lead, SNV in Ethiopia.

SNV undertook a comprehensive market survey to better understand the issues and bottlenecks in the ICS market. The findings of the Survey guided the IRES project to focus on providing coaching and skills building, market linkages, and financial support to target small and micro enterprises engaged in briquette production. On the other hand, the findings of the supply side study helped SNV to address the quality, quality and distribution related gaps.

“Having the production and promotion skills, we are now able to produce more than 95 and disseminate 70 Improved Cookstoves to users, and earn 5,600 birr within a month” explained Alemu Melese, head of Alemu, Cheklit and their Friends’ Mirt Stove Producers’ Association in Amhara region.

In order to increase the demand for the ICS and the briquette, SNV in collaboration with Mines and Energy Offices and Small and Medium Enterprises (SMEs) has organised consumer awareness campaigns in Amhara, Tigray, Oromia, and SNNP regions.

Furthermore, SNV developed two inclusive business models and trained10 small and micro producers who were not able to keep up with the market due to lack of market linkages, adequate business and technical skills.

These interventions reinforced the improved ICS value chain and motivated 40 ICS producer groups and 40 promoters/retailers to distribute 3,200 improved cookstoves to the rural households in 2014.

Alemnat Ayalew, an ICS user  in Amhara region, Wogelsa kebele, said,“I used to consume a donkey-load of firewood for two weeks, but now fuel consumption is reduced by half.”

Working closely with financial institutions, Integrated Renewable Energy Services (IRES) project has managed to improve the market integration among SMEs and MFIs in the implementations areas. Financial institutions already started accepting ICS producers as business partners and provided training to manufacturers on regular saving and loan procedure, motivating them with success stories of other SMEs. Following the training, SMEs in the project woredas of Oromia and SNNP regions have started saving money to qualify for loans to finance their business.

The two-year pilot project, IRES, is part of a five-country SNV regional programme, and supports the efforts of the Government of Ethiopia to respond to the urgent need to increase access to improved energy supply and to contribute towards establishment of a climate resilient green economy.

In Ethiopia, IRES has planned to disseminate 15,000 Improved Cookstoves in rural areas of Amhara, Tigray, Oromia, and SNNP regions by the end of 2015 through improved markets channels. SNV aims that the capacities developed and business models tested will be instrumental in taking the sector further towards a nationwide market based solution to energy poverty of Ethiopia.