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KOKO NETWORKS
KOKO Networks
Fuelling Smarter Commerce for Urban Africa By: Tabrez Khokhar
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OKO Networks, a venture-backed technology firm whose flagship network was launched in Nairobi last year, provides the hardware and software to underpin a major new household fuels industry in urban Africa. But as Tabrez Khokhar finds out, KOKO’s tech platform presents commerce possibilities that extend far beyond the $25bn urban cooking fuel market.
KOKO Networks - Kenya
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Greg Murray, CEO & Co-Founder, KOKO Networks
KOKO Networks Microtanker
As its name suggests, KOKO builds networks. As an Agent’s application, KOKO installs a cloud-connected “KOKOpoint” inside the Agent’s shop. KOKOpoints are physical kiosks that serve as consumer access points for a range of goods and services, and allow retailers to expand their product offering, boost footfall and increase revenues. The first consumer solution available through KOKOpoints addresses the $25 billion urban cooking fuel market in Africa’s major cities, the bulk of which is currently spent on dirty fuels - principally charcoal and kerosene. This market is ripe for disruption, with consumers
spending major portions of their hard-earned incomes on dirty fuels, yet keen to upgrade to a modern, clean and affordable solution.
Last-mile networks for clean fuel KOKO’s consumer offering is branded SmartCook, and includes a modern two-burner liquid ethanol stove and a refillable Smart Canister that docks with the KOKOpoint, enabling consumers to buy affordable clean fuel in small increments, or to refill the entire canister. Aspire Africa · Issue 6.0
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A key benefit of liquid cooking fuel is that more than $10 billion of liquid fuel infrastructure already exists across Africa.
Customers order their SmartCook kit through the KOKOpoint, or the accompanying “myKOKO” smartphone app, and it is delivered the next day to the Agent, with customers receiving a pickup code via SMS. “KOKOpoints initially serve as smart ‘ATMs’ for clean cooking fuel,” explains Greg Murray, CEO and Co-Founder of KOKO Networks. “They are equipped with an internal fuel tank and a touchscreen that allows customers to order their SmartCook kits, refill their canisters and interact with video messages and surveys.” KOKOpoints themselves are refilled by Smart MicroTankers - bulk fuel carriers equipped with KOKO’s Fuel IoT hardware. KOKO’s fuel supplier partners store bulk fuel at nearby petrol stations. KOKO’s software controls the safe refilling of KOKOpoints through an external refilling box at the Agent’s shop, and automates payments to the fuel supplier. Customers are also able to use the “myKOKO” app to earn income through signing up their friends, or setting up a small business that promotes the SmartCook solution in local markets, church groups and savings groups. The recurring footfall associated with buying a household staple like cooking fuel - KOKO estimates that urban households spend an average of around $25 per month on it - is clearly attractive to retailers, who not only add a profitable new business line, but also recognise the possibilities for cross-selling.
Connecting suppliers, retailers and consumers KOKO’s platform connects suppliers, retailers and customers. KOKO isn’t a fuel supplier, nor a fuel retailer - it simply provides technology and services to wholesaler and retailer alike, earning fees from those partners for the use of the technology platform. A key benefit of liquid cooking fuel is that more than $10 billion of liquid fuel infrastructure “arteries” already exist across Africa, bringing petrol, diesel and kerosene efficiently and competitively into urban bulkstorage depots, more commonly called petrol stations. Adding a fourth line of liquid fuel to the existing infrastructure is a relatively lowcost task, so long as that fuel can find a way to move at low cost from the petrol stations to within a short walk of customers’ homes. KOKO’s technology suite was built to play that “last-mile veins” role for clean liquid fuel. Murray emphasises: “Africa is already equipped with major infrastructure for moving liquid fuels in bulk from plants and ports through to petrol stations. It would be pointless and expensive to reinvent or replicate that. By partnering with established fuels and retail players, we can overcome the challenges of last-mile distribution without owning or operating any of the fuel or infrastructure. Statue of
John Dube
Put simply, our technology suite enables fuel partners to add a profitable new business line and enter the mass-market segment that is currently dominated by deforestation-based charcoal.”
Delivery of the SmartCook Kit
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KOKO Networks - Kenya
It’s a unique offering for fuel companies and KOKO is collaborating with several major and
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Smartcook stove and canister
regional oil marketing companies who seek to enter wholesale fuel supply partnerships, in Kenya and in planned expansion markets.
A proven cooking fuel Liquid ethanol fuel is produced in East Africa from molasses, a by-product of the sugar industry. There are thirteen ethanol plants in East Africa, as well as port capacity to handle imported ethanol. Domestic producers seek to find a market for industrial ethanol, which historically has found its way into illegal alcohol production, leading to sensible government regulation of industrial ethanol in Kenya. Ethanol cooking fuel is denatured with a bittering agent that makes it undrinkable, and KOKO’s proprietary “smart-valve” technology
means no liquid or vapour is released during either the canister refilling process at KOKOpoints, or the stove refilling process in homes. Liquid ethanol has been commercialised at reasonable scale as a middle-income solution in a few African cities over the past few years, but using very low-tech “version 1.0” approaches that add significant cost to the delivered price to the customer. KOKO’s technologies have removed approximately 50% of the cost of getting fuel to customers, and so now enable this fuel to become affordable for even the poorest households in a city. The environmental impact of this is significant; the UNFCCC verified that the charcoal-ethanol switch delivers 5-10 tonnes of CO2e reduction per household per year, depending on household size and usage patterns. Aspire Africa · Issue 6.0
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Within a short time, KOKO maps branded share of wallet and develops a detailed profile of its customers.
KOKO’s technology suite enables fuel partners to add a profitable new business line and enter the mass-market segment.
A Smartcook customer refills at a KOKOpoint in Nairobi
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KOKO Networks - Kenya
We’ve been really pleased by the very strong demand from shopkeepers and customers across Nairobi.” Greg Murray
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Customer purchasing a fuel bundle Switching households from charcoal to ethanol also reduces the huge pressure on local forest land that derives from the charcoal industry. Charcoal-driven deforestation is a major driver of food insecurity, because of the established links between deforestation and soil degradation, micro-climate changes and associated agricultural yield decline. In the US, much has been made of the “food versus fuel” impacts of using maize as a feedstock for ethanol transportation fuel, because of the impact on global corn prices. But in East Africa, ethanol cooking fuel from molasses is replacing charcoal, which means that ethanol cooking fuel actually improves food security by reducing deforestation. Following its commercial soft launch in
Nairobi last year, Murray give a status report: “We’ve been really pleased by the very strong demand from shopkeepers and customers across the city - the key issue for us is now supply-side planning as we prepare to roll out the full network in Nairobi next year.”
Building a broader smart commerce platform It is not only suppliers of fuel that benefit from this platform, however. The customer behaviours associated with SmartCook (regular visits to KOKOpoints and interaction with KOKO through the app) are significant for suppliers of other products and services. Indeed, as customers buy fuel, they are played targeted video ads and given fuel credit to answer surveys about their brand preferences and desired purchases. Aspire Africa · Issue 6.0
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Within a relatively short time, KOKO maps their branded share of wallet and develops a detailed profile of its customers - information that is simply not available at scale in these markets today, and which can be leveraged by brands and suppliers seeking to better serve the mass-market. Similarly, KOKO’s logistics infrastructure can be used for the low-cost delivery of other products, cutting through the last-mile inefficiencies currently experienced in mass-market urban retail. These analytics tools equally present an enticing proposition for KOKO Agents. Realtime data allows shopkeepers to know their customers better than ever before, affording far greater visibility on what they are buying and when, and thus enabling better pricing strategies and targeted promotions. KOKO’s commerce offering builds on years of R&D in African cities. “We found the frustrations and challenges facing customers and retailers were remarkably similar across different cities,” explains Sagun Saxena, Chief Innovation Officer and Co-Founder of KOKO. “Retailers often felt like they were left behind by the fast-growing cities they worked in, and by the fast-changing habits of their customers. At the same time, urban customers were seeing access to goods and services lag behind rising disposable incomes. Nowhere was this more pronounced than in the cooking fuel market, which is why we decided to launch the first solution in this category.” KOKO’s R&D team is looking at how best to expand the platform, through initiatives that extend beyond e-commerce and into connectivity, content, digital financial services and e-government. Saxena states: “Our ‘Labs’ team is dedicated to bringing products and services out of incubation and onto the platform. We are collaborating with a wide range of companies on these efforts and believe that some quite unique offerings will ultimately emerge - watch this space!” 8
KOKO Networks - Kenya
KOKOpoint refuelling
Geographic expansion through partnerships As KOKO grows its platform, so too will it expand its geographic reach. KOKO’s approach to geographic expansion is through partnering with large established operating companies in new countries, who can license the KOKO platform and build their own Networks. The company is currently in discussions with counterparties in a range of new geographies, who have a deep understanding of the opportunity in their own cities and seek to partner with KOKO to quickly build and launch networks in the coming years. With players in numerous sectors and countries lining up to get involved, KOKO is one of Africa’s hottest start-ups, with the potential to build a mass-market commerce platform that meets Africa’s growing consumer demand in a uniquely tailored way. The retail sector hasn’t kept pace with how its customers are changing; KOKO seeks to bring massmarket retail into the 21st century. ASPIRE
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