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ISSUE 02 OCT- DEC 2017
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ClimateLaunchpad winners to represent Kenya in Cyprus Running a successful energy business: the case of Mary Waiyego Why customer value proposition is indispensable for green tech enterprises Investing in start ups is our core business ClimateInnovationCenter
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ClimateLaunchpad winners to represent Kenya in Cyprus By Michelle Mung’ata
ClimateLaunchPad (CLP), the world’s largest green business ideas competition, held its national finals in Kenya on Friday, 8th September 2017 at Strathmore Business School, in conjunction with The Kenya Climate Innovation Centre (KCIC). Three finalists were selected to represent Kenya at the Global Grand Finals which will take place in Cyprus on the 17th and 18th of October 2017 where the top ten teams will stand a chance to win access to the Climate-KIC Accelerator and prize money.
Speaking during the ceremony, KCIC CEO Edward Mungai emphasized on the importance of supporting ideas which can transform the state of the environment and improve livelihoods through resource efficiency. “A lot of the challenges we experience today could be easily solved if we adopted and supported the ideas of green entrepreneurs,” he added. Winning the top position was team Bio Alkanol Gel consisting of Boniface Jiveri and Dr. David Musyimi from Maseno University. Their
concept involves the fermentation of waste fruit peelings converted into eco-friendly fuel for domestic use. The second runners up were Clean Planet, represented by Elis Mabiria and Sarah Onchangu. Their concept was also based on waste management by converting municipal waste into gas using pyrolysis and plasma technology. Position three was taken by Dach, headed by Davies Ateka. His is a bio pesticide and fertilizer that will serve farmers efficiently in protecting their crops from pests. The competition is geared towards supporting startups
evolve their innovative ideas which address climate change. Out of 63 entries, 14 teams were shortlisted and underwent intensive boot camp training in July followed by a six week intensive pitch training. The aim of the boot camp was to equip the participants with adequate skills to successfully run their startups. Frans Nauta, CLP founder, was the lead trainer at the two day boot camp, together with the national lead for Kenya, KCIC CEO Edward Mungai. “Things start to change when we act on ideas, and that is what entrepreneurs do. We started ClimateLaunchPad to support green entrepreneurs in building their ideas to big start ups that address climate change,” noted Frans Nauta. Kenya was selected as the host country because of the strides it has taken in incubating and funding startups geared towards addressing climate change challenges in Africa. One of the many challenges of climate change in Kenya is its economic impact on the country. To expound on this, the study ‘the Economics of Climate Change in Kenya’ was carried out by the Stockholm Environment Institute (SEI) Oxford working with local partners and addressed three main issues. The impacts and economics costs of climate change, the costs of adaptation and the potential for low carbon growth. The study indicated the existing climate discrepancies, have a significant economic cost to Kenya and if not addressed, will lead to future additional economic costs to the country. The ClimateLaunchPad competition is in its 3rd year and has over 35 countries participating mainly from Europe. Of all the startups selected in 2015 and 2016, 85% of them are still in operation. Despite having prize money as the ultimate goal, the competition has more
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to offer. With Keynote speakers and interactive sessions, the selected teams will leave the competition more inspired and knowledgeable in respect to the future of their businesses and the impact they are yet to make on our planet. The selected teams to attend the finals will have the opportunity to meet the trainers, all of whom are established and renowned individuals in their respective fields of expertise. Ranging from Communication and Marketing to Geography and Land Resource Management. What they have in common is the spirit of entrepreneurship which they hope to share with the 2017 Climate Launch Pad participating teams.
Kenya Climate Innovation Center Strathmore Business School Ole Sangale Road Madaraka P.O. Box 49162-00100 Nairobi, Kenya. +243703034701 About KCIC The Kenya Climate Innovation Center (KCIC) provides holistic, country-driven support to accelerate the development, deployment and transfer of locally relevant climate and clean energy technologies. KCIC provides incubation, capacity building services and financing to Kenyan entrepreneurs and new ventures that are developing innovative solutions in renewable energy, water and agribusiness to address climate change challenges. Editor Mercy Mumo info@kenyacic.org Contributors Bob Aston Curtis Musembi Elijah Odolo Esther Kahinga Michelle Mung’ata Gichira Kibara Jacqueline Kimeu
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LIVE GREEN crops are grown on very small spaces. This technology is also favourable for urban farming. According to Elizabeth Achieng, one of the co-founders of Ukulima Tech Company Ltd, ‘The multi-level design provides nearly 8 times more growing area than single level green houses or traditional farming systems, that enable low income earners with limited space to have enough space to engage in food production either for business or consumption.’
Green technologies for food security By Esther Kahinga There are 3.4 million Kenyans facing starvation in the country even though the major focus right now is on politics and the nullified election. The food crisis has persisted since the beginning of the year. The country experienced depressed rainfall between April and June, and the weatherman predicts that the short rains expected between October and December will also be less than
normal. This means that in 2018, Kenya is staring at a food crisis worse than what was experienced this year especially if the armyworm effect is factored in. Evidence shows that countries in Sub-Sahara Africa must move from rain-fed agriculture if food security is to be achieved. The Food and Agriculture Organisation predicts that agricultural productivity could drop by up to
50% under rain-fed conditions. The solution then is to look for technologies and innovations that reduce reliance on rain and make irrigation more accessible to farmers. The Kenya Climate Innovation Center has been in the forefront of supporting these kind of technologies and more actors in the agricultural sector need to find ways of scaling the awareness and adoption of such technologies. These technologies include vertical farming, hydroponics, micro solar irrigation and water harvesting among, others. Vertical farming involves growing crops, mostly vegetables, in multi-level pipes so that more
Hydroponics is a technology that entails growing crops in a mineral nutrient solution without soil. The technology is also ten times more efficient in using water than traditional farming. According to Peter Chege of Hydroponics Africa, ‘When growing in a hydroponic system, plants do not expend energy to draw out nutrients from the soil, which explains the expedited growth. The farmer also has near total control over the nutrients the plant receives. The plants are able to reach their genetic potential because of the tightly controlled environment. With higher-quality and quicker yields, hydroponic systems provide farmers with a climate smart-agriculture technique that allows them to grow animal feed, crops, and vegetables more effectively and efficiently.’ Micro-solar irrigation solutions have been in Kenya since 2013 and have gone through major changes to make them suitable for small scale farmers in the country. Some of the companies involved are Sunculture,
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KickStart International and Future Pump. These companies now have portable solar irrigation pumps with innovative payment systems that take into consideration farmer dynamics. Farmers who are using this technology have realised an increase in yields of two to three times their usual harvest. Advancement in technology has also made water harvesting easier. The availability of dam liners that are affordable to farmers and the longer dry seasons make it necessary for more farmers to take up water harvesting. The Billion Dollar Business Alliance for Rainwater Harvesting – Kenya Chapter that has adopted a business approach to scaling up farm ponds among farmers is an initiative that now ought to kick-off. Rainwater harvesting and micro-solar irrigation need to be combined for more efficiency in agricultural production especially on farm sizes of between 0.5 – 2 acres. Indeed, agriculture in Kenya and Sub-Sahara Africa must combine these two technologies for farmers to survive the hard times ahead. Government should find a way of scaling these green agricultural innovations for food security and cushioning farmers against the shocks of climate change. Ravaging drought and floods have become so common and dis-oriented many farmers. These technologies will help put farmers back on their feet and even earn an extra income that can improve their livelihoods.
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LIVE GREEN Running a successful energy business: the case of Mary Waiyego By Jacqueline Kimeu In the green hills of Muranga lives Mary Waiyego Kamau. Mary is a widow with three children – one boy and two girls and has been blessed with four grandchildren. When we recently visited Mary and her children, she intimated, “when I look at my four grandchildren, I always ask myself – will they grow up to be self-sufficient much more than I did, more so than I brought up my children? This charges me completely to use all means to ensure that my family is happy.” Muranga being a predominantly farming community, many of its residents are involved in growing maize, bananas, sweet potatoes, beans, arrowroots, pumpkins, and numerous other food crops grown in the region. Tea and coffee are the main cash crops produced. Mary has a coffee farm and used to sell milk and bananas in the nearby markets, but with her advancing age she could no longer adequately tend to her cows and sell her produce. She therefore made the tough decision to leave these activities to her daughter, Eva Muthoni while she pursued a solar business that she had been introduced to. This was close to
three years ago; Mary is now an accomplished solar home systems re-seller and has even expanded her business and now sells improved cook stoves and energy briquettes. Mary says, “when I was first introduced to me solar products, I did not have the confidence to approach potential clients to sell these products, but through the support and mentorship I received from Practical Action’s partner SCODE, I can now speak authoritatively about my products.” Mary was provided with business development support as well as leadership training that gave her new knowledge and skills while boosting her overall confidence and marketing skills. Mary says, “I no longer looked at my limitations – even though I did not have enough capital to start off with many units. I had found a product that would complement the business I run together with my daughter. I saw a market in the people at the markets we often visit – a reason for them to extend the time they spend at the market, but at the same time in the homes, providing an alternative lighting source. In fact, even though our homes have been connected to electrici-
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ty, we have found out that the solar products sell more when there is a prolonged power-rationing period.” “At the same time, I diversified the range of products I was selling to meet new demands. Lighting had been adequately take care of with the solar lamps but now people wanted more efficient cooking systems and fuels, hence my venture into cook stoves and briquettes,” she adds. Mary is so well known in the region that now many people and especially women have approached her to be trained on proper book keeping and managing successful energy businesses. As much as Mary has been successful she says, “I would like a situation where when my daughter goes to the market, she can deliver solar products together with the bananas. I also look forward to the day when my sales increase to a point where I can employ an extra hand to work with me.” Mary is one among the 760 women that Practical Action and its partner SCODE have trained and mentored to run energy businesses in the solar, improved cook stoves and energy briquettes value chains under its Women in Energy Enterprises in Kenya project. SCODE is also one of the enterprises undergoing the accelerator programme at KCIC. They have received a number of services ranging from market linkages, research and development of their strategic plan.
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A section of clients in the energy sector during a study tour in August 2017 to Solinc East Africa Limited in Naivasha. A group of executives from Salesforce pose for a photo after a networking meeting with staff and KCIC clients in August 2017.
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KCIC staff planting trees with Nile Road Special School Principal Mrs. Lucy Kwamboka in September 2017.
Participants at the Energy Summit which was held in July in collaboration with Christian Aid.
Autodesk Foundation Executive Director Joe Spiecher listens to Dan Waithaka of Wisdom Innovation during a courtesy visit to KCIC in September 2017.
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LIVE GREEN and improved water sources and sanitation. GESIP will benefit young innovators, as it promotes green Innovation and technology development. This includes promoting Green technology start-ups including business incubation centres. Youth are proving to be invaluable partners who can advance the Country’s Green Economy through Green-tech businesses. In youth lies an untapped opportunity that can help address unemployment, which has remained one of the most daunting challenges in Kenya. Green jobs creation is as an opportunity to address the challenges to employment faced by Youth and transition to a low carbon resource efficient, equitable and inclusive socio-economic transformation.
Green Economy: What does it hold for the youth? By Bob Aston
The 2017 Human Development Index (HDI) Report shows that unemployment among Kenya’s youth is estimated to stand at 17.6 percent compared to 6.3 percent for Tanzania, Uganda’s 6 percent and 7.6 percent for Ethiopia. The United Nations Development Programme (UNDP) report says that nearly four in every 10 Kenyans of working age have no jobs. The UN findings are in line with a 2016 World Bank Report that showed that Kenya has the largest number of unemployed
youth in East Africa. The launch of the Green Economy Strategy and Implementation Plan (GESIP) 2016-2030 provides an opportunity for the country to transition to a green economy, which will result in faster economic growth and creation of enterprises that will accelerate opportunities for decent jobs for youth. The Kenyan Government through GESIP aims to create one million green jobs annually. GESIP endeavours to expand
decent work by providing innovations aimed at improving the safety of the work environment, expanding social protection and health programmes and social dialogue by pursuing a suit of social policy tools and targeted investment in green technologies. The strategy proposes support for rapid economic growth, infrastructure development, diversification and commercialization of agriculture, food security, better health and education, youth employment
GESIP advocates for the revamping of TVETs including apprenticeship schemes and entrepreneurship training. Accessibility and availability of such skill enhancing programmes will promote the assimilation of youth in the labour market. A Green economy will protect the Country’s natural capital, reduce environment and climate footprint and help make contributions from a business and social perspective since it improves competitiveness, spurs growth that in turn creates green and decent jobs. Kenya has a number of initiatives that support Green innovations and entrepreneurs. The National Environment Trust Fund (NETFUND) implements the Green Innovation Awards (NETFUND GIA)
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which promotes green growth. The Award identifies, recognises, rewards and nurtures innovative projects that reduce the effects of climate change. Similarly, the Kenya Climate Innovation Center (KCIC) provides support for youth entrepreneurs. The Center provides enteprises with an opportunity to scale up their green-tech businesses and contribute significantly to the mitigation of the effects of climate change. Tangaza University College in collaboration with The British Council, The Standard Media and other partners have a Business Innovation Challenge, which identifies innovative and impactful entrepreneurial minds that need business skills and training to boost their social impact. The challenge has over the years attracted a high number of entrepreneurs particularly youth. The Ministry of Environment and Natural Resources (MENR) with support from development partners spearheaded the development of the GESIP to enable the country to better utilise its natural resources and ensure greater socioeconomic growth as a country. The GESIP implementation projections show that the Country requires KSh 2.4 Trillion. Such level of investment in Green economy will generate higher growth than the case of business as usual. The country has developed GESIP at a time when the demand for water, soils, air and ecosystems continue to attract more pressure coupled with unpredictable weather patterns fuelled by climate change. -
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Why customer value proposition is indispensable for green tech enterprises By Curtis Musembi In his book The Ten commandments of business failure, Don Keough goes on a satirical journey on how to fail a business. While his step by step guide that guarantees a highly successful business “loser” proposes a number of reasons on why enterprises fail, it is no doubt the customer occupies a central place in the viability of any business. In inference, the ability of the entrepreneur to create a value based relationship with the customer cannot be overstated. Green tech (also referred to as clean tech) enterprises in Africa are no exception to those key drivers of business. Despite the noble intent to create environmental and social impact, such results can only be achieved through sustained success on the income success. They are faced with the challenge of pushing their products to a target clientele who demand value first with the environmental and social benefits auxiliary. The green tech ‘revolution’ will make several leaps forward at the nexus of climate friendly products and services being offered competitively to the right customer using the most efficient business model.
B.Customer centric Innovation The former president of Ghana, John Kufuor, aptly described the plethora of challenges confront-
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business brand.
So what makes a great customer value proposition? A. Understand customer pain The entrepreneur must truly appreciate the length and breadth of the customer pain points. It involves not just consuming the available data but going the extra mile and testing their hypothesis carefully with the market. Nathan Furr and Paul Ahlstrom, co-authors of the book ‘Nail It, Then Scale It’, said it best: “Which would you rather do talk to customers now and find out you were wrong or talk to customers a year and thousands of dollars down the road and still find out you were wrong?” When an entrepreneur has an idea, the temptation is to retreat to a ‘cave” in his mind and go over it. The pitfall is the idea becomes the goal in itself rather than the client who will ultimately pay for it. Complete understanding of your customer is imperative to success. Indeed, entrepreneurs must walk 1,000 miles in the shoes of their customers. Optimism is what any entrepreneur feeds on, but it must be backed by hard data.
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ing Africa’s agricultural sector. Crops are overwhelmingly rain-fed. Even if the rains come at the time and intensity expected, pests and diseases still ravage harvests. There is minimal use of pesticides, fertilizers or machinery. The same crops are grown year after year, robbing the soil of its fertility. The declining export revenues used to pay for food imports have only helped to drive down prices for our own crops. Breakthrough innovations in last mile delivery are still at a nascent stage. The solution to the customer pain described above lies in innovating products and services that best address it. The innovative solutions have to be commercially viable, culturally acceptable to ensure long term sustainability. This innovation is not just in new ideas or products but also in the distribution channels to the end user.
C. Differentiation: unique value propositions Differentiation sets apart the entrepreneur, providing a selling point to enter the market and compete with the existing solutions. Without a unique value proposition, it’s hard to switch potential consumers from existing solutions which they already have preference for. For instance, consumer financing using channels such as the pay as you go (PAYGO) systems have utilized the high mobile money penetration in sub Saharan Africa. This has borne substantial results in sectors such as solar products for home and agricultural use in removing the barrier of prohibitive upfront costs. One key differentiator in the market place has been the ability of the enterprise to build a unique customer experience in the beachhead market. The entrepreneur ought to find that unique value-add and communicate as effectively as possible to build the
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Government subsidies and support programs A recent study by Energy for Impact noted that a number of support programs gave stoves to households for free or at highly subsidized prices, which helps overcome cost barriers at the outset, but can reduce the perceived value of the stoves and is also unsustainable in the long run. It has become clear that in order to make a substantial and long-term impact, cook- stove initiatives need to produce a transformation of local stove markets which is self-sustaining and demand-driven. A fully commercial approach, as opposed to simply distributing clean stoves through development programs, has been found to be the most important factor in achieving long-term sustainability. Whilst governments and development partners play an invaluable role in creating an enabling environment, green tech solutions must resonate not only with the target customers needs and but also be in tandem with their means. Subsidies are subject to policy changes but a product that meets the customers’ needs can out survive such turbulence. Conclusion Investors are always on the look out to invest in enterprises that show an innovative product that is being sold to a strategic target market using an efficient channel. This is the cog that all the business plans and models are based on. For clean energy entrepreneurs to attract greater access to finance, they have to demonstrate these qualities as the cornerstone to their business.
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LIVE GREEN model (B2B). Twalisha now focuses on the mobile grocery trucks and progress to physical kiosks and get on the online platform through mobile delivery. The pilot phase is underway and already working with farmers from Kiambu County. They are set to target farmers from other counties progressively. In addressing the challenges they aim to solve, Mary Wambui, Business Development Manager at Twalisha states, “Our aim is to provide a market to smallholder that is fair, factoring in the numerous cases of exploitation by brokers. We also aim to provide our consumers with a grocery purchase point that is consistent in quality and can be trusted.”
Providing a Market to Farmers through Mobile Trucks By KCIC Team
The agriculture sector has become a global concern for many countries being an important source of income and the world’s largest business. It faces a number of challenges with an equal number of solutions to counter. According to The Executive Summary of the IAASTD Synthesis Report, one solution is providing a fair market for farm produce. Twalisha Limited creatively
crafted from a Swahili word to mean “we feed”, is in the business of creating a market in which farmers can sell their produce. Local markets are flooded with farm produce and thus competition amongst farmers is quite high. What Twalisha is offering is a market solution that is centred on a distribution model using estate targeted mobile trucks. Urban households and city dwellers benefit by getting their
fresh farm produce at the convenience of their estates. They work with small scale vegetable and fruit farmers. The service is called Twalisha Market. Peter Nduati, the founder and CEO of Africa Turnaround Limited (ATL), a company that has vast experience working with entrepreneurs, came up with the idea that is Twalisha today. Through ATL, data on small holder farmers, through previous research undertakings, was available. The findings indicated that farmers in Narok and Nakuru region lacked adequate markets to sell their potatoes. Mr. Nduati sought to create a market linkage that focused on a business-to-business
In addition to offering Twalisha Market, they are set to provide accessibility of quality farm inputs to small holder farmers at fair prices through partnering with financial institutions and farm input manufacturers, dubbed Twalisha Inputs. Through Twalisha Wallet, a virtual mobile account offering a bouquet of financial solutions to FFV smallholder farmers, they will offer solutions include payments, credit, savings and insurance. And finally through Twalisha Advisory, farmers and farmer groups will receive capacity building services in agronomy, enterprise and financial literacy skills.As one of the clients in Kenya Climate Innovation Centre (KCIC), Twalisha has received mentorship support that has assisted the start-up in developing their business model through advisory on their market study, pitch deck
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development and building the business’ systems and processes. Twalisha has the potential to provide Kenya with immense social and economic benefits: Job creation with a focus on youth and women: They will create new jobs along the FFV value chains as a result of improved access to sustainable markets. Among the opportunities created will be increased demand for farm labor, supply of farm inputs, transportation of produce and increased demand of retail assistants among others. Twalisha will deliberately mainstream youth in the value chain thereby contributing to youth employment creation. Twalisha is set to create social impact by ensuring just and fair compensation for smallholder farmers. Income for smallholder farmers will increase, leading to improved quality of life marked by access to basic services such as healthcare and education. Twalisha will benefit the community, as grocery consumers will get access to quality and clean produce resulting in improved nutrition.
Urban households and city dwellers benefit by getting their fresh farm produce at the convenience of their estates.
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Confronting Climate Change in Kenya: The Policy Challenge By Gichira Kibara
Climate change is a real and presents a threat for Kenya. Government actions point to an acute awareness of the threat to Kenya’s development. In the second Medium Term Plan, the government commits to pursue its development objectives while ‘paying full attention to securing our environment and building our resilience to climate change’. The government has also been at the frontline in international and regional climate change forums. It has developed a National Climate Change Response Strategy (NCCRS 2010), National Climate Change Action Plan (NCCAP 2013), a National Adaptation Plan (NAP) 2016-2030) and a National Climate Change Policy Framework. Relevant legislation has also been developed including the Climate Change Act,2016 ,
NEMA Act, Mining Act and the Petroleum Act. The Government has also developed a Green Economy Strategy and Implementation Plan (2016-2030). The strategy recognizes the vulnerability of Kenya’s economy to climate change noting that 42% of the GDP is derived from natural resource-related sectors that provide 75% of overall employment. The strategy is anchored on the Constitution and Vision 2030 and it sets out the strategies for implementation of the Paris Agreement on Climate Change and Sustainable Development Goals (SDGs). The strategy identifies five thematic areas: promoting sustainable infrastructure; building resilience; sustainable natural resource management; promoting resource efficiency; social
LIVE GREEN inclusion and sustainable livelihoods. Kenya has not made great strides in the protection of the environment despite hosting UNEP and having signed and ratified most of the international and regional instruments on the environment. Nairobi suffers from serious traffic pollution, poor sanitation, and waste mismanagement. The NEMA Act, 1999 (revised 2015) stipulates environmental standards in regards to construction and protection of wetlands but are not adhered to. To successfully confront climate change some of following policy issues must be addressed: Good Governance Policy implementation is a challenge that must be addressed in a rational manner with clear evaluations and articulations that show the cost-benefits of its implementation. Policy is always about choices and there is always resistance. While there is broad consensus that climate change is a harmful reality to Kenya, response to it faces many obstacles, A fundamental obstacle is a culture of disregard for the law and weak law enforcement. Sanctions are necessary to ensure carbon emissions are reduced, dumping of fossil fuel waste is regulated and controlled among other measures. The chaos in management of public transport and the adulteration of fuel is quite disheartening. Political will and leadership Sustained commitment and passion for real transformation is a challenge to a green economy. As demonstrated by the late Hon. John Michuki, effective implementation requires both conviction of
the need for transformation and the courage and passion to overcome resistance to implementation of the policy . Implementation of environmental laws is not easy as many of the measures are opposed by vested business interests. A good example is the noise pollution laws. The local authorities have not succeeded in reigning in noisy bars, churches in residential estates and matatus despite numerous appeals from the public . The political leadership is held captive by the financial and electoral power of the matatu industry. Attempts to outlaw to 14 seater matatu due to the traffic congestion and pollution have not borne fruits for more than a decade despite policy pronouncements. Financial Commitment Implementation of public policy is expensive. Policies fail because of lack of adequate and timely financing. The green economy strategy is projected to cost Ksh.2.4 trillion(US$24Billion) over a period of 15 years. Financing of this ambitious transformation requires clear and coherent strategies and capacity to mobilize finances that are not evident so far. While the integration of the transformative measures into the MTP is proposed, the MTEF budgeting process is largely unresponsive to radical changes. Substantial components of the Vision 2030 (especially LAPSET) remain unfunded. It is however encouraging that a national policy on climate change finance has been developed and endorsed by Cabinet.
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Social re-orientation through civic education and public participation The kind of transformation envisaged by the green economy strategy requires social transformation. The current social orientation is one of regarding natural resources as infinite and inexhaustible. It is also characterized by conspicuous consumption and wastefulness. Energy conservation is alien. This can only be achieved through a massive awareness campaign. Public participation and engagement in the climate change mitigation/adaptation process remains anecdotal rather than systematic. Transformation of this nature cannot be owned by government and the international community but by all citizens. Policy Coherence One of the primary causes of public policy failure is the lack of coherence between the various related policies. Addressing the challenges of climate change would require a holistic review of policies and laws governing land tenure and land use, devolution, water management, industrialization, mining and many others. Without a deliberate attempt to coordinate sectoral policies the likelihood of government pursuing contradictory policies such as developing a coal industry in a green economy is quite high. It also requires coordination of climate change initiatives between the national government and the county governments. Mainstreaming climate change into the County Integrated Development Plans (CIDPs) is essential. While Kenya is committed to combating climate change and has ratified the critical international instruments including enacting relevant legislation, a lot has to be done to ensure the implementation of policies and laws is successful.
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By Elijah Odolo
investments, in Kenyan Shillings, backed by Kenya-based post-investment support, helping to build the local climate innovation investment ecosystem. KCV is an innovative “demonstration fund”: KCV seeks to demonstrate that funds like KCV can accelerate the flow of commercial capital to innovations likely to advance climate adaptation and mitigation. KCV Deploys a Commercially Attractive “Evergreen” Model: KCV is an open-ended fund, and as such, seeks to demonstrate superior market service and competitive advantage potential of an “evergreen” structure. KCV intends to demonstrate it can be a commercially attractive investment model, at target scale, which produces returns likely to attract substantial additional, new forms of commercial capital.
Kenya Climate Ventures (KCV), an independent subsidiary of Kenya Climate Innovation Centre, is a pioneer early- stage Venture Capital investment company established in 2016. The aim was to bridge the gap that exists in providing capital to start-ups and early-stage businesses in the climate-space in Kenya. KCV provides the much needed capital to innovative promising companies that would otherwise be stuck in the ‘valley of death’ due to the small investment size, need for
intensive management support, the long time required to realize returns, the need to develop new markets, unproven technologies and/or business models among other challenges that make the traditional investors – banks, private equity firms among others shun these companies. KCV is the only Kenya-focused, commercial return investment fund bridging the gap in “early missing middle” capital needs of climate-focused entrepreneurs: KCV is led by a Kenyan team, and makes Kenya
KCV Has an Important Role in the Capital Chain: KCV offers a “bridge across the valley of death” to follow on capital, for early stage climate innovators. KCV intends to offer attractive, de-risked deal flow to later stage commercial investors interested in the sectors, but who do not have KCV’s risk tolerance. KCV is the only “Hyper-Local” early stage investment fund focused on climate innovation in Kenya – KCV is led by Kenyans, was designed to serve Kenyan entrepreneurs, and support them with (mostly) Kenyan
post-investment support resources. Why Climate? With the impacts of climate change being felt world over, with extreme weather conditions becoming more frequent and severe, heat waves and drought plaguing many countries, destroying agriculture, increasing the risk of wildfires and endangering lives. Also, rising sea level threatening the coastal communities and infrastructure. In Kenya, the effects are already being felt with erratic and unpredictable weather changes leading to shifts in seasons, drought, extinction of wildlife and loss of biodiversityamong others. Financing innovations that advances transformative solutions that mitigate climate change and/or help communities adapt to its impact can thus not be understated. KCV targets investments in the climate space such as climate-smart agriculture, water management, energy efficiency and conservation – sustainable transport, urban planning, sustainable green architecture and green buildings, renewable energy, forestry conservation Target Companies KCV targets companies that are have proven their business models and are generating revenues and developing customer base having identified suitable distribution models and supply chain infrastructure for initial service delivery and market penetration. Investment ticket, instrument and
ISSUE 02 OCT- DEC 2017 time horizon KCV makes strategic minority equity investments with ticket sizes of between $100,000 to $ 1 million. Due to the nature of companies and clients, the investments can be initially in the form of convertible debt or preferred equity allowing conversion at later stages of the company’s growth. KCV takes keen active management of the business at the board of directors’ level to steer the company’s strategic direction. KCV provides a patient, flexible tailored and risk tolerant medium to long-term capital with investment time horizon averaging 7 – 10 years. Investee Company Development KCV investees require more hand-holding support for the development of talent (through mentoring, coaching and quality team recruitments and development), strategy and business model development, establishment of robust financial and operational systems, market intelligence and marketing support, linkages and assistance in getting the necessary regulatory approvals and access to finance – linkages with funders as well end user-consumer financing. Beyond the invested capital, KCV provides technical assistances to these companies thus catalysing the growth.