(Bloomberg) -- KOKO Networks, a startup targeting sub-Saharan Africa’s $47 billion cooking-fuel market, plans to expand its ethanol stove manufacturing capacity 10-fold and then grow globally.
The company manufactures its stoves in India and sells them, as well as the fuel they use, in Kenya. KOKO plans to scale up the use of ethanol fuel -- in Africa, Southeast Asia and Latin America -- as an alternative to charcoal, which can cause respiratory disease.
KOKO fuel is “40% cheaper than charcoal,” the company’s co-founder and chief executive officer, Greg Murray, said in an interview. “We are massively undercutting charcoal while delivering a major quality of life-improvement.”
Charcoal production is the leading driver of deforestation in Africa and endangers the estimated 850 million to 900 million people who use solid fuels, including charcoal and firewood, for cooking on the continent. It’s blamed for shortening the lives of more than half a million Africans every year, according to the World Bank.
KOKO increased the number of its customers by 450% to 330,000 Kenyan homes last year, Murray said. The stoves use agricultural ethanol, mostly made from sugar-production byproducts.
KOKO sells the stoves online for 2,021 Kenyan shillings ($18) and has a partnership with Vivo Energy Plc to distribute its fuel through “KOKOpoints” housed in corner stores. It can supply another 500,000 Kenyan homes this year, and is now going ahead with a plan to build a factory in India in phases to produce 5 million stoves annually, according to Murray.
“There are 60 countries that need these networks and they are pretty much the poorest nations in Africa, Southeast Asia and Latin America -- places like Haiti, Bangladesh and Cambodia,” Murray said. For now, the plan is to expand into six additional African countries over the next six years.
KOKO’s growth projections are partly based on Africa’s urban poor’s spending patterns, with as much as 20% going to cooking fuel monthly, according to the World Bank. A study by the University of Hohenheim found that Sub-Saharan Africa accounts for 65% of the world’s charcoal production.
The World Bank estimates that the bulk of the annual $47 billion spent in the region on cooking fuel comes in the form of charcoal and wood with just 18% of people using electricity, kerosene or liquefied petroleum gas.
The company founded eight years ago, has 65 shareholders and around 1,100 employees. It may list in about four years, Murray said.
KOKO also sells carbon credits to a subsidiary of Korea Electric Power Corp., South Korea’s coal-burning power utility, and is preparing to expand sales of the instruments to Europe, Murray said.
KOKO doesn’t publish information on its revenue and funding rounds, Murray said.
“We are a climate tech startup,” Murray said. “Think of it as a renewable fuel utility.”
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