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SEFA to help scale-up innovative clean cooking business in Nigeria
The Sustainable Energy Fund for Africa (SEFA) approved a US $580,000 preparation grant for the expansion of Green Energy & Biofuels (GEB) Bio-refinery project in Nigeria. The project is a pilot of Small & Medium Entrepreneurship Fundamentals (SMEFunds), a social enterprise based in Lagos, and the first bio-energy cooking fuel production facility and distribution network in Nigeria. Specifically, the SEFA grant will finance technical studies, business advisory services and a full environmental and social impact assessment in support of the scaling-up of SMEFunds/GEB operations, particularly the waste-to-ethanol cooking fuel production and distribution in Nigeria, to fully harness economies of scale. The expansion entails growing their biogel production capacity from 1,000 to 30,000 litres/day and ramping up the cookstove manufacturing supply chain four-fold over the next three years.
After the approval, Joao Duarte Cunha, SEFA Coordinator, stated, “SEFA’s support will enable the expansion of the first commercial waste-to-ethanol and cookstoves operation in Africa, itself the product of ingenuity and capacity of African entrepreneurs. By offering a modern low-carbon cooking solution, GEB is also contributing to improving women’s and children’s health, creating employment opportunities and reducing deforestation associated with charcoal production.”
Despite Nigeria’s enormous wealth in energy resources, an estimated 84% of households lack access to quality cooking and lighting fuels. In addition, woodfuel is still the main source of energy for cooking and heating for 56% of the population. With a high demand for woodfuel and an estimated 100 million m3 of firewood consumed annually, Nigeria has currently one of the highest rates of deforestation in the world, at over 3.3% per year.
SMEFunds developed the project to produce second-generation bio-ethanol gel cooking fuel from waste products (currently sawdust and water hyacinth) and distribute improved clean cookstoves. Following a two-year pilot, with 120,000 stoves and 700,000 litres of biofuel sold, SMEFunds created GEB, a spin-off company, to achieve scale as a stand-alone business. Scaling-up this business will involve the construction of a large bio-refinery plant in Lagos that can produce up to 22 million litres of ethanol per year at maximum capacity, and 10 biogel micro-plants in strategic locations across the country to carry out gel production and packaging over the next three years.
In addition to providing grant funding, the Bank will play an advisory role throughout implementation, which will be key to attract other financial partners, catalyze the first stage of the GEB scale-up plan, and lay the foundations for the involvement of the Bank in the project financing of the second phase. This grant is timely for the Bank as it comes on the heels of a formal commitment in the clean cooking space made in November 2014 at the Cookstoves Future Summit, building on its role as the host of the Sustainable Energy for All (SE4ALL) Africa Hub and SEFA. GEB was also the winner of the first West Africa Clean Energy Finance business plan competition (WAFCEF) co-sponsored by SEFA.
About the Sustainable Energy Fund for Africa (SEFA): SEFA is a multi-donor facility to unlock private investments in small to medium-sized clean energy projects in Africa, operating through three components: (i) grants to facilitate the preparation of renewable energy generation and energy efficiency projects (ii) equity investments to bridge the financing gap for renewable energy generation projects; and (iii) support to public sector in improving the enabling environment for private investments in sustainable energy. SEFA is endowed with US $60 million from the Governments of Denmark and United States. The Fund is hosted by the Energy, Environment and Climate Change Department of the African Development Bank (AfDB).