Market Segmentation Study
Phase 1 Top Five Broad Segments
Top Three Segments
1
Overview
•
•
Project Approach
Macro Environment
–
–
–
–
–
–
–
–
–
•
Energy Demand
–
–
•
•
Fuel Use
Cooking Fuel
Energy Stacking
Factors Influencing Energy Demand
–
–
–
–
•
Climate and Environment
Counties and Provinces
Demographics
Employment
Income
Education
Economy
Political Structure
Technological Infrastructure
Biomass
Kerosene
LPG
Electricity
Cook Stove Industry
–
Cook Stove Industry by Region
2
Overview
•
•
•
•
•
•
•
•
Cook stove Consumer
Net Socio Economic Benefits of ICS
– Improved Fuel Wood Stoves
– Improved Charcoal Stoves
– Improved Kerosene Stoves
– Improved LPG stoves
– Improves Electric Stoves
ICS – Upfront Costs
Fuel Costs
Barriers to Improved Cook Stoves adoption
ICS Market Needs
Factors Influencing ICS adoption – Market Drivers
Segments of Energy and Cook Stove Consumers
– Broad Segments
– Top Three Segments
3
Acronyms
AGOL
Africa Gas and Oil Limited
CBO
Community Based Organization
ICS
Improved Cook Stoves
KUSCCO
Kenyan Union of Savings and Credit Co-operatives
KRC
Kenya Railway Corporation
LPG
Liquefied Petroleum Gas
MOU
Memorandum of Understanding
MF
Microfinance
MFI
Microfinance Institution
NGO
Non Governmental Organization
SACCO
Saving and Credit Co-operative Society
4
Introduction
•
•
•
co2balance, in partnership with the Global Alliance for Clean Cookstoves, have identified the main
consumer segments in Kenya and closely examined those with the greatest potential to reach large
scale improved cook stove and fuel adoption.
The objective of this study was to assess the viability and successful uptake of improved cook
stoves and fuels in different segments in Kenya at the local level. The information obtained will be
used to enhance current efforts of improved cook stove adoption and determine where additional
resources should be applied in order to have the greatest impact on the cook stove market.
There were two parts of this study:
 Literature review of determinants for fuel use and improved cook stove purchase in Kenya –
The analysis considered 12 variables as a determinant of adoption. These variables influence
purchase; age, gender, head of household, home ownership, family size, geographic location,
fuel used in cooking, employment (Income Quintiles), fuel access, education level, fuel cost
and willingness to pay.
•
We found that improved cook stove adoption and fuel choices are significantly influenced by socio-economic
status and demographic profile of households, energy choices and uses, energy cost and expenditure.
 Survey Analysis - Segments across the Central, Coastal and Western regions were examined
using these variables.
•
Surveys were conducted in the field to determine fuel and cook stove use and potential uptake of large scale
improved cook stove projects in the regions.
5
Project Approach
Segments of Energy
and Cook stove
Consumers
Energy
Demand
Strategy Development
Macroenvironment
Cook stove
Consumer
Market
barriers
Market
needs
Market
drivers
Top Three segments of
Energy and Cook Stove
Consumers
Cook stove
Industry
Survey Analysis
Literature Review
6
Macro Environment – Climate and
Environment
•
•
•
•
•
Kenya is located on the East African coast, bordering the Indian Ocean, between Somalia and Tanzania.
Border countries include Ethiopia (861 km), Somalia (682 km), South Sudan (232 km), Tanzania (769 km)
and Uganda (933 km). The total area of the country is 580,370 sq km; land 569,140 sq km and water
11,227 sq km.
The climate varies from tropical along coast to arid in interior. The climate is influenced by the intertropical convergence zone and relief and ranges from permanent snow above 4 600 metres on Mt. Kenya
to true desert type in the Chalbi desert in the Marsabit district in the north of the country. About 80
percent of the country is arid and semiarid, while 17 percent is considered to be high potential agricultural
land, sustaining 75 percent of the population. The forest cover is about 3 percent of the total land area.
The average annual rainfall is 630 mm with a variation from less than 200 mm in Northern Kenya to over 1
800 mm on the slopes of Mt. Kenya. The rainfall distribution pattern is bimodal with long rains falling from
March to June and short rains from October to November, for most parts of the country.
Natural resources include limestone, soda ash, salt, gemstones, fluorspar, zinc, diatomite, gypsum, wildlife
and hydropower. Agricultural land covers approximately 33% of the country. Land use includes arable land
(9.48%), permanent crops (1.12%), other (89.4%). Recurring droughts and flooding during rainy seasons
are the most significant hazards affecting Kenya.
Kenya depends on its biodiversity and natural resources for much of its economy. Kenyans highly depend
on the nation’s forests, rivers, lakes and soil for sustainable living. Environment issues include water
pollution from urban and industrial wastes; degradation of water quality from increased use of pesticides
and fertilizers; water hyacinth infestation in Lake Victoria; deforestation; soil erosion; desertification and
poaching.
Source: CIA World fact book
7
Macro Environment - Counties and
Provinces
Kenya is divided into 47 counties. These counties
make up the former “Province” areas of Central,
Coastal, Eastern, Nairobi, North Eastern, Nyanza,
Rift Valley and Western regions.
For the purpose of this study, statistical data from
the former 8 Provinces were used to find segments
at the regional and local level.
Region
Counties
Central - 1
1a-Nyandarua, 1b-Nyeri, 1c-Kirinyaga, 1dMurang'a, 1e-Kiambu
Eastern - 3
2a-Mombasa (city), 2b-Kwale, 2c-Kilifi, 2dTana River, 2e-Lamu, 2f-Taita-Taveta
3a-Marsabit, 3b-Isiolo, 3c-Meru, 3dTharaka-Nithi, 3e-Embu, 3f-Kitui, 3gMachakos, 3h-Makueni
Nairobi - 4
4a-Nairobi City
Coastal - 2
North Eastern - 5 5a-Garissa, 5b-Wajir, 5c-Mandera
Nyanza - 6
Rift Valley - 7
Western - 8
6a-Siaya, 6b-Kisumu, 6c-Homa Bay, 6dMigori, 6e-Kisii, 6f-Nyamira
7a-Turkana, 7b-West Pokot, 7c-Samburu,
7d-Trans Nzoia, 7e-Uasin Gishu, 7f-ElgeyoMarakwet, 7g-Nandi, 7h-Baringo, 7iLaikipia, 7j-Nakuru, 7k-Narok, 7l-Kajiado,
7m-Kericho, 7n-Bomet
8a-Kakamega, 8b-Vihiga, 8c-Bungoma, 8d8
Busia
Macro Environment - Demographics
Currently, Kenya's population is
estimated to be 44,037,656
77.80% of the population lives in
rural areas whilst 22.80% resides in
urban areas. The current rate of
urbanization is at 22%
Population growth rate – 2.444%
Main religious bodies - Christian
82.5% (Protestant 47.4%, Catholic
23.3%, other 11.8%), Muslim 11.1%,
Traditionalists 1.6%, other 1.7%,
none 2.4%, unspecified 0.7% .
Main Languages - English (official),
Kiswahili (official), numerous
indigenous languages.
Main ethnic groups - Kikuyu 22%, Luhya 14%, Luo 13%, Kalenjin 12%,
Kamba 11%, Kisii 6%, Meru 6%, other African 15%, non-African (Asian,
European, and Arab) 1%
Life expectancy at birth - 63.07
years
Males - 61.62 years
Females - 64.55 years
Source: CIA World fact book
9
Macro Environment - Employment
Spatial distribution of 15-64 employment sector
80
70
70
60
50
50
40
40
30
30
20
20
10
10
0
0
Nairobi Central
Working
Coast
Eastern
North Nyanza
Eastern
Not Working
Female
Rift Western
Valley
Percentage (%)
Percentage (%)
60
Unemployment is very high in
Kenya. Unemployment increased
to 40% in 2011 from 12.70% in
2006. The unemployment rate
measures the number of people
actively looking for a job as a
percentage of the labor force.
Kenya also manifests considerable
regional disparities in employment
and human development.
Consistent with the regional trends
in wage employment, Nairobi has
the highest number of informal
sector employment while North
Eastern has the lowest.
Women make up 47% of the labor
force whilst males account for 53%.
Male
Sources : Nyaga R.K., (2010), Omolo. J.,
(2012)
10
Income Quintiles
Income Bracket
Category
Income Quintile 1
Households living below the urban poverty line Kshs. 2913 per month
Households living below the rural poverty line Kshs. 1562 per month
Rural households in extreme poverty Kshs. 988
Income Quintile 2
Households living above the urban poverty line Kshs. 2913 per month
Households living above the rural poverty line Kshs. 1562 per month
Ideal income level between Kshs. 6120 and Kshs. 9319
Income Quintile 3
Income levels between Kshs. 9320 and Kshs. 13015
Income Quintile 4
Income levels between Kshs. 13016 and Kshs. 20408
Income Quintile 5
Income levels above Kshs. 20409
Sources: KNBS (2007), KIPPRA
(2010)
11
Macro Environment - Education
•
Access to pre-school and primary education in Kenya is high; 70%. The gender
parity at pre-primary and primary education stands at 51.2% and 48.8% (preschool) and 51.3% and 48.7% (primary education) for boys and girls respectively.
The parity deteriorates as they progress; at University level, it widens to 58% and
42% for boys and girls respectively.
•
The expenditure on education is at 6.7 % of the total GDP. Adult literacy rates are
higher in men than women; including urban and rural regions . Nairobi and Central
regions have the highest literacy rates for women; 84.20% and 75.80%
respectively. The North Eastern region has the lowest literacy rates for both men
and women; 37.50% and 11.60% respectively.
Source: World bank
12
Macro Environment - Economy
Kenya’s economy is relatively strong, however, it has been plagued by corruption and by reliance upon several
primary goods whose prices have remained relatively low. As a result of high food and fuel import prices, Kenya
has experienced chronic budget deficits, inflationary pressures, and sharp currency depreciation. The discovery
of oil in March 2012 has provided an opportunity for Kenya to balance its growing trade deficit if the deposits are
found to be commercially viable and Kenya is able to develop a port and pipeline to export its oil. Following the
elections held on March 4th, Kenyan economic performance in 2013 is now proving to be highly dependent on
the capacity of the country to attract foreign investment and tourism.




$76.07 billion (2012 est.)
$72.37 billion (2011 est.)
$69.33 billion (2010 est.)
$41.84 billion (2012 est.)
Exports - commodities
Tea, horticultural products,
coffee, petroleum products, fish,
cement
Exports - partners
GDP - real growth rate



5.1% (2012 est.)
4.4% (2011 est.)
5.8% (2010 est.)
Imports
Uganda 9.9%, Tanzania 9.6%,
Netherlands 8.4%, UK 8.1%, US
6.2%, Egypt 4.9%, Democratic
Republic of the Congo 4.2%
(2011)
Machinery and transportation
equipment, petroleum products,
motor vehicles, iron and steel,
resins and plastics
GDP - per capita (PPP)






$1,800 (2012 est.)
$1,800 (2011 est.)
$1,700 (2010 est.)
agriculture: 24.2%
industry: 14.8%
services: 61% (2012 est.)
Imports - partners
GDP (purchasing power parity)
GDP (official exchange rate)
GDP - composition by sector
China 15.3%, India 13.8%, UAE
10.5%, Saudi Arabia 7.3%, South
Africa 5.5%, Japan 4% (2011)
Source: CIA World fact book
13
Economic Indicators – Food Items
Average food consumption per adult / month in Kshs.
Region
Food
Kenya
Rural
Urban
1754
1453
2642
Cereals
359
360
355
Bread
72
43
156
Tubers
106
108
99
Poultry
38
33
53
Meat
158
110
301
Fish
39
28
72
196
163
291
Oils
71
62
97
Fruits
89
68
150
Vegetables
160
130
249
Pulses
103
108
85
Sugar
111
106
125
Non-alcoholic beverages
68
47
130
Alcohol
58
37
120
113
37
335
15
12
22
Milk, Eggs
Restaurants
Spices and condiments
Source: KNBS (2007)
14
Economic Indicators – Non Food Items
Average non food consumption per adult / month in Kshs.
Region
Total Non- Food
Kenya
Rural
Urban
1678
878
4032
Tobacco
28
24
40
Water
33
17
82
Fuels
177
113
366
2
0
6
Clothing & Footwear
304
232
517
Household, Personal
191
117
407
Furnishings & Maintenance
23
17
40
Domestic Services
45
22
112
Transportation
232
108
596
Communication
99
39
275
Recreation
56
16
174
Refuse, Sewage
House rent
238 -
Education
224
152
435
27
22
43
Health
937
Source: KNBS (2007)
15
Macro Environment – Political Structure
•
Kenya has 47 counties. The country has a mixed legal system of English common law, Islamic law,
and customary law; judicial review in a new Supreme Court established pursuant to the new
constitution.
•
The Chief of state is President Uhuru KENYATTA (since 9 April 2013); Deputy President William
RUTO (since 9 April 2013); the president is both the chief of state and head of government
•
The head of government is President Uhuru KENYATTA (since 9 April 2013); Deputy William RUTO
(since 9 April 2013); according to the 2008 power sharing agreement the role of prime minister was
created though not well defined, following the new constitution the position was abolished after
the March 2013 elections.
•
The bicameral parliament consists of a Senate (67 seats) and a National Assembly (349 seats);
members to serve five-year terms. Elections were last held on 4 March 2013 (next to be held in
2018). The President is elected by popular vote for a five-year term (eligible for a second term); in
addition to receiving a simple majority of votes, the presidential candidate must also win 25% or
more of the vote in at least five of Kenya's seven provinces and one area to avoid a runoff.
Source: CIA World fact book
16
Macro Environment – Parties and
Pressure Groups
•
•
•
•
•
•
•
•
•
Political parties and leaders:
Kenya African National Union or KANU [Gideon MOI]
The National Party Alliance or TNA [Uhuru KENYATTA]
National Rainbow Coalition-Kenya or NARC-Kenya [Martha KARUA]
Orange Democratic Movement-Kenya or ODM-K [Kalonzo MUSYOKA]
Party of National Unity or PNU [Mwai KIBAKI]
United Democratic Forum Party or UDF [Musalia MUDAVADI]
United Republican Party or URP [William RUTO]
Wiper Democratic Movement or WDM [Kalonzo MUSYOKA]
•
•
•
•
•
•
•
•
•
Political pressure groups and leaders:
Council of Islamic Preachers of Kenya or CIPK [Sheikh Idris MOHAMMED]
Kenya Human Rights Commission [L. Muthoni WANYEKI]
Muslim Human Rights Forum [Ali-Amin KIMATHI]
National Muslim Leaders Forum or NAMLEF [Abdullahi ABDI]
Protestant National Council of Churches of Kenya or NCCK [Canon Peter Karanja MWANGI]
Roman Catholic and other Christian churches;
Supreme Council of Kenya Muslims or SUPKEM [Shaykh Abdul Gafur al-BUSAIDY]
Other: Labour unions, Kenya Association of Manufacturers, Kenya Private Sector Alliance
Source: CIA World fact book
17
Macro-environment – Technological
Infrastructure
Sector
Successes
Challenges
Information and Communication Technology
Institutional reforms in the power sector have
reduced the burden of subsidies on the public
by about 1% GDP .
Strengthen competition to bring down prices.
Ensure competitive international gateway.
Modernized ICT sector now offers 90 percent of
the population access to a GSM cell phone
signal
Air Transport
Leading regional airline
Ports
Major air hub for Africa
Major regional shipping hub.
Energy
Major institutional reforms
Cost-recovery pricing
Relieve capacity constraints at Jomo Kenyatta
International Airport.
Substantial investment to reduce capacity
issues
Institutional reforms to increase efficiency.
Improve reliability through new investment.
1,000 megawatts generating plant will be
needed over the next decade.
Large efficiency gains by KPLC (Kenya Power)
Bring down costs of power supply.
Railways
Strategic regional rail corridor
Revisit design of rail concession
18
Macro-environment – Technological
Infrastructure
Sector
Successes
Challenges
Roads
Sound road fund in place
Major rehabilitation backlog
Improve quality of public investment
Urban infrastructure
Low levels of access to services
Water Resources
High rates of tenancy and insecure
tenure
Increase water storage capacity
Water-resources-management
authority in place.
Increase irrigated area by 50%
Improved drinking water source
Urban – 82% of population
Rural – 52% of population
Water and Sanitation
Major institutional reforms
Improved Sanitation facility access;
Urban – 32% of population
Rural – 32% of population
Strengthen water resources
management and river-basin
institutions
Address under pricing of water
Cut distribution losses
Rural access
Source: Africa Infrastructure
Country Diagnostic Country Report
(2010)
19
Energy Demand
•
•
•
•
•
•
•
•
Firewood: Approximately 89% of rural and 7% of urban households regularly use firewood, giving a national
average of about 70% of all households. The average annual per capita consumption is approximately 741 kg and
691 kg for rural and urban households, respectively.
Charcoal: Use of charcoal is about 47% at the national level with use of over 82% and 34% of urban and rural
households, respectively. Per capita consumption is 156 kg in urban areas and 152 kg in rural areas.
Farm Residues: Farm residue is used as a source of cooking and lighting fuel in areas where energy demand
exceeds supply and in certain seasons when wood supply is limited. The quantities of residues will depend on
yields of a particular crop and are usually proportional to the area planted. Overall, about 21% of households use
farm residues, but their use is mainly in rural areas with 29% households as compared to 0.5% in urban
households.
Wood Waste: There are two major sources of wood waste. Logging sites where branches and tops remain after
felling, supply about 35% of fuel wood. The other source is sawmilling sites where sawdust, bark and small off-cuts
are available for fuel wood. Only 2.5% of households use wood waste. Use is mainly in urban areas by 3.7% of
households as compared to 2.1% in the rural areas.
Kerosene: Kerosene is often regarded as a “poor man’s” fuel and is used by approximately 92% of all households
(rural; 94% and urban; 89%). Kerosene is exempted from some taxes in comparison with other fuel products.
LPG: Only 7.8% of the population (23% urban and 1.8% rural) use LPG. Average per capita consumption is only 3.6
kg and 9.7 kg for rural and urban areas respectively. LPG is used (cooking 3.5%) along with firewood in rural areas
while in urban areas; it is used as a supplement for electricity.
Electricity: Electricity in Kenya is expensive for the majority of the households, and only 46% of urban and 3.8% of
rural households have access to electricity. Nationally, this translates to only 15% households with access to
electricity.
Biogas: There are over 6748 biogas plants in Kenya, however only about a quarter of these plants are believed to
be operating by design. The Kenya National Domestic Biogas Program (KENDBIP) is currently funded through the
Ministry of Energy and the Dutch Ministry of Foreign Affairs, has a goal of constructing 12,000 high quality,
functioning plants by 2014.
Sources: SCODE, Kenya National Energy Policy
(2012),
20
Percentage Use of Cooking Fuel- Urban/Rural
Areas
70
90
60
80
70
50
60
40
50
40
30
30
20
20
10
10
0
Percentage used in cooking Kenya (%)
Percentage used in cooking (%)
100
Rural
Urban
Total Kenya
0
Fuel Used
Source: Ministry of Health (2007)
21
Percentage Distribution of Cooking Fuel by
Region
Rural
Urban
Western
Rift Valley
Fuel wood
Nyanza
Charcoal
North Eastern
Kerosene
LPG
Eastern
Electricity
Coast
Other
Biomass: Over 70%
of the consumers in
Kenya use biomass
while 30% use other
fuels.
Biomass
provides over 65% of
energy
requirements.
Rural
households
tend to use firewood
for cooking ~86%,
whilst the majority
of urban households
consume
charcoal
~82%
Central
Nairobi
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Source: Ministry of Health (2007)
22
Energy Stacking
Energy consumption patterns in Kenya portray more of fuel stacking than fuel switching,
where households are observed to be using multiple fuels. Fuel switching is the main
response to increasing incomes in urban areas while fuel stacking or multiple fuel use is seen
to dominate in rural areas.
Fuel stacking occurs in 54% of Kenyan households; using two fuels with 2% using only one
fuel type. Lower income households tend to not utilize LPG, Electricity and Solar Energy
sources because of the high cost of installation.
Source: KIPRRA (2010), Schlad and Zuzarte
(2008)
23
Factors Influencing Energy Demand –
Biomass (Fuel Wood and Charcoal)
•
•
•
•
In rural areas, the lowest income households depend on firewood the most. This is in line
with previously documented consumption patterns for the country. Approximately 76% of
households in Kenya obtain all their firewood for free through collection, 17% of households
regularly purchase it while 7% supplement their free collection by purchasing some firewood.
Firewood is mainly used for cooking and space heating.
Firewood has the highest energy budget share on average for both rural (11.6%) and urban
(9.34%) compared to other fuels.
The budget share for charcoal is driven by factors such as socioeconomic status, prices,
education and location of household.
Key Determinants: Demand for charcoal is inversely related to its own price (as the price
increases, less of it is demanded). Other important factors in the demand for charcoal
includes, household size, price of LPG, as well as primary education which is inversely related
to demand. Households in urban areas are more likely to use charcoal than those in rural
areas; Eastern, Rift Valley and Western Provinces have a negative influence on demand for
charcoal. Households in these regions experience reduction in budget share of charcoal due
to certain climatic characteristics unique to these regions. There is a high use of kerosene in
these regionsHousehold energy demand in Kenya: An application of the linear approximate
almost ideal demand system
Sources: Sustainable Community and
Development Services (2010), KIPPR
(2010), Ngui. D., et al (2011)
24
Kerosene
•
•
•
Urban households use around 90 litres of kerosene per year, rural at 41 litres
per year. On average Kerosene prices ranges from Kshs. 81.03 – 83.83 per litre.
Overall price per year of kerosene for urban households is around Kshs. 7293 –
7545 and rural households Kshs. 3322 – 3437.
Some dealers have adulterated petroleum products in efforts to make higher
profits at the expense of Government taxes. Current retailing practices lead to
high mark-up prices (sometime as much as 300%) in remote areas even
though tax exemption is aimed at lowering prices.
Key Determinants: The determinants for kerosene use at the household are
occupation, total energy expenditure, household size, fuel wood price,
education level and price of LPG. As the household size increases, the budget
share on kerosene declines. This could be explained by the fact that as the
household size increases, the household switches to other fuel types such as
charcoal, fuel wood and even LPG to meet increased demand for energy. This
is an indication that most households use multiple fuels as a safety net to
cushion themselves against the failure of one source.
Sources: Sustainable Community and
Development Services (2010), KIPPR (2010),
Ngui. D., et al (2011)
25
Liquefied Petroleum Gas and Electricity
•
•
•
LPG - Key determinants: The share of budget for LPG in Kenya is mainly driven by, total
expenditure on LPG, kerosene prices, fuel wood price and its own price. As the price of
charcoal increases, the budget share on LPG increases.
As the price of LPG increases, the budget share also increases. Also as the price of charcoal
increases, the budget share of LPG increases. This could be explained by the household
opting to use more of LPG when prices of charcoal increase, since it is cleaner and faster in
food preparation compared to the latter. In terms of gender, a household headed by female,
is more likely to reduce demand for LPG than that headed by a male.
Electricity - Connectivity to electricity in Kenya varies across provinces with Nairobi having
the highest connection with 53.47 % of total households. Central province is second with
42.4 % and the North Eastern and Western Provinces has the least connection rates of 14.5%
and 14.7 % respectively. The national connection rate is estimated to be around 28.9 %.
Sources: Sustainable Community and
Development Services (2010), KIPPR
(2010), Ngui. D., et al (2011)
26
Cook Stove Industry
120
~60% households use
traditional three
stove fires as primary
cook stove. This is
higher in rural areas
~75% than urban
households ~10%.
100
3.9%
4%
80
6.5%
10.9%
7.1%
Improved Cookstove
8.4%
60
Ordinary Stove
40
Improved Traditional 3 Stone
Fire
78%
14.3%
60.8%
20
Traditional 3 Stone Fire
16.6%
1%
9.1%
0
Kenya
Rural
Urban
KIHBS 2005/2006
27
Cook Stove Industry - Region
120
100
3%
19.6%
0.8%
3.6%
2.9%
4.5%
0.2%
4.7%
3.2%
22.9%
0.9%
2.9%
8.8%
7.3%
80
Other
Percentage (%)
Electric Cooker
6%
Gas Cooker
11.2%
60
Kerosene Stove
Improved Cookstoves
Ordinary Stove
89.2%
65.3%
40
79.4%
Improved Traditional 3 Stone Fire
76%
Traditional 3 Stone Fire
53.2%
20
5.2%
0
4.8%
1.5%
Nairobi
Coast
Eastern
North Eastern
Nyanza
KIHBS 2005/2006
28
Cook Stove Industry - Region
120
Three stone fires have lost its
predominant position in three
Provinces (Central, Rift Valley and
Western).
100
7.7%
3.4%
9.1%
20.3%
%
Percentage (%)
80
60
17.6%
20.7%
3.8%
7%
8.6%
12.8%
Other
14.4%
Gas Cooker
%
10.3%
16.%7
37.4%
20
Kerosene Stove
The medium and better off
households possess mainly two
Improved Cookstove (firewood) pot stoves (62% and 51%
respectively). While one third of
Traditional 3 Stone Fire
households have a Rocket Mud
Stove two pot.
Kenya Ceramic Stove
34.8%
Poor households do not have
expensive models of stoves and
they tend to have fewer improved
cook stoves than higher income
households.
21.9%
9.6%
0
Central
Rift Valley
Lowest incomes possess the
cheapest available improved cook
stoves, the Jiko Kisasa one pot
(56%).
Charcoal Metal
9.9%
12%
40
Electric Cooker
The vast majority of improved
cook stoves are found in rural
areas (76%).
Western
GTZ (2009)
29
Cook Stove Consumer – Purchase and Use
•
There is little information on the uptake and use of improved cook stoves, but
some empirical evidence suggests that high use cannot be assumed even when
stoves are highly subsidized or given free of charge. However, improved cookstove
use is directly correlated with socioeconomic benefits to consumers and these
benefits are driven by stove type.
30
Net Socioeconomic Benefits of Improved Fuel wood
Cook Stoves
For fuel wood stoves, the
most
important
factors
influencing the net benefits
of the switch to this stove are
the use of the stove and its
relative
time
efficiency
(compared to the traditional
3
stone
fires).
These
parameters are important
because a large proportion of
the benefits of this stove
come from time savings, but
these are only captured if it
is used often and efficiently.
Inefficient stove use imposes
a net time cost on users.
Source: Jeuland. A.M., Pattanayak. S (2012)
31
Net Socioeconomic Benefits of Improved
Charcoal Cook Stoves
Source: Jeuland. A.M., Pattanayak. S (2012)
32
Net Socioeconomic Benefits of Improved
Charcoal Cook Stoves
For charcoal stoves, the
most important drivers
tend to be in parameters
that affect the relative cost
of fuel: the market price of
charcoal, and the amount
of baseline fuel needed and
baseline energy efficiency,
which influence the relative
gains obtained from the
new stove. Also important
are the use rates, the
market
wage
(income
quintile)
and
baseline
cooking time, the latter two
of which determine the
value of collection and
cooking time savings.
Source: Jeuland. A.M., Pattanayak. S (2012)
33
Net Socioeconomic Benefits of Kerosene
and LPG Cook Stoves
For kerosene and LPG stoves, the incidence and cost-of-illness, which determine some of the health gains,
figure much more prominently. Also important are the value of time savings (determined by relative time
efficiency, market wage, and shadow value of time savings).
Source: Jeuland. A.M., Pattanayak. S (2012)
34
Net Socioeconomic Benefits of Electric
Cook Stoves
Net benefits of the electric
stove are most strongly
affected by its relative
efficiency and electricity
prices.
Source: Jeuland. A.M., Pattanayak. S (2012)
35
Cost in USD
ICS Current Market– Upfront Costs
80
70
60
50
40
30
20
10
0
72
31
31
9
9.5
20
16
6
4
10
20
6
11
Cost - USD
36
Cook Stove Consumer - Fuel Costs
•
Urban households use around 90 litres of kerosene per year, rural at 41 litres per year. On average
Kerosene prices ranges from Kshs. 81.03 – 83.83 per litre. Overall price per year of kerosene for urban
households is around Kshs. 7293 – 7545 and rural households Kshs. 3322 – 3437.
•
Charcoal is a preferred household energy source due to its affordability. It is the cheapest urban household
cooking fuel currently costing about Kenya shillings Kshs. 12,000 per household per year. Charcoal is
usually purchased in small quantities of 1.5 kilogrammes costing between Kshs. 30-50, hence; low income
households and businesses find it affordable to buy charcoal every day in small quantities.
•
Average LPG cost per household in Kenya is around Kshs. 31,760 per year. The current (June 2011) price of
LPG is Kshs. 2,500 for a 13 kilogramme cylinder or Kshs. 1,000 for a 6 kilogramme cylinder.
•
Per capita electricity household consumption averages 844 kwh in urban and 544 kwh in rural areas.
Higher income urban households consume the largest amount of electricity (1,352 kwh) compared to 606
kwh by the lowest income group. Average Electricity cost per household in Kenya is around Kshs. 59,200
per year.
37
Cook Stove Consumer - Fuel Costs
Fuel
Kerosene price(Kshs/l)
Fuel wood price(Kshs/bundle)
LPG price(Kshs/kg)
Electricity price(Kshs/Kwh)
Charcoal price(Kshs/4kg tin)
Motor Spirit Premium price(Kshs/l)
Automotive Gas Oil price(Kshs/litre)
Lubricant price(Kshs/ l)
Costs (Kshs)
81.03 - 83.83
70
217.27
11.62
61.4
119.23
66.13
382.657
38
Cook Stove Consumer - Fuel cost per
household
Total expenditure on fuel (Kshs/month)
6000
4933
Cost per month (Kshs)
5000
4000
3509.34
3000
3000
2647
2243.52
2000
1000
700
1254.8
1000
Kshs/Month
277
0
Fuel
39
Cookstove Consumer - Fuel Perception
Map
High Price
LPG
Electricity
Quintile 4 and 5
Urban and PeriUrban
High Value
Low Value
Charcoal
Quintile 1, 2 and 3
Rural, Urban and
Peri-Urban
Kerosene
Quintile 1, 2 and 3
Rural, Urban and PeriUrban
Fuel wood
Quintile 1, 2 and 3
Rural and PeriUrban
Low Price
40
Barriers to ICS adoption
Barriers
Market Approach
Despite the benefits of improved cook stove adoption, several projects have struggled to make an impact over
decades of effort . Despite high awareness of improved cook stoves by rural households, adoption rate is quite
low. Even though people are aware of ICS technology, they are unaware of its benefits.
Improved cook stove programs are more successful when the cook stove is physically seen by prospective
customers. This provides concrete and observable benefits to the implementer and is best done through
stakeholder meetings. In urban areas, where fuel is often purchased, users are motivated by stoves that save
money . The same can be said about rural areas; people are generally motivated by saving money on fuel efficient
stoves
Health - IAP
While there is an abundance of literature on improved cook stoves to mitigate household air pollution, results
prove to be statistically insignificant in cook stove adoption. The type of fuel used seems to produce a positive
correlation with improved health benefits, for example, improved fuel wood stoves substantially reduce exposure
however; they give fewer health benefits than improved charcoal stoves, which can reduce exposure to very low
levels. Improvement of health through reducing indoor air pollution (usually ranked high by cook stove
developers) rarely ranks highly amongst improved cook stove users .
Marketing stoves based on the improved health indicators has so far been ineffective. This is due to lack of proper
education and users do not seem to value health benefits highly enough to overcome traditional cooking methods.
Research has shown that marketing the value of the stoves as a whole increases uptake, e.g., an improved stove
can be seen as contributing to a cleaner kitchen, adding new cooking functionality, or providing a status symbol
associated with modernity. Commercial players who are the most innovative in creating observable value for their
customers will more than likely increase uptake of improve cook stoves and run a successful project.
Source: Slaski . X and Thurber, M., (2009),
Mtsami. P.T., (2012)
41
Barriers to ICS adoption
Barriers
Gender, Age and
Education
The use of improved cook stoves is normally associated with a woman’s role in the household ; hence women have a
significant influence on their adoption rate.
In lower income households, males are often the head of the household; however women still have valuable input in
financial decisions of the household
Women, who bear the brunt of the costs associated with cooking, can have a significant input in fuel choice. The
education level of the wife can influence the adoption rate of improved cook stoves. i.e., higher the education level of
the wife in a household the more likely the household will adopt improved cook stove technologies. Education level of
the woman works in conjunction with age to fully influence the uptake of improved cook stoves.
Studies have shown that uptake of improved cook stoves are higher in households in the quartile of age 25-54.
Sources: Silk. B.J., et al (2012), P. MO and
Fraser GCG., (2006 ), Mtsami. P.T., (2012)
42
Barriers to ICS adoption – Fuel Costs and
Affordability
Barriers
Fuel cost and affordability
The price competitiveness of fuel is a significant barrier to improved cook stove adoption.
In rural districts where wood fuel is collected for free, households are less inclined to use improved cook stoves. As
in the case of Wundanyi, Mwatate and Voi Districts, 79% of rural households who got their fuel wood free of
charge were not using improved cook stoves and that 62% of households who bought their fuel wood were using
improved cook stoves.
In rural areas the implementation of improved cook stoves should target areas where majority of the households
buy their fuel. This can help promote adoption rates because such communities are motivated to adopt the new
technologies by the fact that they will save on fuel costs. In rural areas where literacy levels are low (below primary
level education), implementation of improved cook stoves should work alongside adult education programs
targeting women.
Source: Mtsami. P.T., (2012)
43
Barriers to ICS Adoption – Fuel Costs and Affordability
Barriers
Charcoal and
Firewood
Charcoal and firewood costs are generally low and there is a dominance of charcoal stoves in urban regions . The low price
of charcoal and firewood results can be attributed to the fact that both are obtained from a natural resource that can be
tapped with little or no direct cost to producers or consumers. Charcoal and firewood are the cheapest form of cooking
fuel for urban and rural areas respectively.
Charcoal production is still considered an illegal activity in rural Kenya. However, recent legislation has supported the
production of sustainable charcoal.
Charcoal is normally considered low cost and affordable. But due to the fact that it is repeatedly bought in small quantities
it ends up being more expensive in the long run compared to other energy sources e.g. LPG gas
Kerosene
Cost-effective alternatives, like kerosene, have had a massive uptake in Kenya (when compared to traditional fuel) because
the Kenyan Government has removed all taxes on kerosene. Though not classified as a clean fuel, it is seen as a general
improvement from using wood fuel. Therefore, many consumers in urban areas switched to kerosene, which is now used
in a significant majority (over 85%) of urban households .
Given the importance of kerosene in meeting urban poor household energy needs, targeted and time-limited subsidies for
kerosene stoves and lamps could expand the kerosene market, widen access among the urban poor, lead to local
investment in kerosene stove and lamp manufacture and reduce overall energy costs.
However, the use of kerosene is expected to decrease significantly by 2030. The Government of Kenya has announced
plans to phase out the use of kerosene (Kerosene free initiative) for lighting and cooking, and replace it with clean energy
products such as solar lighting kits. 1 million solar lighting kits are expected to be disseminated into Kenyan households by
2030. This will have significant impacts on the kerosene cook stove market.
Sources: EEDNA (2008), EAC (2008), World bank (2011)
44
Barriers to ICS adoption - Fuel Costs and Affordability
Barriers
LPG
Policies have retarded a further shift towards clean cooking fuels by maintaining high levels of taxation on
some products like LPG. The use of LPG as a household cooking fuel is minimal in rural Kenya.
LPG has a very high upfront cost which is normally beyond the reach of the majority of the urban poor. About
11.9% of urban households cooking using LPG gas compared with rural households where only 0.7% uses it.
This is attributed to a number of reasons. Where LPG is marketed by petroleum companies, it is still yet to
have a wide coverage in many areas. For many years, the country has had only a small LPG handling facility in
Nairobi. The Kenya Pipeline Company plans to build a 2000 tonne storage and cylinder filling facility in Nairobi,
as well as storage and distribution facilities in Nakuru, Eldoret, Sagana and Kisumu.
Consumers are also held captive by the few out letting companies through limited out letting and customized
cylinders and valves. The Government sought to address this by standardizing cylinders and valves. Another
major challenge with LPG is that being a petroleum product, it is vulnerable to the escalating international oil
prices.
Income levels and cost of other fuels and several factors determine LPG cook stove uptake, these are:
availability, reliability of LPG supply, fears about safety, unfamiliarity with cooking with LPG, lack of knowledge
about the harm caused by smoke from solid fuels burned in traditional stoves, and cultural preferences.
Sources: EEDNA (2008), EAC (2008), World bank (2011)
45
Barriers to ICS adoption
Barriers
Political Stability
Political and institutional risks in Kenya can negatively impact on the enabling
environment which can have detrimental impacts on the development and
implementation of improved cook stove projects.
The key concern relates to the uncertainty of the regulatory process and the
likelihood that it can be affected by political regime changes.
Private and public sector cook stove projects are currently encouraged by the
government but certain changes under consideration in Kenya (e.g. taxation on
fuels and revenue share on carbon market streams) may result in increased
administrative burden and costs, and lower returns for CDM developers and
buyers.
46
Barriers to ICS adoption
Barriers
Project developers
Project developers face a variety of challenges when implementing ICS projects. The
following issues can hinder purchase by end user if not addressed at an early stage in
the ICS implementation process;
•Poor feasibility / Lack of technical expertise – ICS projects may fail if the technical
expertise is not fully aware of the requirements of a successful project from the
onset.
•Bad product / Lack of understanding of community needs – product design and
functionality does not meet the needs of end user.
•Lack of investment.
•Lack of ICS maintenance and proper monitoring
•Bad reputation – End users knowledge of failed projects in other areas may hinder
ICS adoption or purchase.
•Lack of understanding from DNAs.
47
ICS Market Needs
Market needs
Groups of
consumers
Rural / Urban
Women (Head of
household)
Market requirements
Affordable cook
stoves
Willingness to pay
Rural / Urban Men
(Head of
household)
Age 15-64
(Working age)
Income quintile 1
Heavily subsidized
ICS / microfinance
Fuel wood, charcoal
Income quintile 2
Subsidized ICS /
microfinance
Fuel wood, charcoal
Improved cook
stoves
Income quintile 3
-5
Higher willingness to
pay for ICS/fuel than
lower income groups
Cleaner fuel
Education level
up to secondary
/ tertiary
Willingness to
pay
Fuel wood,
charcoal,
LPG, electricity
LPG, Electricity
48
Factors Influencing ICS adoption –
Market Drivers
•
•
•
•
•
•
•
•
•
•
•
•
Age
Gender
Head of household
Home Ownership
Family size
Education level
Geographic Location – including urban and rural
Employment (Income Quintiles)
Fuel Type (used in cooking)
Fuel Availability
Fuel Cost (Affordability)
Willingness to Pay
Source: Jeuland. A.M., Pattanayak. S (2012)
49
Factors Influencing ICS adoption – Market
Drivers Rank
Importance
Age
Education Level
Fuel cost
3
4
5
Fuel access
Fuel type (used in
cooking)
Stove cost
Head of household
Geographic location
Level of income
Home Ownership
Gender
1
2
Willingness to pay
Ranking
1 – Lowest Rank, 5 – Highest Rank
50
Segments of Energy and Cook Stove
Consumers
Energy Choices
and Uses
Socio-economic
and demographic
profile of the
household
Energy cost and
expenditure
Broad
Segments
51
Broad Segments
•
The combination of ranked market drivers can be grouped into similar broad
segments that exhibit similar characteristics. These broad segments are grouped
into the following
Socio-economic and demographic profile of
the household
Gender, age, head of household, decision
making regarding household energy issues,
home ownership, family size, highest level of
education reached in the household,
employment
Energy Choices and Uses
Energy sources, energy choice determinants
in cooking, problems associated with the use
of energy, fuel availability
Energy cost and expenditure
Level of income, cost/unit for each of the
energy consumed.
Source: Jeuland. A.M., Pattanayak. S (2012)
52
Segment 1 – Low income households
Income and Household Characteristics
•
Households living below the urban poverty line Kshs. 2913 per month
•
Households living below the rural poverty line Kshs. 1562 per month
•
Rural households in extreme poverty below Kshs. 988
•
Households predominantly found in rural areas
•
Household usually living in temporary structure and there is no ownership of the dwelling unit.
•
No disposable income and generally do not have money for upfront investment
•
Luxury goods usually purchased through savings or other subsidized schemes
Gender
•
Women primarily users of cook stoves
•
Men/women makes financial decisions on fuel choice
•
Men/women makes financial decisions on household appliances
Education
•
Level of education of head of household – up to primary
•
Awareness of the benefits of improved cook stoves minimal.
Fuel Choice and Affordability
•
Main fuel used is fuel wood and other biomass such as dung, and agricultural wastes
•
Fuel usually collected for free.
Cook Stoves
•
Usually use traditional 3 stone fire and the cheapest type of stove Jiko Kisasa (one pot)
53
Segment 2 – Low/Middle income
households
Income and Household Characteristics
•
Households living above the urban poverty line Kshs. 2913 per month
•
Households living below the rural poverty line Kshs. 1562 per month
•
Ideal income level between Kshs. 6120 and Kshs. 9319
•
Household usually living in temporary structures.
•
Predominantly found in poor urban areas
•
Limited disposable income, products need to be subsidized through financial schemes
•
Moderate willingness to pay for technology without subsidies
•
Luxury goods usually purchased through savings or other subsidized schemes
Gender
•
Women primarily users of cook stoves
•
Men/women makes financial decisions on fuel choice
•
Men/women makes financial decisions on household appliances
Education
•
Level of education of head of household – primary
•
Moderate awareness of the benefits of improved cook stoves.
Fuel Choice and Affordability
•
Typical fuel choices are firewood, charcoal and agricultural residues
•
Access to electricity in urban households but affordability prohibits adoption rate.
•
Poor urban households may use urban residues as fuel; such as cardboard residues from building construction.
Cook Stoves
•
Uses three stone fire, cheapest type of stove Jiko Kisasa (one pot) and kerosene wick stoves
54
Segment 3 – Middle income households
Income and Household Characteristics
•
Income levels between Kshs. 9320 and Kshs. 13015 per month
•
Found in both rural and urban areas
•
Households usually living in temporary and rented dwelling units
•
Moderate disposable income
Gender
•
Women primarily users of cook stoves
•
Men/women makes financial decisions on fuel choice
•
Men/women makes financial decisions on household appliances
Education
•
Level of education of head of household– primary and secondary
•
Moderate awareness of the benefits of improved cook stoves.
•
Substantial awareness of stoves using cleaner fuel like LPG and electricity
Fuel Choice and Affordability
•
Kerosene stoves in urban areas used to boil water or tea and charcoal used for cooking (for better taste).
•
Usually purchase fuel for cooking and lighting
Cook stoves
•
Moderate willingness to pay for LPG and Electric Stoves
•
Typically uses kerosene wick and charcoal stoves.
55
Segment 4 – Middle/High income households
Income and Household Characteristics
•
Income levels between Kshs. 13016 and Kshs. 20408 per month
•
Household usually living in rented (permanent structures) and owned dwelling units
•
Found in both rural and urban areas
•
Exceptional awareness of improved cook stoves
•
Luxury items usually purchased through savings
•
Income sources are usually fragmented in rural districts
Gender
•
Women primarily users of cook stoves
•
Men/women makes financial decisions on fuel choice
•
Men/women makes financial decisions on household appliances
Education
•
Level of education of head of household – primary; secondary; some tertiary
•
Moderate awareness of the benefits of improved cook stoves.
Fuel Choice and Affordability
•
Typically uses firewood, charcoal, kerosene and/or LPG stoves.
•
Easier access to fuels
•
Fuels in both urban and rural areas are purchased.
•
Higher willingness to pay for LPG and electric stoves in urban areas than in rural areas; may be hindered
due to high taxation on LPG and constant shifts in gas and tariff prices.
•
Moderate disposable income
56
Segment 5 - High income households
Income and Household Characteristics
• Income levels above Kshs. 20409 per month
• Predominantly found in rural/urban regions
• Household usually living in rented and owned dwelling units.
• Luxury items usually purchased through savings
Gender
• Women primarily users of cook stoves
• Men/women makes financial decisions on fuel choice
• Men/women makes financial decisions on household appliances
Education
• Level of education of head of household – primary, secondary and tertiary
• Exceptional awareness of improved cook stoves
• Moderate awareness of the benefits of improved cook stoves.
Fuel Choice and Affordability
• Households predominantly use firewood, charcoal, kerosene and LPG stoves.
• Higher willingness to pay for LPG and electric stoves in urban areas than in rural areas; may be
hindered due to shifting taxation on LPG and constant shifts in gas and tariff prices.
57
Segment Matrix
The segment matrix ranks market drivers by region. Market drivers are ranked 0 to 5 with 0 being the least
likely option to increase cook stove adoption and 5 the most likely.
Segment Matrix
Age
Segments ranked 0 to 5 with 0 being lowest score and 5 the highest
0 - 14
1
15-24
4
25 - 54
5
55 - 64
3
65 and over
1
Family Size
Nairobi
2
Central
4
Coastal
4
Eastern
5
North Eastern
5
Nyanza
5
Rift Valley
4
Western
5
Fuel type (used in cooking)
Firewood
Charcoal
Kerosene
LPG
Electricity
Nairobi
1
4
4
4
1
Central
5
4
2
1
0
Coast
4
4
3
1
0
Eastern
4
2
2
1
0
North Eastern
4
2
1
0
0
Nyanza
4
2
2
0
0
Rift Valley
3
3
1
0
0
Western
5
3
1
0
0
Home Ownership
Nairobi
4
Central
4
Coastal
4
Eastern
3
North Eastern
2
Nyanza
3
Rift Valley
3
Western
4
Eastern and North Eastern Regions are high risk security areas.
58
Segment Matrix
Gender
Head of household Female
Employment
Male
4
Central
4
Coastal
4
Eastern
3
North
Eastern
4
Income
Quintile 1
Income
Quintile 2
Income
Quintile 3
Income
Quintile 4
Income
Quintile 5
0
3
5
5
5
Nairobi
2
Fuel Access
Fuel wood
Charcoal
Kerosene
LPG
Electricity
Fuel Access
Fuel wood
Charcoal
Kerosene
LPG
Female
5
Nairobi
Rural
3
4
3
3
3
Central
Urban
2
5
3
3
3
Rural
5
3
3
2
2
Coastal
Urban
4
4
3
3
3
North Eastern
Urban
Rural
3
3
2
3
4
4
2
2
Nyanza
Urban
2
3
4
2
Rural
2
2
3
2
Urban
1
4
4
4
3
Nyanza
4
Rift Valley
3
Western
4
Rural
4
3
3
2
2
Eastern
Urban
3
2
4
2
2
Rural
3
3
4
2
2
Rift Valley
Urban
Rural
3
3
3
2
3
3
1
1
Western
Urban
3
3
4
3
Rural
4
3
4
3
59
Segment Matrix
Fuel Cost (Affordability)
(Appendix III)
Fuel wood
Charcoal
Kerosene
LPG
Electricity
Nairobi
Fuel Cost (Affordability)
(Appendix III)
Fuel wood
Charcoal
Kerosene
LPG
Electricity
North Eastern
Level of Education (up to
secondary - females)
Central
Coastal
Eastern
Urban
Rural
Urban
4*
3
4
Rural Urban
4
4
4
3
2
4
4
5
4
4
4
3
2
4
3
4
4
4
4
3
3
4
3
3
2
3
2
2
2
4
2
3
2
3
2
2
1
Nyanza
Rural Urban
Rift Valley
Rural
Western
Urban
Rural
Urban
Rural
Urban
Rural
Urban
Rural
3
2
3
2
3
3
4
4
3
2
3
2
3
3
3
3
3
3
3
3
3
3
3
3
2
2
2
2
2
1
3
2
2
1
2
1
2
1
2
2
Nairobi
Central
Coast
Eastern
North Eastern
Nyanza
Rift Valley
Western
3
5
4
4
3
3
4
4
Urban
Rural
1
4
4
3
3
4
4
3
4
2
Willingness to pay
Firewood
Charcoal
Kerosene
LPG
Electricity
60
Segments
•
•
•
•
Broad categories of factors that influenced improved cook stove adoption were
identified and several targeted segments were discovered within each category.
The targeted segments are based on a collation of drivers from the segment
matrix. All scores ranked 4-5 are preferable indicators for a character profile. These
character profiles represent the ideal target market for large scale improved cook
stove adoption; based on a market profitability approach.
12 variables were considered as a determinant of adoption. These were age,
gender, head of household, home ownership, family size, geographic location, fuel
used in cooking, employment (income quintiles), fuel availability, education level
and willingness to pay.
Improved cook stove adoption and fuel choices are significantly influenced by
socio-economic status and demographic profile of households, energy choices and
uses, energy cost and expenditure.
Using the segment matrix, we based the top characteristics on variables that were
significant in a review of fuel and improved cook stove adoption. These were age,
employment (level of income), gender, level of education, head of the household,
household size and geographic location.
61
Segments – Top 3
• Demographic–
–
–
–
–
Working women;
Women who are the head of the household; age 25 – 54;
Education up to secondary level;
Firewood and Charcoal stove users.
• Economic –
–
–
–
–
Low income bracket - Kshs 2913 to Kshs 9319 per month; for subsidized stoves
Middle income - bracket Kshs 9320 to Kshs 13015 per month;
For upfront purchase
High Income - Kshs. 13016 to Kshs. 20408 per month;
High Income - > Kshs. 20409;
• Regional–
– Central (Rural household size > 3, Urban household size ~4);
– Western (Rural household size ~4);
– Coastal (Urban household size ~4).
62
Segments - Character Profiles
Segments
1
Education
Up to
Secondary
(Primary,
Secondary)
Age
2554
Gender /
Head of
household
Formal
/ Informal
Employment
Income
Female
Both
Low
Female
Both
High
Quintile /
month
Household
Size
Rural/
Urban
Main stove
type used in
cooking
District
Region
Kshs 2913
to Kshs
9319
>3
Rural
Fuel wood
Murang’a
Central
Kshs.
13016 to
Kshs.
20408;
Households
for adoption
200,000
~3
Urban
Charcoal
Nyeri
Central
~4
Rural
Fuel wood
Kakamega
Western
~4
Urban
Charcoal
Kilifi
Coastal
>Kshs.
20409;
2
3
Up to
Secondary
(Primary,
Secondary)
Up to
Secondary
(Primary,
Secondary)
2554
2554
Female
Both
Female
Both
Female
Both
Middle
Middle
High
Kshs 9320
to Kshs
13015
Kshs 9320
to Kshs
13015
Kshs.
13016 to
Kshs.
20408
185,000
135,000
~4
Rural
Fuel Wood
Kilifi
Coastal
>Kshs.
20409;
63
References
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Africa Infrastructure Country Diagnostic Country Report (2010): Kenya’s Infrastructure, A
Continental Perspective
CIA world fact book. Kenya, https://www.cia.gov/library/publications/the-worldfactbook/geos/ke.html [Last Accessed: May 2013]
Energy Environment and Development Network for Africa (2008)
GTZ (2009), Survey on Impacts of the Stove Project in Transmara, Western and Central Cluster of
Kenya
Jeuland. A.M., Pattanayak. S., (2012): Benefits and Costs of Improved Cook stoves: Assessing the
Implications of Variability in Health, Forest and Climate Impacts
Kenya National Bureau of Statistics (2007): Basic Report on Well Being
Kenya National Bureau of Statistics (2005/2006): Kenya Integrated Household Budget Survey
Kenya Institute for Public Policy Research and Analysis (2010): A comprehensive study and analysis
on Energy consumption patterns in Kenya
Nyaga. R.K., (2010): Earnings and Employment Sector Choice in Kenya
Omolo. J., (2012): Regional Disparities in Employment and Human Development in Kenya Vol. 1
Issue 1. (pp. 1-17)
SCODE (2010): Gender, Improved Cook Stoves and Development in Kenya+
Slaski . X and Thurber, M., (2009): Cookstoves and Obstacles to Technology Adoption by the Poor
The East African Community (EAC) Strategy on Scaling-up Access to Modern Energy Services (2008)
Worldbank (2011): The role of liquefied petroleum gas in reducing energy poverty
64
Market Segmentation Study –
Survey Analysis
65
Overview
• Market Size
• Household Purchasing Power
• Fuels and Cook Stoves Being Used / Purchased by Segments
– Primary Fuel Used in Cooking
– Fuel Collection
– Cook Stoves Being Used by Customers
– Primary Cooking Devices
• Actions Taken to Purchase ICS / Ongoing Fuel Costs
– Current ICS use – Savings and Purchase
– Money Spent on Cooking Fuel per Month
• Willingness to Purchase
– Reasons for wanting to purchase a new ICS
– Reasons for not yet purchasing a new ICS
– Willingness to Pay
66
Overview
• Access to Luxury Devices, Motivation and Micro-finance
– Interest in Purchasing Luxury Devices
– Motivation and Microfinance
– Purchasing Schemes
• Active Fuel and Cook Stove Stakeholders in Each Segment
• Fuel and Cook stove Value Chains / Distribution Channels
– Charcoal Value Chain
– Fuel Wood Value Chain
– LPG Value Chain
– Value Chain – Improved Cook Stoves
– Value Chain – Energy Related Products
– Current Specs of Market Products
67
Acronyms
AGOL
Africa Gas and Oil Limited
CBO
Community Based Organization
ICS
Improved Cook Stoves
KUSCCO
Kenyan Union of Savings and Credit Co-operatives
KRC
Kenya Railway Corporation
LPG
Liquefied Petroleum Gas
MOU
Memorandum of Understanding
MF
Microfinance
MFI
Microfinance Institution
NGO
Non Governmental Organization
SACCO
Saving and Credit Co-operative Society
68
Market Size
Segments
Region
Sample District
Central Region
Murang’a
Central Region
Female education –
up to secondary
level
Rural / Urban
Stove Type
Income
67,574
Rural
Fuel wood
Low income
Nyeri
61,194
Urban
Charcoal
High Income
Western Region
Kakamega
83,461
Rural
Firewood
Middle Income
Coastal Region
Kilifi
Rural
Firewood
High Income
Coastal Region
Kilifi
Urban
Charcoal
Middle Income
15,077
n = 100 unless otherwise stated
69
Market Size
Sample district
Region
Female head of
household
Households for
adoption
Murang’a
Nyeri
Kakamega
100
Central
0.3
200,000
Western
0.2
185,000
Kilifi
Kilifi
Sample Size (n)
Confidence Level –
95%
Confidence
Interval - +/-10%
100
100
100
Coastal
0.2
135,000
100
n = 100 unless otherwise stated
70
Households –
Purchasing Power
Average household size
Household head
Male
Female
Female HH head
belonging to
women's group n =
60
Yes
No
4.5
Percent
Segment 1a - Central region- rural fuel wood
cook stove users (Murang’a) – Low income
Education of household head
Tertiary, 4%
None, 5%
25%
75%
88%
12%
General women's
group in area
Kopep Women’s group
Gaba Women’s Group
Kagumoini Chama
Uwezo Self help Group
Rurie Group
Gabo and Gaitho
Group
Riato Women’s Group
Faulu Kenya
Kenya Women Zedi
Kagumoini
Secondary,
55%
Primary,
36%
Factors taken into before purchasing a product
How much item costs
1.18%
Savings to purchase
them
22.35%
76.47%
Recommendation
from community
leader
Other people in the
village using product
71
Households –
Purchasing
Power
Household size
Household head
Male
Female
Segment 1b – Central region- Urban charcoal
cook stove users (Nyeri) – High income
Education of household head
1%
1%
4.5
Percent
55%
45%
5%
None
Primary
Female HH head belong to
women's group n = 45
Yes
No
Secondary
University
35%
65%
93%
General women's group in area
Metumi Women Group
Skuta Women group
Merry go round
Wendani Group
Kangaruu W Group
Super Sales Women S.H
Githima Women Group
Nganciarithi Women Group
Pamoja Women Group
Kenya Women Finance trust
Mungano Women Group
Mwendwa Group
Young ladies
Kingongo Merry Go round
Ngumbacho Group
Pamoja Women Group
Women Finance
Factors taken before purchasing a
product
Savings to
purchase
the item
28%
How much
the item
costs
77%
72
Households –
Purchasing Power
Segment 2 –Western Region – Rural fuel wood
cook stove users (Kakamega) – Middle Income
Education of household head
Average household
size
Household head
Male
Female
University
1%
5.5
Percent
40%
60%
Primary
19%
Female HH head in women's group n = 40
Yes
No
Secondary
80%
44%
56%
General women's group in area
Faith Women Group
Women Enterprise
Hope group
Cabda
Luamba Women's group
Pamoja Tufaulu
ECLOF
Merry Go Round
Leso Group
Isuda Women Group
Equiry Group
Ilesi Potery Women Group
Machina Turns
Chajikoni Women Group
Basanji Women Group
Ilala Women Group
Tupendane Women Group
Sitochi women group
Muyanzi Women Group
Faith Women Group
Factors taken into account before purchasing a product
Savings to
purchase the
item
3%
How much the
item costs
97%
73
Households –
Purchasing Power
Segment 3a Coastal – Urban charcoal cook
stove users (Kilifi)– High Income
Education of household head
Tertiary None
7%
3%
Average Household size
Household head
Male
Female
6
26%
74%
Female HH head belong to women's group
n = 74
Yes
No
General
Women's
Groups
Faraja Women
group
Tuwezeshe
St Matia
Mulumba
Nkonkanya
Merry go
round
14%
86%
Primary
25%
Secondary
65%
Factors taken into account before purchasing a product
Savings to
purchase the
item
4%
How much the
item costs
96%
74
Households –
Purchasing Power
Average household size
Household head
Male
Female
Education of household head
4.7
Tertiary None
8%
11%
26%
74%
Primary
29%
Secondary
52%
Female HH head in women's group
n = 74
Yes
No
Segment 3b Coastal – Urban charcoal cook stove users
(Kilifi)– Middle Income
40%
60%
Factors taken into account before purchasing a product
General Women's Group in area
Peacock
Merry Go round
Kichuku women's group
KCB
Nkonkanya
MaremboW.G
Big family
KWFT
Sisters with Vision
Tuungane
Tuungane
MICROFINANCE GROUP
Maendeleo
SELF HELP GROUP
Mudzini
MABROCK WOMEN GROUP
Peleleza
KEDET WOMEN GROUP
Recommendat
ion from
community
leader
2%
Savings to
purchase the
item
27%
How much the
item costs
71%
75
Purchasing Power – Level of Income
Segment 1a - Central
region- rural fuel
wood cook stove
users (Murang’a) –
Low income
Segment 1b – Central Segment 2 –Western
region- Urban
Region – Rural fuel
charcoal cook stove wood cook stove
users (Nyeri) – High users (Kakamega) –
income
Middle Income
Segment 3a Coastal– Segment 3b Coastal –
Rural fuel wood cook Urban charcoal cook
stove users – High
stove users (Kilifi)–
Income
Middle Income
Income Bracket
600 - 1199
5.10%
1%
0.00%
0%
0%
1200 - 2499
13.27%
0%
2.02%
1%
0%
2500 - 3999
26.53%
0%
4.04%
13%
5%
4000-6499
26.53%
3%
3.03%
2%
5%
6500-8999
10.20%
12%
27.27%
3%
13%
9000-11999
7.14%
11%
23.23%
5%
32%
12000-14999
2.04%
19%
20.20%
20%
30%
15000-19999
5.10%
27%
7.07%
30%
7%
20000-24999
1.02%
15%
8.08%
22%
4%
>25000
3.06%
12%
5.05%
4%
4%
Highest income earners. Income in Kilifi is highly fragmented. Many respondents indicated
their income were from various sources such as farming, fuel selling and trading
76
Head of household occupation (%)
Segment 1a - Central region- rural fuel wood cook stove
users (Murang’a) – Low income
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Head of household occupation
Total Non
agricultural
activity –
23%
Main source of income
Head of household occupation (%)
Household Occupation and Main
Source of Income
Segment 1b – Central region- Urban charcoal cook stove users
(Nyeri) – High income
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Total Non
agricultural
activity 95%
Head of household occupation
Main source of income
77
Household Occupation and Main
Source of Income
Segment 2 –Western Region – Rural fuel wood cook stove users (Kakamega) –
Middle Income
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Farming
Small Scale Business
Head of household occupation
Laborer
Unemployed
Main source of income
Total non-agricultural activity – 53%
78
Household Occupation and
Main Source of Income
Segment 3b Coastal – Urban charcoal cook
stove users (Kilifi)– Middle Income
70%
Head of household occupation
Head of household occupation (%)
Segment 3a Coastal – Rural charcoal cook stove
users (Kilifi)– High Income
60%
50%
40%
30%
20%
10%
0%
60%
50%
40%
30%
20%
10%
0%
Occupation
Occupation
Main source of income
Main source of Income
Total Non agricultural
activity 82%
Total Non agricultural
activity 98%
79
Summary
•
•
•
•
•
•
We initially excluded households that were not headed by females. This was to stay true to the
original segments found. Due to time constraints we had to include households that were also
headed by males.
Secondary education for all households was over 50%. Kakamega, Nyeri and Rural Kilifi had the
highest levels of secondary education.
Factors taken into account before purchasing an item were generally; savings to purchase the item;
the cost of the item and whether or not it was recommended by a family/friend.
In all segments where there was a male head of household, they indicated that their wife was in
charge of controlling the finances even though the men were the bread winners. There was a
distinct level in the division of household roles. The male heads indicated that even though they
were the bread winners; wives were the ones who made everyday financial decisions on what is
needed in the home or what needs putting money into such as food, clothing, fuel and school fees.
Men on the other hand, would make financial decisions on more intensive things like buying land or
building/extending the home.
Polygamous households indicated that the first wife was generally in charge of making financial
decisions.
It was difficult to quantify levels of income. All respondents indicated fragmented and informal
sources of income. This was particularly high in Kilifi rural and urban areas. Some of these
fragmented sources of income included selling fuel and trading farming produce.
80
Fuels and Cook Stoves being
Used / Purchased by Segments
81
Primary Fuel Used in Cooking
100%
90%
3%
4%
8%
1%
1%
2%
2%
11%
3%
4%
6%
13%
22%
80%
70%
60%
50%
40%
96%
85%
Kerosene
76%
85%
71%
30%
LPG
Charcoal
Fuel wood
20%
10%
0%
5%
2%
Segment 1a - Central Segment 1b – Central Segment 2 –Western Segment 3a Coastal– Segment 3b Coastal –
region- rural fuel wood region- Urban charcoal Region – Rural fuel
Rural fuel wood cook Urban charcoal cook
cook stove users
cook stove users
wood cook stove users stove users – High
stove users (Kilifi)–
(Murang’a) – Low (Nyeri) – High income (Kakamega) – Middle
Income
Middle Income
income
Income
82
Fuel Collection
100%
90%
2.00%
2.00%
1.00%
7.00%
16.00%
24.00%
80%
70%
48.00%
32.00%
60%
50%
47.00%
98.00%
97.00%
40%
30%
20%
10%
Both
Collect for Free
52.00%
Purchase
45.00%
29.00%
0%
Segment 1a - Central Segment 1b – Central Segment 2 –Western Segment 3a Coastal– Segment 3 Coastal –
region- rural fuel
region- Urban
Region – Rural fuel Rural fuel wood cook Urban charcoal cook
wood cook stove charcoal cook stove wood cook stove stove users (Kilifi) – stove users (Kilifi)–
users (Murang’a) – users (Nyeri) – High users (Kakamega) –
High Income
Middle Income
Low income
income
Middle Income
83
Fuel Collection
Location
Average Time to
collect fuel wood /
mins
Average Distance to
collect fuel wood
Means on transport
General sources of
fuel
Segment 1a - Central
region- rural fuel
wood cook stove
users (Murang’a) –
Low income
30-90
100 m to 1 km
On foot
Free from nearby
woodlands
Local village vendors
Segment 1b – Central
region- Urban
charcoal cook stove
users (Nyeri) – High
income
30-60
100-500m
On foot
Convenience Store
Market Vendor
Roadside vendor
Segment 2 –Western
Region – Rural fuel
wood cook stove
users (Kakamega) –
Middle Income
0-30
100m-500m
On foot
Free from nearby
woodlands
Local village vendors
Road side vendors
84
Fuel Collection
Location
Average Time to
collect fuel wood /
mins
Average Distance to
collect fuel wood
Means on transport
General sources of
fuel
Segment 3a Coastal–
Rural fuel wood cook
stove users (Kilifi) –
High Income.
30-90
500m-1km
On foot
Free from nearby
woodlands/grasslands
Road side vendors
Segment 3 Coastal –
Urban charcoal cook
stove users (Kilifi)–
Middle Income /
Charcoal fuel
0-30
100m-500m
On foot/bicycle
Convenience Store
Market Vendor
Segment 3a Coastal –
Urban charcoal cook
stove users (Kilifi)–
Middle Income / LPG
Fuel
0-30
1m-3km
Car – Respondents
indicated long
distances required
vehicle transport
Convenience store
Petrol station
Bicycle
Segment 3b Coastal –
Urban charcoal cook
stove users (Kilifi)–
Middle Income /
Kerosene Fuel
0-30
100m – 1km
On foot/bicycle
Convenience store
Roadside vendor
Petrol station
85
Percentage Distribution of Cooking Devices
Used in Households
Segment 1a - Central Segment 1b – Central Segment 2 –Western Segment 3a Coastal–
region- rural fuel
region- Urban Region – Rural fuel Rural fuel wood cook Segment 3b Coastal –
wood cook stove charcoal cook stove
wood cook stove stove users (Kilifi) – Urban charcoal cook
users (Murang’a) – users (Nyeri) – High users (Kakamega) –
High Income. stove users (Kilifi)–
Low income
income
Middle Income
Middle Income
Three stone fire
Firewood Jiko Kisasa –
one pot
Firewood Jiko Kisasa two pot
Rocket Mud Stove - one
pot
Rocket Mud Stove - two
pots
25%
8%
37%
34%
10%
10%
-
4%
1%
1%
1%
-
2%
8%
-
16 %
-
-
-
-
11%
1%
1%
-
-
Charcoal stove
7%
50%
21%
20%
57%
Upesi Stove
5%
2%
11%
6%
-
Other ICS
8%
5%
11%
-
Kerosene wick
Kerosene pressure
stove
LPG stove
Electric stove – 2 ring
Total
14%
26%
14%
12%
16%
-
1%
-
4%
-
3%
12%
4%
4%
15%
-
-
1%
-
1%
100%
100%
100%
100%
100%
These figures represent cooking devices found in households,
they do not reflect primary fuel used for cooking.
86
Percentage of Multiple Stoves Found in Households
Segment 1a Segment 1b –
Segment 2 –Western
Central regionCentral region- Region – Rural fuel wood
rural fuel wood
Urban charcoal
cook stove users
Segment 3a Coastal–
cook stove users
cook stove users
(Kakamega) – Middle
Rural fuel wood cook
(Murang’a) – Low
(Nyeri) – High
Income stove users (Kilifi) – High
income
income
n = 70
Income.
n=47
n = 66
users n = 56
Multiple Stove
Use
47%
Reasons for multiple stove use
To cook bigger
meals
6%
To save time in
cooking
33%
Fuel is cheaper
for some stoves
59%
Food tastes
better
2%
Less accidents /
burns
0.00%
Segment 3 Coastal –
Urban charcoal cook
stove users (Kilifi)–
Middle Income users
n=60
66%
70%
56%
61%
18%
5.71%
17.24%
3.33%
77%
91.43%
10.34%
33.33%
5%
2.86%
68.97%
61.67%
0.00%
0.00%
3.45%
1.67%
0.00%
0.00%
0.00%
0.00%
Main reasons for multiple stove use.
87
Stove Use – Primary Cooking Device
Segment 1a - Central region- rural fuel wood cook
stove users (Murang’a) – Low income
Stove type
Three stone fire
Firewood Jiko Kisasa two pot
Rocket Mud Stove one pot
Rocket Mud Stove two pots
Charcoal stove
Other – ICS
kerosene wick
LPG stove
Primary Stove Average purchasing
Use
price of stove (kshs)
62%
Free
2%
250-500
7%
250-350
2%
9%
10%
3%
5%
300-400
250-500
500-1000
350-750
3500-7000
Segment 1b – Central region- Urban charcoal
cook stove users (Nyeri) – High income
Primary
Stove Use
1%
Stove type
Three stone fire
Rocket Mud Stove
1%
- two pots
96%
Charcoal stove
1%
kerosene wick
LPG stove
1%
Average
purchasing price
of stove (kshs)
Free
300
500-1000
300-700
3500-7000
Segment 2 –Western Region – Rural fuel wood
cook stove users (Kakamega) – Middle Income
Average
Primary Stove purchasing price
Stove type
Use
of stove (kshs)
Three stone fire
44%
Free
Firewood jiko
Kisasa - one pot
5%
250-500
Other - ICS
9%
250-1000
Rocket mud
Stove - two pot
2%
250-500
Charcoal stove
15%
500-1000
Upesi Stove
20%
100-250
Kerosene wick
stove
2%
500-1000
LPG stove
3%
3500-7000
88
Stove Use – Primary Cooking Device
Segment 3a Coastal– Rural fuel wood cook stove users
(Kilifi) – High Income.
Average
purchasing
Primary price of stove
Stove Use (kshs)
Stove type
Three stone
40%
fire
Firewood Jiko
Kisasa - one
4%
pot
Other ICS
23%
Charcoal stove26%
kerosene wick 3%
kerosene
pressure stove1%
3%
LPG stove
Free
250-500
250-1000
500-1000
350-700
Segment 3b Coastal – Urban charcoal cook
stove users (Kilifi)– Middle Income
Average
Primary purchasing
Stove price of
Stove type Use
stove (kshs)
Three stone
5%
Free
fire
Charcoal
60%
500-1000
stove
kerosene
20%
350-750
wick
4000-7000
LPG stove 15%
250-600
4000-6000
89
Stove Use and Fuel Combination
Stove
Three stone fire
General reasons for use
Source of stove / General responses
Fuel more readily available
Food tastes better (when compared against kerosene
stove)
Cooking large meals are easier
Made by householders
Firewood Jiko Kisasa – Less smoke in the home if cooking indoors during rain
one pot
Good for cooking smaller meals.
Many respondents indicated that they needed bigger pot
plates to cook some meals to they revert to using three
stone fires.
Good fuel wood savings
Householders make themselves or pay someone to make it
for them
Firewood Jiko Kisasa - Easy to use
two pot
Good fuel wood savings
Householders make themselves or pay someone to make it
for them
Rocket Mud Stove one pot
Faster cooking
Easy to use
Good fuel wood savings
Householders make themselves or pay someone to make it
for them
Rocket Mud Stove two pots
Less smoke in the home
Faster cooking
Householders make themselves or pay someone to make it
for them
Charcoal stove
Charcoal more readily available
Fuel is cheap
Purchased from NGO Subsidized vendor or road side
vendor
90
Stove Use and Fuel Combination
Stove / type fuel
General reasons for use
Source of stove
Upesi Stove / fuel wood
Stove is easy to use
Fuel is easy to access / buy
Saves money and frequent trips to collect/purchase
fuel
Purchased from NGO subsidized vendor or
householders pay someone to make it for them
Kerosene wick
Fuel is cheap to purchase if wood / charcoal runs out –
Respondents also indicated that they do not like to use
kerosene to cook because they do not like the taste it
produces in foods
Purchased from Convenience Store or Local village
vendor
Kerosene pressure stove
Fuel is cheap to purchase if wood / charcoal runs out
Purchased from Convenience Store or Local village
vendor
LPG stove
Many respondents indicated that LPG was expensive
to purchase on a continuous basis
Fuel lasts longer but only used sparingly
Purchased from Convenience Store or Local village
vendor
Electric stove – 2 ring
Stove is easy to use
Purchased from Convenience Store or Local village
vendor
91
Stove Use
• A survey on the impacts of stove projects in Transmara, Western
and Central Kenya conducted by GTZ in 2009, indicated that three
stone fires had lost it’s predominant position in the Central region,
however, in Murang’a district, this is not the case.
• Multiple stove use were common in all households surveyed,
however, respondents indicated that some stoves are used only on
occasion. Three stone fires were still predominantly used in rural
areas; respondents indicated that they didn’t like some of the
models being sold in the ICS market. They also indicated that some
models were not fitted to their cooking needs, specifically in
Western Kenya (Kakamega). For example. respondents indicated
that their ICS was not large enough to cook their main food, Ugali,
so they reverted to using three stone fires.
92
Actions Taken to Purchase ICS /
Ongoing Fuel Costs
93
Current ICS use – Savings and Purchase
100%
5%
15%
90%
30%
44%
80%
70%
60%
50%
72%
50%
40%
70%
Did not answer
Bought stoves through own savings
40%
54%
Borrowed money to purchase/ install ICS
30%
20%
45%
20%
30%
10%
0%
8%
Segment 1a Central regionrural fuel wood
cook stove users
(Murang’a) –
Low income
12%
15%
Segment 1b –
Segment 2 –
Segment 3a
Segment 3b
Central region- Western Region Coastal– Rural Coastal – Urban
Urban charcoal – Rural fuel wood fuel wood cook charcoal cook
cook stove users cook stove users stove users (Kilifi) stove users
(Nyeri) – High
(Kakamega) – – High Income (Kilifi)– Middle
income
Middle Income
Income
The majority of
respondents did
not want to
disclose who
they borrowed
money from to
purchase ICS
94
Money spent on cooking fuel per
month
Segment 1a - Central Region: Rural fuel wood stove
users (Murang’a)
Segment 1b - Central Region:
Urban charcoal stove users (Nyeri)
30%
35%
30%
Respondents (%)
Respondents (%)
25%
20%
15%
10%
25%
20%
15%
10%
5%
5%
0%
0%
Money spent on cooking fuel / month (Kshs)
Money spent on fuel / month (Kshs)
95
Money spent of cooking fuel per month
Respondents (%)
Segment 2 –Western Region – Rural fuel wood cook stove users (Kakamega)
– Middle Income
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Cost of cooking fuel /month (Kshs)
96
Money spent of cooking fuel per month
Segment 3b Coastal– Urban Charcoal cook stove users
(Kilifi) – Middle Income
40%
35%
30%
25%
20%
15%
10%
5%
0%
25%
Respondents (%)
Respondents (%)
Segment 3a Coastal– Rural fuel wood cook stove
users (Kilifi) – High Income
20%
15%
10%
5%
0%
Money spent on cooking fuel / month (Kshs)
Money spent on fuel / month (Kshs)
97
Willingness to Purchase
98
Willingness to Purchase New ICS
Location
Willingness to pay
Segment 1a - Central region- rural fuel wood cook stove users
(Murang’a) – Low income
98%
Segment 1b – Central region- Urban charcoal cook stove users
(Nyeri) – High income
93%
Segment 2 –Western Region – Rural fuel wood cook stove users
(Kakamega) – Middle Income
94%
Segment 3a Coastal– Rural fuel wood cook stove users (Kilifi)–
High Income
96%
Segment 3b Coastal – Urban charcoal cook stove users (Kilifi)–
Middle Income
99%
Even though the majority of households were using more than one cooking device, there was a strong willingness to
pay for even more ICS technologies in all segments. Upon further investigation we found that when households were
offered an opportunity to purchase a new ICS that could further lower the use of any fuel, they would wanted to
purchase the ICS on the strength of the perceived benefit of using far less firewood/fuel.
99
Reasons for Wanting to Purchase New ICS
120%
100%
80%
43%
34%
30%
60%
60%
83%
34%
To reduce time collecting fuel
37%
40%
20%
0%
To save money spent on fuel
It is an advanced technology
37%
1%
To reduce smoke in the home
30%
5%
5%
18%
28%
35%
2%
14%
2%
1%
1%
Segment 1a - Central
Segment 1b –
Segment 2 –Western Segment 3a Coastal– Segment 3b Coastal
region- rural fuel
Central regionRegion – Rural fuel Rural fuel wood cook – Urban charcoal
wood cook stove Urban charcoal cook wood cook stove stove users (Kilifi) – cook stove users
users (Murang’a) – stove users (Nyeri) – users (Kakamega) –
High Income
(Kilifi)– Middle
Low income
High income
Middle Income
Income
In Kakamega,
respondents indicated
that their ICS was not
large enough to cook
their main food, Ugali,
so they reverted to
using three stone fires.
100
Reasons for not yet Purchasing New ICS
120%
100%
9%
25%
80%
43%
20%
39%
52%
13%
60%
9%
40%
20%
0%
7%
4%
37%
Other ICS unavailable in the area
28%
Do not like the models being sold in the area
25%
Do not have the upfront money
12%
14%
29%
54%
ICS is too expensive
Currently saving to purchase
29%
29%
7%
7%
8%
Segment 1a Segment 1b –
Segment 2 –
Segment 3a
Segment 3b Coastal
Central region- rural Central regionWestern Region – Coastal– Rural fuel – Urban charcoal
fuel wood cook Urban charcoal cook Rural fuel wood
wood cook stove
cook stove users
stove users
stove users (Nyeri) cook stove users users (Kilifi)– High
(Kilifi)– Middle
(Murang’a) – Low
– High income
(Kakamega) –
Income
Income
income
Middle Income
101
Respondents (%)
ICS purchase –
Willingness to Pay
Segment 1a - Central region- rural fuel wood cook
stove users (Murang’a) – Low income
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Purchasing power Willing to
pay upfront
cost
33%
0-50
50-100 100-150 150-200 200-250
Willingness to pay per month (Kshs)
>250
Willing to
pay
monthly
installment
s
67%
102
ICS purchase –
Willingness to Pay
Segment 1b – Central region- Urban charcoal
cook stove users (Nyeri) – High income
40%
Respondents (%)
35%
Purchasing power
30%
Willing to
pay
monthly
installment
s
41%
25%
20%
15%
10%
5%
0%
0-50
50-100
100-150 150-200 200-250
Willing to
pay up font
cost
59%
>250
Willingness to pay per month (Kshs)
103
ICS purchase –
Willingness to Pay
Segment 2 –Western Region – Rural fuel wood cook
stove users (Kakamega) – Middle Income
45%
40%
Willing to
pay
monthly
installment
s
36%
Respondents (%)
35%
30%
25%
20%
15%
Purchasing power
Willing to
pay upfront
cost
64%
10%
5%
0%
0-50
50-100 100-150 150-200 200-250
Willingness to pay / month (Kshs)
>250
104
ICS purchase –
Willingness to Pay
Segment 3a Coastal– Rural fuel wood cook stove users
(Kilifi)– High Income
Purchasing power
50%
45%
Respondents (%)
40%
Willing to
pay
monthly
installment
s
51%
35%
30%
25%
20%
15%
Willing to
pay upfront
cost
49%
10%
5%
0%
0-50
50-100
100-150
150-200
200-250
Willingness to pay / month (Kshs)
>250
105
ICS purchase –
Willingness to Pay
Segment 3b Coastal – Urban charcoal cook stove users (Kilifi)–
Middle Income
Purchasing power
70%
Repondents (%)
60%
Willing to
pay
monthly
installment
s
34%
50%
40%
30%
Willing to
pay
upfront
cost
66%
20%
10%
0%
0-50
50-100 100-150 150-200 200-250
Willing to pay / month (Kshs)
>250
106
Access to Luxury Devices,
Motivation and Micro-finance
107
Access to devices
100%
90%
80%
70%
60%
Mobile Phones
50%
Television
40%
Radio
Desktop Computers
30%
Laptops
20%
10%
0%
Segment 1a - Central Segment 1b – Central Segment 2 –Western Segment 3a Coastal– Segment 3b Coastal –
region- rural fuel wood region- Urban charcoal Region – Rural fuel Rural fuel wood cook Urban charcoal cook
cook stove users
cook stove users
wood cook stove users stove users (Kilifi) –
stove users (Kilifi)–
(Murang’a) – Low (Nyeri) – High income (Kakamega) – Middle
High Income
Middle Income
income
Income
108
Interest in purchasing new products
Devices
Segment 1a - Central regionrural fuel wood cook stove
users (Murang’a) – Low
income
Segment 1b – Central region- Urban
charcoal cook stove users (Nyeri) –
High income
Segment 2 –Western Region –
Rural fuel wood cook stove
users (Kakamega) – Middle
Income
Interested
Not
interested
Did not
say
Interested
Not
interested
Did not
say
Interested
Not
interested
Did
not
say
Mobile
Phones
5%
88%
7%
5%
80%
15%
6%
94%
-
Television
39%
48%
13%
20%
50%
30%
20%
80%
-
Radio
10%
80%
10%
4%
90%
6%
15%
84%
1%
Desktop
Computers
5%
75%
20%
10%
80%
10%
7%
80%
-
Laptops
2%
28%
70%
5%
10%
85%
8%
92%
109
Interest in purchasing new products
Devices
Segment 3a Coastal– Rural fuel wood cook
stove users (Kilifi)– High Income
Segment 3b Coastal – Urban charcoal cook stove
users (Kilifi)– Middle Income
Interested
Not
interested
Did not say
Interested
Not
interested
Did not
say
Mobile Phones
35%
30%
35%
4%
96%
-
Television
15%
60%
25%
23%
77%
-
Radio
3%
97%
-
8%
90%
2%
Desktop
Computers
17%
83%
-
5%
95%
-
Laptops
4%
96%
-
25%
75%
-
110
Motivation and Microfinance
•
•
•
•
•
•
•
Cooking on improved cook stoves comprises a variety of cultural and lifestyle changes. Some of
these changes include fuel switching, frequency of wood collection (an activity with a strong social
component) as well as general cooking (an activity heavily influenced by tradition).
Changes in lifestyle may bring significant benefits such as the ability to replace wood gathering with
productive economic activities; but they are not undertaken lightly.
Products like improved cook stoves that are more complicated than traditional technologies may
require training and ongoing correct use to reap their benefits.
What has made rural cook stove programs particularly difficult is that they are expensive, imply a
significant change in user habits, and, are usually not highly valued by potential users at the offset.
For developers to fully succeed in the cook stove market, they will need to be creative in addressing
all three of these obstacles, in addition to the difficult challenges of developing cost-effective
supply chains to remote rural areas.
Most important of all are efforts to create compelling perceived value for consumers which goes
beyond outsiders’ perceptions of the value that should already exist, such as for health.
There is a significant lifestyle change presented by a change in cooking methods therefore deep
motivation on the part of consumers is required. Skilful design can be a key part of making the
stoves as easy to use, robust, and highly valued as possible.
The extent to which project developers can profitably provide products to those on lower incomes
will then depend on how creatively they can apply tools of financing where possible and make
subsidies available where necessary through partnerships with governments and NGOs.
Slaski.X., Thurber. M., (2009), FSD 2009
111
Motivation and Microfinance
• In urban areas, where fuel is often purchased, users are
motivated by improved cook stoves that saves money.
• In rural areas where fuel is scarce people similarly see the
value of fuel-saving stoves. Motivated customers will
overcome many obstacles to purchase a product, but real
barriers can still remain, the most important of which is
affordability.
• For most low-income consumers (Income Quintile 1 and 2),
stoves are still not affordable and projects may have to adopt
a microfinance scheme.
Slaski.X., Thurber. M., (2009), FSD 2009
112
Microfinance
•
33% percent of Kenya has no access of micro financing schemes or financial services, whilst there is a strong
business opportunity to introduce the new technologies under a micro-finance scheme to low-income households
and businesses in Kenya, there are a small percentage of people that are unwilling to take out loans for products.
The reason was not related to the actual products but purely not wishing to take on any debt.
•
Over 40% of Kenyans are unaware of how microfinance works. Education programs, targeting low income families
on Income Quintile 1 and 2, especially in rural areas of Nyanza, Eastern, and North Eastern Provinces, can
significantly increase the uptake of microfinance projects in Kenya.
•
co2balance has conducted household, business and community enterprise surveys in three different locations
across Kenya (Kisumu, Aberdares and the Coastal Region). The objective of the surveys was to determine the
potential market for clean technologies distributed through a micro-finance scheme in Kenya as a whole.
•
The surveys revealed a large potential market for solar lamps, small solar panels, solar light and mobile charging
technologies, efficient cook stoves and water filters. Results highlighted a variance in affordability of monthly loan
payments, up to a maximum of £3.70 ($5.60). The surveys showed that households are willing and able to pay the
highest monthly loan payments for the solar lamps, and the combined lighting and charging devices, suggesting
that these products are seen as having the most benefits.
•
There is strong interest from community enterprises already experienced with micro-finance to lead small
distribution programmes, and MPESA mobile money transfers have been identified as a particularly suitable
means to collect payments.
113
Project technologies under micro finance
schemes
Project Technologies
Market Size /
households
Target loan
repayment / month
Solar Lamps (one
solar lamp)
334,944
£3.70 ($5.60)
Solar Panel
320,988
£0.75-1.10 ($1.101.70)
Combined Light and
Phone Charger
327,966
£0.75-1.50 ($1.102.20).
Efficient Cook Stove –
Fuel wood*
-
£0.40 ($0.60)
Water Filter
282,609
£0.40 ($0.60)
*In order for the distribution of cook stoves to be viable, the monthly loan payment would have to be higher than
the £0.40 ($0.60) households identified as affordable. Alternatively, the cost would have to be supported through
the use of carbon finance.
114
Purchasing Schemes – “Merry go round”
• Rural respondents willing to purchase products through financing
schemes indicated that they usually do so through women groups.
• The majority of women groups are informal and operate a “merry
go round” savings scheme. This works by members making
weekly/monthly contributions which are pooled for members to
take loans from.
• Alternatively smaller groups pool money and the lump sum is given
to a single member of the group each month. The small amounts
they contribute when pooled and given to a single member, makes
the member have enough money to finance large purchases. For
example, if a group has 5 members and each member contributes
1000 every month, then every month a member will have 5,000 to
spend.
115
Purchasing Schemes – Hire Purchase
• For formal workers, such as office workers, hotel staff, managers
and teachers (SACCO members), hire purchase has become a
standard way of paying for household items.
• Most of the hire purchase companies in Kenya are locally owned,
with central offices (Nairobi) and rural shops scattered around the
country.
• Products sold by Hire Purchase firms include a wide range of
household goods ranging from sewing machines to TV’s and stereos
to fridges or sofa sets.
• Energy items include cooking appliances and solar home system
kits. Goods are sourced centrally on a wholesale basis. Hire
purchase contract terms typically last one to two years, and are
directly debited from the paycheck of the consumer. The quoted
purchase price includes interest on the item, which is often over
40% per annum
References: The Shell Foundation
116
Energy Lending
•
The Kenyan Union of Savings and Credit Co-operatives (KUSCCO) functions as a national umbrella
organization for Saving and Credit Co-operative Society (SACCO), which account for 40% of Kenya’s
national savings.
•
KUSCCO is a micro finance institution and has largely focused on the promotion of LPG for cooking
purposes. They have also focused on several solar projects.
Energy Lending Model
• Market Development: KUSCCO conducts market research to identify needs and feasibility of energy
loans. The energy company develops and markets the technology and trains KUSCCO staff in the
technical details of its products.
• Appraisal and Processing SACCOs serve as the primary level micro financing institution to finance
energy services through direct loans to clients.
• Disbursement: SACCO loans from KUSCCO for energy on- lending if necessary. KUSCCO issues check
to energy companies on behalf of SACCOs to purchase energy equipment
• Installation and Training: For solar loans KUSCCO appoints and trains regional sub-contractors who
install the systems as well as arrange basic user training under the supervision of KUSCCO. In case
of LPG systems KUSCCO takes up a distribution function where in it collects information on energy
needs from the SACCOs and purchases energy systems in bulk directly from the energy companies,
distributes them to the SACCOs, which deliver the units to the clients.
• Repayment: SACCO recovers the loans on behalf of KUSCCO and KUSCCO monitors the repayment
117
Active Fuel and Cook Stove
Stakeholders in Each Segment
118
Active Cook Stove and Fuel
Stakeholders
Client / Partners
Scale
Monitoring
Marketing Approach Effectiveness of ICS Project Challenges
Project Success
Market mapping for
legal charcoal chain.
Practical Action / GIZ,
GVEP, Ministry of
Agriculture, Solar
Cookers international,
Edinburg University,
EnDEV
Large Scale
Focused extensively on
women groups to aid in
the marketing of
alternative fuels and
ceramic stoves.
Participatory Market
Systems Development.
Participatory Market
Mapping.
Working with CBOs and
engaging local media
(Radios adverts)
Transportation of
ceramic stove products
to market is a major
constraint
Monitoring of IAP
Financing to ensure
growth
Competition with
substandard products
which affects the
market negatively
Producer groups trained
on production and
marketing of ICS
(ceramic wood and
charcoal burning stoves)
Promoters, retailers and
distributor networks
established
Scaling up of smoke
removal interventions
based on IAP monitoring
119
Active Cook Stove and Fuel
Stakeholders
Client / Partners
Scale
Monitoring
Marketing Approach Effectiveness of ICS
Use of women groups
to disseminate stoves.
My climate
Large Scale (100,000+
stoves)
Microfinance scheme
through community
savings and learning
groups.
Project Challenges
Sustainable
development indicators
- Quarterly Monitoring
of all indicators
Investment for training
monitoring and
Most effective:
ongoing maintenance
Ongoing quarterly
surveys to ensure users
are happy with stove
functionality and use.
Project Success
Groups have been
trained with
installation skills and
are marketing stoves as
an income generating
activity.
Networks and
partnerships
established to support
stove activities.
Setting up
microfinance scheme
through Kasadimba
Women's Group
120
Active Cook Stove and Fuel Stakeholders
Client / Partners
Scale
Paradigm project / World
Vision, Food for the
Hungry, Compassion
International, World
Large Scale (250,000+
Food Program, Impact
stoves)
Carbon, Blue Source,
Envirofit, Fine
Engineering, Chujio
Ceramics
Marketing Approach
Subsidized two tier,
variable priced, open
market perspective.
Commercial Tier 1 Market defined pricing,
Retail vendor network,
Supported by direct sales
people.
NGO Tier 2 - Subsidized
pricing strategy, Sold via
CBO, Supported by NGO
Monitoring Effectiveness
of ICS
Project Challenges
Ongoing water boiling
tests at manufacturing
facility
Project Success
Most effective: Quarterly
monitoring of new
project households and
existing customers
Most effective: Annual
follow up surveys of
existing users
Biennial field testing to
assess any changes to
baseline. Reassessing
performance of aging
stoves
Sold over 36,000 stoves
High investment
Carbon financing –
Revenue subsidizes the
price of the stoves by
around 25-30%
Most effective: Warranty
system informs ongoing
monitoring and allows
for real-time
response to any stove
usage or performance
issues.
121
Active Cook Stove and Fuel
Stakeholders
Client / Partners
Scale
Micro scale – 2000+
stoves
co2balance
Small Scale – 15, 000+
stoves
Large Scale > 15,000+
stoves
Marketing Approach
Stakeholder meeting
before product
dissemination to
engage local
communities in the
project process.
Monitoring
Effectiveness of ICS
Most effective: ICS
quarterly monitoring All damaged stoves
replaced, stakeholders
are interviewed to
ensure they are happy
with their stove's
functionality
Sustainable
development indicators
Trusted community
- Quarterly Monitoring
based organisations aid
of all indicators.
in marketing of stoves.
Most effective: Biennial
monitoring of stove use
Project Challenges
Project Success
Distributing networks
established.
Effective monitoring
Ongoing investment for procedure for damaged
new projects
stoves.
Groups have been
trained with installation
skills and are marketing
stoves as an income
generating activity.
122
Active cook stove and fuel stakeholders
Client / Partners
HIVOS / SCODE
Scale
Large scale
Marketing Approach
Monitoring Effectiveness
of ICS
Project Challenges
Awareness campaigns
directed at low income
target groups to inform
them about benefits and
Use of gender responsive
availability of ICS and
approach in the
Difficult to develop local
fuel wood production.
implementation,
fuel wood supply in fuel
monitoring and
scarce areas.
evaluating stages along
Targeting rural women
the project
through women's groups
to effectively participate
in the project both as
entrepreneurs and
beneficiaries.
Project Success
Technical support to
entrepreneurs in
installing ICS and
planting trees at buyer’s
place.
Training buyers on
operation and
maintenance of ICS.
Training households and
institutions on
production,
management and
utilization of trees for
fuel wood production.
Sharing information and
knowledge on ICS, fuel
wood and gender related
issues.
123
Active cook stove and fuel stakeholders
Client / Partners
Scale
Challenges
Project Success
Major LPG suppliers
Marketed 100,00 + MT
hydrocarbons.
Shifting LPG prices
Oryx Energies
Large Scale - Over 150,000 LPG
cylinders in Western Kenya
Rising import costs and weaker
domestic currency
Inaccessibility to rural communities
TotalGaz
Large Scale - Nationwide
Oryx Energies - Over 150,000 LPG
cylinders in Western Kenya
Established distribution networks
with local shops and supermarkets
Hashi Gas - Installed two bulk LPG
storage tanks at its Nairobi LPG
plant
Large Scale - Nationwide
Hashi Gas
Unknown
Total Kenya Ltd
LPG filling station in Thika Central
Kenya
124
Fuel and Cook stove Value
Chains / Distribution Channels
125
Charcoal Value Chain
Wood
production
Wood
harvesting
Charcoal
production
Job
split by
gender
Women
Men
Men
Job type
Tree
seeding
Tree cutters /
loggers
Charcoalers
Kiln
construction
Tree
planting
Seasonal
Seasonal /
Full Time
Seasonal /
Full time
Charcoal
transport
Large Scale
Selling
Men – Large
scale.
Women –
Small scale
Charcoal packaging
Collectors
Men and
Women
Women
Large
scale
retailers
Small
shop
owners.
Local and national
distribution through
individual transport
or SMEs
Full Time
Small Scale
Selling
Charcoal
consumption
Women and
Men
Road side
vendors
Town
and
village
vendors
Full Time
Full Time
Full Time
Full time /
part time
Low Skill
126
Charcoal Value Chain
Wood
production/Harvesting
Average Age
39
Charcoal transport
Vendors
35
34
Share of Women 16%
14%
57%
Owning
business
88%
67%
Formal
Education
Primary 58%;
Secondary 30%;
Tertiary 3.8%
Primary 50%;
Secondary 36%
Tertiary 4%
Av. gross income Kshs. 4,496
per month
Kshs. 11,298
Kshs. 7,503
Full time
business
43%
74%
95%
51%
Source: National Charcoal Survey
127
Charcoal Distribution
•
•
•
•
•
Women are primarily involved with tree seedling planting, watering, tending and
selling. They also care for the tree as it grows on the land. Men also partake at this
level; however they are much more heavily involved in tree cutting and tree burning.
Wood harvesting is done by the Tree Cutters/Charcoalers, who cut the wood and stack
it systematically in a pile into an earth mound kiln. The kiln is then fired and left for
between 7 and 14 days.
After cooling, the charcoal is offloaded from the kiln and packed into bags which range
from 28 to 42 kilograms with 35kg being the average. The charcoaling process generally
takes between ten to twenty one days.
Women and men both take part in charcoal packaging. Packed charcoal is sold to the
transporters at the charcoaling site or transported to the roadside, mostly using human
labour; awaiting customers who are either transporters to the urban centres or
consumers who directly get their charcoal from the charcoalers.
Transporting the charcoal to markets/end users can be challenging. Pick ups and LGVS
are the most commonly used means of transport. Some rural areas still view charcoal
production as illegal, even though there has been recent legislation to support
sustainable charcoal production. May rural areas still pay bribes to law enforcement
along transport routes.
Sources: PISCES (2010), Cologne University of Applied Sciences
Institute for Technology and Resources Management in the Tropics
128
and Subtropics (2010)
Fuel Wood Value Chain
Wood
production
Job split
by gender
Job type
Women
Tree
seeding
Wood
harvesting
Men
Tree
cutters /
loggers
Tree
planting
Fuel wood
transport
Men and
Women
Wood
packaging
Collectors
Large Scale
retailing
Men and
Women
Large
scale
retailers
Seasonal
Seasonal /
Full Time
Full Time
Women
Fuel
consumption
Women and
Men
Small
shop
owners.
Road side
vendors
Local and
national
distribution
through
individual
transport or
SMEs
Full time /
part time
Small Scale
retailing
Village
vendors
Full Time
Low Skill
Full Time
Full Time
129
Fuel Wood Value Chain
• Fuel value chain is characterized by a marked fragmentation
of operators (producers, transporters and retailers) who tend
to work in isolation on an individual or informal basis.
• Fuel wood and other biomass resources generate at least 20
times more local employment within the national economy of
Kenya than other forms of energy, per unit consumed (UNEP
2012). This is due to the huge amount of manpower (unskilled
labor) required for harvesting, processing, transporting and
trading of the fuels.
Cologne University of Applied Sciences Institute for Technology and
Resources Management in the Tropics and Subtropics (2010)
UNEP The Role and Contribution of Montane Forests and
Related Ecosystem Services to the Kenyan Economy (2012)
130
LPG Value Chain
Production
Platform
LPG import
Skill type
Highly Skilled
Gas
Processing
Plant Refinery
Primary
Storage
Bulk transport
Distribution
depot
Consumer
Import
terminal
Highly Skilled
Highly Skilled
Low skilled
Low skilled
131
LPG Value Chain
Production
Platform
Gas
Processing
Plant Refinery
Bulk transport
There are two state-owned enterprises relevant to the LPG industry in Kenya:
• Kenya Petroleum Refineries Limited, a joint venture owned on a 50/50 basis by the state and
Essar Energy Overseas Limited, owns and operates a hydroskimming refinery with a
throughput capacity of approximately 4.5 million tonnes per year. There’s an imbalance
between refinery production and domestic market requirements for black oils (residual fuels
such as heavy fuel oils and industrial diesel). This results in a maximum refinery production
yield of LPG in the range of 28,000 to 30,000 tonnes per year. Demand for LPG in Kenya has
increased in the last five years from 49,400 tonnes in 2005 to 87,800 tonnes in 2010, an
increase of about 78 per cent.
• Kenya Railway Corporation (KRC) transports LPG in rail tankers from the Mombasa storage
depots owned by the four LPG supply/distribution companies to their storage and bottling
installations in Nairobi. The private industry operators in the LPG supply and distribution
business are Caltex, Libya Oil Kenya Limited (branded OiLibya), Shell (a joint venture with BP),
TOTAL (TotalFinaElf), Kenol/Kobil and some relatively new participants—Hashi Energy (Hashi
Gas), BOC (Handigas) and Hunkar Gas. The National Oil Corporation of Kenya Limited also
indicates that it has entered into LPG distribution.
Source: Houston International Business Corp
(2011)
KNBS (2011)
132
LPG Value Chain
LPG
Import
•
•
•
•
Import
Terminal
Primary
Storage
The LPG companies import in a joint procurement operation. The joint cargoes are
normally in the range of 1,200 to 1,300 tonnes each.
Typical import sources are Aden (Yemen), South Africa (seasonal availability), and
from as far away as.
LPG terminal at Shimanzi in Mombasa has a storage capacity of just 1,400 MT.
Tankers carrying 2,500 tonnes of gas have to off-load subject to availability of
storage space.
Africa Gas and Oil Ltd (AGOL) has completed building a bulk import handling and
storage terminal at Mombasa to ease the quick offloading of sea tankers ferrying
over 5,000 tonnes of LPG from the Middle East. The depot has a storage capacity
of 14,000MT
Sources: Houston International Business Corp (2011). Ministry of Energy,
KNBS 2011
133
LPG Value Chain – Distribution Depots
•
•
•
•
•
•
In Kenya, companies have between 75 and 220 service station outlets. Over two thirds of these outlets are
located in major urban centres such as Nairobi, Mombasa, Kisumu or Nakuru. Stations are either owned by
the company or franchised to local dealers with strict relationship rules.
Caltex, OiLibya, Shell and TOTAL each have small bottling plants in Mombasa as well as larger plants in
Nairobi.
BOC also has a bottling plant in Nairobi which provides hospitality to Kenol/Kobil. In addition OiLibya has a
small plant in Eldoret, which also bottles TOTAL cylinders under a hospitality arrangement.
Hashi Energy (Hashi Gas), BOC (Handigas) and Hunkar Gas also have filling facilities.
The LPG cylinder sizes have been regulated and harmonized by The Energy (Liquefied Petroleum Gas)
Regulations, 2009, to four allowable sizes for household use: 1 kg, 3 kg, 6 kg and 13 kg. The valves and
regulators have also been standardized (unified) to facilitate market competition and ensure safe
practices.
The operators also have larger cylinder sizes such as 22.5 kg, 35 kg and 50 kg to serve commercial and light
industrial consumers, as well as bulk distribution operations serving stationary bulk tanks installed at
industrial/commercial sites.
Source: Houston International Business Corp (2011)
134
LPG Value Chain – End Users
•
•
•
The distribution companies in Kenya are owners of their entire cylinder stocks.
The end users use them on the basis of having paid an initial deposit and the
companies are readily disposed to returning the original deposit to any enduser who wishes to return cylinders belonging to their respective companies.
The Energy (Liquefied Petroleum Gas) Regulations, 2009 established minimum
cylinder ownership provisions of the companies in order to be licensed as well
as provisions for an LPG Cylinder Exchange Pool which restricts the filling of
cylinders owned by others to members of the Pool.
The Kenyan government wants to encourage the use of LPG as a measure to
counter deforestation, and to this end the government has laid out several
policy initiatives that it hopes will reduce the price of LPG for consumers.
– One important measure is the standardization of LPG cylinders and valves which allow
consumers to choose their LPG supplier based on the cost alone. This measure will encourage
cost competition among the LPG suppliers thus reducing the consumer LPG prices.
135
Value Chain – Improved cook
stoves
Overseas
Manufacturer
/ Assemblers
Onsite
Material/
Component
Producers
In bound
Logistics
Transport of
components
/Materials
Local
Manufacturer
/ Assemblers
Storage /
Warehousing
Artisanal
Assemblers
Intermediary
Broker
Operations
Organisations
Promoting
Stoves
Shipping
Local
Distribution
(CBOs,
NGOs)
Outbound
Logistics
Stockists,
Vendors,
Retail
End Users
Marketing, Sales,
Service
136
Distribution Channels
Value chain
Distribution
Onsite Material/Component
Producers
Coastal - Local materials available - New steel sheet, Recycled steel sheet (oil drums etc.), Wire mesh, Bricks,
Pottery clay, Stone, Cement.
Central and Western – High availability of potter clay in both regions. Clay required for stove liners is sourced
locally . Therefore, all components are sourced, made, and distributed locally.
Raw material collection is generally contracted by large scale distributors or purchased from fragmented sources
by small scale contractors.
Myclimate and Practical action Upesi stoves generally produced by locally available material in Central and
Western regions.
Challenges
Clay as a raw material is in decline following introduction of concrete.
Obtaining environmental licence can be vulnerable to corruption
Quality control on materials can increase administrative costs.
Transport of components /
raw materials
Usually contracted out to local businesses. Transported by locally/nationally hired LGVs/HGVs.
Dilapidated road networks and seasonality of material supply can cause delays. Access to materials
dictated by location (rural areas can be difficult to access).
Road infrastructure in Western Kenya better than Central and Coastal.
137
Distribution Channels
Value chain
Distribution
Overseas manufacturers /
Assemblers
High administration costs for overseas manufactures. Raw materials for stove production may not be locally
available. Income and general business of small scale local operators can be adversely affected by overseas
companies.
Paradigm project imports Envirofit stoves from the USA and distributes them through retail or NGO partners.
Envirofit also has a manufacturing plant in Nairobi
Local Manufacturers /
Artisanal Assemblers
Done by men/women through NGO/CBO groups. Women are mainly involve in liners production and stove
assembly whereas metal work is dominated by men.
Logistics
Stoves that are manufactured on site are transported to warehouses via hired HGVs, LGVs.
co2balance’s stoves are manufactured at Coast Clay and transported stoves from the main Mombasa factory to
warehouses at the project location.
Storage
ICS are stored in warehouses in close proximity to or in project area. This can be up to one week before
distribution
co2balance negotiates short term renting contracts with community businesses to generate local employment in
project area.
138
Distribution Channels
Value chain
Distribution
Local distribution CBOs, NGOs
Poor infrastructure and road networks can cause delays. Distribution costs can be high depending on location.
Carbon offset practitioners may choose areas with high baseline consumption (which tends to be areas of lesser
need for ICS projects).
Micro finance schemes may be needed in low income rural areas.
Organisations promoting
stoves
My climate, Practical Action and Scode work closely with women groups. Radio and news paper adverts most
effective in reaching large scale target market.
Vendors/ Retail
Groups sell at open markets and to big and small retailers on demand. Most retailers arrange for their own
transportation.
Retailers and Govt/ NGOs arrange for their own transportation to pick up the finished products and distribute
them appropriately.
GVEP scheduled to work with Women Enterprise Development Institute (WEDI) - fund manager with a portfolio
of 800 women’s savings and credit groups operating in the larger Central Province of Kenya.
End Users
Purchase ICS from retail or NGO/CBO group; through savings or microfinance scheme.
Purchase liners, raw materials from local small scale businesses to manufacture stoves (Firewood jiko, upesi
stove, Rocket mud stoves).
Usually sign carbon transfer forms from project developers in carbon financing projects - subsidized ICS.
139
Distribution Channels – Jiko Poa / Envirofit
Local Production
Import
Imported from overseas
(USA), Manufacture locally
(Nairobi)
Sourced from local materials.
Jikopoa
Made locally by fine
engineering through
mechanised process.
Liner made locally in
Limuru
3rd Party Warehousing
Envirofit
3rd Party Logistics
Distribution and
Wholesale
NGO Partner
Women’s groups /
distribution through
microfinance schemes
Community Based
Organisation
Retail
Consumer
140
Value Chain – Energy related products
Factories
Urban head
office
Retail distribution
network
Households
& Rural Market
Suppliers /
International
and Local
Companies either manufacture their own products or handles a line of imported products and has its
own fully owned distributors in strategic parts of Kenya. Typically, the company has a head office (Nairobi)
with strategic outlets in major towns around the country.
Companies operate through their distributors but often sets up strategic relationships with independent
dealers, NGOs or CBOs. Companies in the PV, consumer electronics and auto parts market are often set up
this way. This type of business may be locally owned or owned in partnership by local and international
groups. Most goods are sold strictly on a cash basis. Credit for customers is “out-sourced” by offering the
goods through established credit systems (i.e. in SACCOs) or by offering products through separate hire
purchase dealers.
Source: The Shell Foundation
141
Distribution Channels – Solar
technology
Central Distributor
Import/distribute durable and affordable
quality products
Train rural distributors
Quality control and technical backup
Rural distributor
Provide financial services to end users.
Ensure availability of product
Provide after sales services
End users
Main distributors: SNV, ENDEV, GIZ. SNV has partnered with ENDEV through GIZ Kenya in implementing a solar PV
Project in ten counties in Kenya; Central and Western regions.
In the current distribution model , SNV has signed partnership MOUs with 7 of the Lighting Africa Associates based
in Kenya. SNV collaborates with both Lighting Africa and rural distributors to create awareness about the
availability and benefits of using solar technology to replace kerosene lamps.
Awareness creation is done through road shows, media and local stakeholder forums. SNV is also involved in the
capacity building of both the rural distributors as well as Last Mile Entrepreneurs who are responsible to develop
innovative financing mechanisms. These include check off systems, micro finance and lay away payments.
Visionary Empowerment Programme is a leading rural distributor in Central Province (Thika) and has a successful
microcredit programme for over 7,000 of their women groups members.
Source: SNV
142
Current market products in Segments – Specs
Products
Design
Weight /kilograms
Specs: width X height
Envirofit G3300
6
29cm x 29cm
Envirofit CH-5200 Charcoal
3.4
35cm x 16.2
Envirofit CH-2200
2.3
31.3cm x 15.4cm
143
Current market products in Segments – Specs
Products
Design
Weight /kilograms
Specs: width X height
Envirofit M5000 HH Wood
Stove7
4.2
32cm x 28cm
Jikopoa Unskirted HH Wood
Stove
-
-
LifeStove (EzyCharcoal) /
Metalrax HH Charcoal Stove
-
-
144
Current market products in Segments
– Specs
Products
Design
Weight /kilograms
Specs: width X height
EcoZoom- Zoom Jet Charcoal
Only Stove
8.5
28cm x 26cm
co2balance / CZK 3
35
36cm x 21cm,
145
Current market products in Segments –
Specs
Products
Design
Weight /kgs
Spec width X height
Ezystove
2.8
33 cm x 30.5cm
Fireless cooker
9 – 20
-
ICS - Ceramic liner, Kuni Mbili,
Upesi, Rocket stove, Jiko Kisasa
-
25cm X 16cm
146
Current market products in Segments – Specs
Products
Design
Weight /kgs
Spec width X height
D.light S250 (Solar lanterns –
combined lighter and mobile
charger)
0.350 (lantern only)
12.7 cm X 13.7cm
D-Light S10
0.3
3.5cm X 7.9cm
LifeStraw Portable Water Filter
0.095
2.9cm X 23.3
147
Current market products in Segments – Specs
Products
Design
Weight /kgs
Spec width X height
Barefoot firefly 12 mobile
weight – LED Lamp
0.5
-
Powapack junior 2.5 matrix
and Powapack 5w – Solar
lantern
1.9
6.5cm x 10.5cm
Trony Solar Sundial TSL-01 –
Solar Desk Lamp
0.39
-
Permanet 3.0 – Insect net
Insecticide (deltamethrin) 4.0
g/kg
Synergist (PBO) 25 g/kg
160x180x150cm
190x180x150cm
148
Current market products in Segments – Specs
Products
Design
Weight /kgs
Spec width X height
Silver lined ceramic water filter
20-30 kgs
Ceramic pot ~30cm x 25cm
Safi solutions ceramic water
filter
Unknown
unknown
149
References
• Delahunty-Pike, A., (2012) Gender Equity, Charcoal and the Value
Chain in Western Kenya. Policy Innovation Systems Clean Energy
Security Policy
• Matthews, W.G., Zeissig, (2010) H.R, Residential Market for LPG: A
Review of Experience of 20 Developing Countries. Houston
International Business Corp
• Slaski . X and Thurber, M., (2009) Cookstoves and Obstacles to
Technology Adoption by the Poor
• SNV, Solar Energy - Access to Clean and Affordable Off-Grid Lighting
Solutions for the BOP
http://www.snvworld.org/sites/www.snvworld.org/files/publication
s/snv_kenya_solar_fact_sheet.pdf [Last Accessed: June 2013]
• The Shell Foundation Sustainable Energy Programme, Kenya
Country Report
150