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Final Report
Sustainable charcoal business development in Tanzania, Tanzania
Grantee: Gaia Consulting Oy (Gaia)
Local Partner(s): Appropriate Rural Technology Institute Tanzania (ARTI-TZ)
Other Partner(s): None
Project start date: 20/06/2013
Project end date: 31/12/2015
23/02/2016 (01/07/2016rev) _______________________________
Date Person responsible (Signature)
pasi.rinne@gaia.fi PASI RINNE+358 400 464 127 Project Director
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY .......................................................................................... 3
2. ASSESSMENT OF IMPLEMENTATION OF THE PROJECT ........................................... 4
2.1 Implementation of Activities .................................................................................... 4
2.2 Deviations from the Planned Activities .................................................................... 8
2.3 Achievement of Outputs and Objectives ............................................................... 10
3. CLIMATE CHANGE ............................................................................................... 12
4. DEVELOPMENT IMPACTS AND CROSS-CUTTING ISSUES ....................................... 12
5. ASSESSMENT OF THE RESULTS AND IMPACTS OF THE PROJECT ........................... 13
5.1 Relevance ............................................................................................................... 13
5.2 Effectiveness ........................................................................................................... 14
5.3 Efficiency ................................................................................................................ 14
5.4 Impact ..................................................................................................................... 14
5.5 Innovativeness and learning................................................................................... 15
6. SUSTAINABILITY AND POTENTIAL FOR SCALING UP AND FOLLOW-UP
INVESTMENTS ............................................................................................................... 16
7. FINANCIAL REPORTING ....................................................................................... 16
8. CONCLUSIONS AND RECOMMENDATIONS .......................................................... 16
ANNEXES
Annex 1 Updated Logical Framework Matrix Annex 2 Pictures
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1. EXECUTIVE SUMMARY
In Tanzania, with an approximate population of 50 million, steady population growth and continued urbanization progressively increase the demand for energy services, especially in food preparation and for selected commercial uses. One of the central energy sources utilized in Tanzania is charcoal that is used in food production and smaller and larger scale industrial production activities. The vast majority of the wood currently utilised for the production of charcoal in Tanzania comes from unsustainably managed native forests.1 Climate profit rests on business profit, and in meeting future challenges sustainable business development has a pivotal role. Gaia Consulting (Gaia) and ARTI have jointly developed a business that creates long lasting positive impacts through replacing traditional charcoal with briquettes produced from renewable residues. The NCF funded project contributed to establishing and developing the company Charcoal Briquettes Tanzania Ltd (CBTL), a joint venture between Gaia and Arti Energy Ltd. (Arti). CBTL’s rationale is to combine good business sense with sustained and lasting development impacts. At the closure of the NCF funded project period, CBTL combines strong climate, environmental and social benefits with remarkable potential for growth. In addition to careful consideration of technological solutions given local contexts, promoting managerial skills and a can-do attitude amongst staff, the greatest key to success lies in the design of the business model that creates the right incentives, supports strategic collaboration, gives positive conditions for partners to invest in the endeavour, and, ultimately, enables sales of high-quality briquettes at an affordable price.
By end 2015, the business concept is well in place, people have been adequately trained, quality improved and managed, and the sustainability of the product carefully assessed. The briquette brand Mkaa Mkombozi has been carefully developed, and marketing and promotion successfully launched in accordance with the market strategy. The expanded manufacturing capacity, logistical arrangements, advertising and marketing operations as well as the established sales network have enabled the Mkaa Mkombozi to perform well in the markets, proving the business idea, and paving the way for further scale-up by the business partners in years to come. The NCF project has achieved the targeted objectives with the installed manufacturing capacity at 150 tons of sustainable charcoal briquettes per month. The project has enabled job creation by establishing additional employment opportunities for 725 farmers, and 27 new jobs have been created in the actual charcoal briquette
1 World Bank (2010), “Enabling Reforms: A Stakeholder-Based Analysis of the Political Economy of Tanzania’s Charcoal Sector and the Poverty and Social Impacts of Proposed Reforms”; The annual consumption of traditional charcoal in Tanzania is being estimated at 1 million tons, half of which is consumed in Dar es Salaam
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manufacturing. Also, 30 sales dealers have been trained, making the total amount of people trained app. 780. The project is expected to generate approximately 30 000 tCO2e in total direct GHG emission reductions.
2. ASSESSMENT OF IMPLEMENTATION OF THE PROJECT
2.1 Implementation of Activities
Activity 1: Start up and structuring of the project
The project agreement between NCF and Gaia was signed in June 2013 launching the project activities. An NCF project due diligence assessed the additionality and synergies of NCF funded activities vis-à-vis another project awarded to Arti and Gaia by the Energy and Environment Partnership (EEP Africa)2. Gaia’s role has covered the climate impact assessment, sustainability criteria development and business development with inputs from Arti. In turn, Arti has held the main responsibility for procurement of machinery (extruders, mixers and kilns) and for conducting trainings in char powder manufacturing and charcoal briquette production. In addition, Arti’s responsibility has covered quality development, stakeholder relation management and field work implementation.
Activity 2: Char powder and charcoal producer trainings
In order to secure a stable supply of raw material, 725 persons were trained in char powder manufacturing as part of the NCF funded intervention. A two day training course covered charring techniques, quality assurance, and health & safety. The participants were selected with assistance from local NGOs, Self Help Groups (SHGs) and Community Development Organisations (CBOs), and village committees. Additionally, another 720 persons were trained within the EEP project (see Activity 1), bringing the total of persons trained in char powder production to 1 445. In order to build the skills levels, staff at the charcoal production site in Salasala have been trained in charcoal production, health and safety and value chain management throughout the project. Staff has been selected on relevant skills and aptitude in learning new ways of working. Since 2015, 23 persons have been employed by CBTL on a permanent basis.
2 EEP project TAN4018, “Scaling up sustainable charcoal briquette production in Tanzania”
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Activity 3: Business development, market strategy formulation and joint venture
establishment
CBTL was created in August 2014, following discussions between Arti and Gaia in 2013 and early 2014. As part of this process Gaia and Arti signed a Shareholder Agreement and agreed on a Memorandum and Articles of Association, detailing parties’ rights and responsibilities. CBTL was set up to manage and oversee all aspects of the charcoal briquette manufacturing value chain. The established business model consists of three major components: (1) distributed raw material (char powder) production, (2) centralized briquetting units and uniform stock management by community based enterprises (CBEs), and (3) marketing and sales managed by CBTL. In order to capture the market potential and make the most efficient use of resources, a market strategy was formulated and approved by CBTL management, including; 1) an overall market and sales approach, 2) analysis of the market situation and key market drivers, 3) assessment of main competing technologies, 4) definition of brand components and characteristics, and 5) sales targets. The main phases of the market strategy are presented below (Figure 1). The first phase has focused on building a credible base that is used as a springboard for further expansion. Figure 1: Brief outline of the market strategy
Activity 4: Production operation development: quality & quantity improvement
through new and improved methods and equipment
The production operations that were initially located in Bagamoyo (app. 50 km north of Dar es Salaam), were moved in 2015 to Salasala in the vicinity of Dar es Salaam. This move was motivated by: 1) the benefit of the proximity to the main target market of Dar es Salaam, 2) the ability to better harness economies of scale, and 3) the possibility of improved supervision and development of both production and sales operations. Char producing CBEs (Community Based Enterprises) have been established in two districts, as was originally intended, and these entities enjoy equal opportunities in producing and delivering char powder to the charcoal briquettes
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production site located in Salasala. As a result closer access to Dar es Salaam, sales improved as a result of the move (see Figure 3 for sales in 2014 and previous years). The production facility in Salasala has been granted all required permits for operation, is fenced and guarded. The briquette manufacturing equipment was procured to perform in a local Tanzanian context, and selection criteria included: i) suitability of the machinery design for the existing production conditions and needs, ii) solid references/track-record of the manufacturer, iii) access to advice and technical back-up, iv) commissioning and installation by manufacturer, v) training by the manufacturer, and vi) price. By the end of 2015, the Salasala production facility operates four production lines with daily manufacturing volumes varying between 3.75–6.50 tons (equivalent to app. 75–130 tons/month), depending on operational conditions. Making use of input from MIT3, production flows were improved and the production facility expanded to enable higher production volumes. Also, a well was dug to secure access to water needed in production as well as for the hygiene and consumption of staff. Quality monitoring has been integrated to the production process and includes regularly assessing ash content, mechanical strength and heat value of the briquettes. Calorific measurements show an average energy density of 20,6 kJ/g, categorizing the product as an high-energy charcoal briquette.4
Activity 5: Charcoal briquette brand, packaging and sales development
The brand Mkaa Mkombozi (Figure 2) has been developed to reflect the values of the business. Product and brand language reflect images of freedom and saving, connecting with both environmental challenges and cultural dimensions. Mkaa Mkombozi in Swahili can loosely be translated as “Saviour Charcoal”. The three unique selling points are summarized as: Okoa Pesa: Saving money; Okoa Afya: Saving health; and Okoa Mazingira: Saving the environment.
3 MIT (Massachusetts Institute of Technology) bachelor and master students carried out a project “Improving the efficiency of charcoal briquette manufacturing operations”, directly serving CBTL. 4 Energy and Environment Partnership (2012), Analysing Briquette Markets in Tanzania, Kenya and Uganda. The calorific measurements were conducted by students from Aalto University, Finland, who visited the project site in September 2015.
Figure 2: The Mkaa Mkombozi brand
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Packaging has been developed in line with customer demands. Charcoal briquettes are delivered in bags of 4, 15 and 25 kg. Analysis shows that industrial and institutional clients prefer larger bags, whereas consumers and retail clients smaller ones.
The closeness to the main charcoal market in Dar es Salaam market has enabled more frequent access to customers, and sales has continually increased as a result. The shortened distance between the production facility and Arti’s office has also enabled more efficient use of management resources.
Seasonal variation exists, but raw material planning has ensured that production has continued through the rainy seasons as well. Figure 3 details sales from 2013-2015, representing sales development in line with the market strategy. Production has satisfied demand, and will be further stabilized to meet the growing demand. Although sales has fluctuated from month to month, volumes are stabilizing in comparison with previous years. Also, the customer base has diversified as a result of focused sales work. Sales channels have included direct and factory sales, retail, and road shows and participation at festivals and events.
Figure 3: Charcoal briquette sales development 2013-2015
The price of the charcoal briquettes has been pegged to traditional charcoal in order to minimize customer switching costs. In the latter half of 2015, the sales team was expanded, and marketing efforts increased.
Activity 5: Logistics development
The supply and logistics chains were developed to support the entire briquette manufacturing operation, from char powder collection to sales and delivery to customers. Most raw materials are collected at CBE source points, and in a majority
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of cases, final charcoal briquettes are delivered to customers’ doorsteps. CBTL manages and oversees all logistics activities. Activity 6: Sustainability criteria development
A sustainability framework was developed to serve as an integral part of CBTL business monitoring and development. The sustainability criteria, based on the IFC framework and in particular the ISCC5, applied to charcoal production, help define the company and product sustainability status, setting a baseline and identifying key aspects to address. Within the framework of management and board of directors meetings the sustainability requirements will be reviewed regularly, as part of the monitoring of key performance indicators, covering financial as well as environmental, social and governance aspects (e.g. operating profit, GHG emissions and gender equity). Also a Health and Safety policy has been developed and is implemented in the charcoal briquette production process. Activity 6: Project monitoring and field visits
Gaia did five project management and monitoring missions to Tanzania in 2013-2015 under project activities. In addition, the project partners met several times as part of other commitments in Tanzania. During these missions, both strategic and operational aspects were reviewed. Since the incorporation of CBTL, two Directors Meetings were held in 2015 in accordance with the Memorandum and Articles of Association. In addition to field visits, the project was monitored via regular telephone/teleconference meetings between Gaia and Arti.
2.2 Deviations from the Planned Activities
2.2.1 Activities that have not taken place
Instead of establishing a new, second, production site as originally intended, machinery and equipment for charcoal briquettes production has been concentrated to one site. The change was motivated by gaining economies of scale and proximity to the main target market in Dar es Salaam. The existing CBEs in the districts of Bagamoyo and Kibaha have continued to enjoy equal opportunities in producing and delivering char powder to the charcoal briquettes production. Hence, the Salasala production facility sustains the activities for both of these areas.
2.2.2 Unforeseen activities that have taken place
5 International Sustainability and Carbon Certification (ISCC) is a certification systems for sustainability and greenhouse gas emissions. It can be applied to meet legal requirements in the bioenergy markets as well as to demonstrate the sustainability and traceability of feedstock in the food, feed and chemical industries.
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Due to a delay by the EEP coordination secretariat (see activity 1), which caused an 8 month delay in briquette production and business development activities, the project applied for a no-cost project extension.
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2.3 Achievement of Outputs and Objectives
An assessment of achieving project objectives and outputs are provided in Tables 1 and 2 below.
Table 1: Specific project objectives
Specific project objectives Status at the end of the project 1. Developing and promoting sustainable charcoal
production and small scale business
development in the field of renewable cooking
fuels
CBLT has been incorporated, and 725 persons
trained in char manufacturing. Charcoal briquettes
have been marketed in conjunction with efficient
cook stoves.
2. Raising awareness in the benefits of sustainable
charcoal production and consumption
In total, approximately 4 500 000 persons have been
targeted throughout the project period through road
shows, fairs, marketing, sales activities, media and
seminars and internet.
3. Creating demand for sustainable, non-wood
charcoal by developing well-functioning
marketing mechanisms for charcoal briquette
sales.
CBTL has gained a strong foothold in the Dar es
Salaam market, with a 7-fold increase in sales
compared to 2014. The products have been
marketed at road shows, fairs, marketing, sales
activities, media and seminars and internet
presence.
Social media presence include Instagram at:
@mkaamkombozitz.
4. Contributing to nearly 50 000 ton carbon
emission reductions (incl. indirect)
The installed capacity amounts to a production
volume of 75–130 tons/month. The direct emission
reductions of the project are estimated at 30 000
tCO2e. Indirect emission reductions are estimated to
reach 80 000 tCO2e by 2025.
5. Creating new business opportunities and
income sources for 770 rural families directly
and income sources for approximately 4000
individuals indirectly.
A total of 782 people trained and provided income
opportunities within the briquette value chain. 725
persons trained in char powder manufacturing,
health and safety aspects and environmental
cautionary actions. 27 people were trained in
briquettes production, and about 30 small
businesses gaining income through the sales of Mkaa
Mkombozi charcoal briquettes.
Table 2: Assessment of Achievement of Outputs in line with Log frame
Expected outputs Indicator(s) Achievement of the outputs The technical capacity of the
production facility and the two char
powder production and collection
CBEs has been improved nearly
tenfold by providing improved
technology for charcoal briquette
manufacturing. 2000 tons of wood
based charcoal is replaced by
sustainable charcoal briquettes
annually leading to app. 700 tons of
Indicator: Amount of
charcoal briquettes
produced
Targets:
2000 tons of charcoal
briquettes annually.
2000 tons of sustainable
charcoal briquettes sold
The installed capacity amounts to a
production volume of 75–130
tons/month. This installed capacity
equals direct carbon emission
reductions of app. 30 000 tCO2e, and
app. 80 000 including indirect. The
total annual production capacity of
CBTL is 2688 tons.
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carbon dioxide (CO2) emission
reductions.
in local markets
annually.
A total of 770 people are trained in
char powder and briquette
production, marketing, sales and
CBE administration in Bagamoyo
and Kibaha districts, as well as at
the production facility at Salasala.
Indictor: Training
participants
Targets:
18 training sessions for
40 char producers each
have been organised.
Briquette production,
marketing and sales
training has been
conducted for 50 CBE
staff members.
725 persons trained in char powder
manufacturing. Training has also
included health and safety aspects and
environmental cautionary actions. 27
people were trained in briquettes
production, and about 30 small
businesses gaining income through the
sales of Mkaa Mkombozi charcoal
briquettes.
Sustainable, well-functioning and
replicable business model for
sustainable charcoal briquette
production. Logistics and
marketing has been developed and
implemented in two CBSs and the
catchment area of production
facility.
Indicator: Products
reach markets and end
users without limiting
barriers.
Targets:
The business can be
easily replicated, and it
is easily scalable.
The charcoal briquette
value chain is efficient
and affordable, and the
CBEs can handle their
own internal marketing
efforts according to
CBTL
CBTL was incorporated on August 21,
2014. All licences and permits are in
place for commercial activity and
production operations.
CBTL has gained a strong foothold in
the Dar es Salaam market, with a 7-fold
increase in sales compared with 2014.
Logistics routes are in place and
function well.
The benefits of sustainable charcoal
production and consumption are
familiar to charcoal users in Dar es
Salaam and the demand for
charcoal briquettes has increased
Indicator: Amount of
people targeted.
Targets:
Charcoal users are
interested to buy
charcoal briquettes and
the demand meets or
exceeds the availability
of the product.
The brand Mkaa Mkombozi is
developed, and packaging meets
customer requirements and supports
brand characteristics.
Customers within retail have been
informed and educated in the benefits
of selling the charcoal briquettes.
Charcoal briquettes are sold at about
30 retail locations in and around Dar es
Salaam.
In total, approximately 4 500 000
persons have been targeted throughout
the project period, through road shows,
fairs, marketing, sales activities, media
and seminars and internet presence.
Charcoal briquettes have
comprehensive sustainability
criteria covering the value chain
from raw materials to end-users.
Indicator: Sustainability
criteria for charcoal
briquettes have been
produced.
Target
CBTL operates
according to established
sustainability criteria
A sustainability framework has been
developed with sustainability criteria
based on the IFC framework and in
particular the ISCC, and applied to
charcoal production.
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3. CLIMATE CHANGE
The project has contributed to climate change mitigation by reducing deforestation through replacing unsustainable wood charcoal with charcoal briquettes produced from agricultural and other biomass waste. The project contributed to direct emission reductions of 30 000 tCO2e, based on gradual production increase and an assumed life time of 10 years for the installed machinery by NCF funding6. In-direct emission reductions thanks to the project are estimated at 80 000 tCO2e. The estimation, which assumes healthy sales development and additional investments, considers CBTL production from 2015 to 2025 including 10 % annual increase in production from 2019 to 2025.
4. DEVELOPMENT IMPACTS AND CROSS-CUTTING ISSUES
CBTL enables sustainable charcoal briquette business to develop in a carefully designed way. The company is a platform for up-scaling and replicating the sustainable charcoal briquette business, and therefore provides a unique opportunity to increase briquette production in Tanzania in a sustainable manner. As originally intended, project impacts include:
Economic: 1) Additional income opportunities have been provided for hundreds of people. Tens of new "green jobs" have been created directly and the project is expected to indirectly contribute to the creation of thousands of jobs more and 2) Permanent employment of workers has been established, which is more an anomaly than rule in Tanzania’s manufacturing sector. Gender: Women are engaged in all aspects of CBTL’s operations and value chain from production to sales and marketing, allowing livelihoods improvements and empowerment in line with gender equality. Institutional: 1) The project has supported the government in its efforts to ban unsustainable charcoal production by introducing an easy to adapt and sustainable option for traditional charcoal in line with National Strategy for Growth and Reduction of Poverty Plan (Mkukuta II), and 2) The Ministry of Natural Resources and Tourism has expressed its strong support for the project, and there has been ongoing, supportive dialogue with the local authorities on the local level.
6 Calculation is based on AMS III.BGv1 methodology.
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Social: Better indoor air quality has decreased exposure to harmful indoor air pollutants (IAP) and respiratory problems caused by them. Generally more women than men have profited from these benefits.
Key development impacts of the project are summarised in table 2 below.
Table 3: Key development impacts of the project
Planned Objectives and
Outputs
Indicator and Means of
verification (MOV)
Achievement of the objectives and
outputs Increased income and new
jobs in rural areas and in town
centers
Indicator: Number of
jobs created
MOV: CBE member and
staff records
Char powder producers have gained new
income streams. Production facility
employees have been contracted on
permanent bases. Income opportunities
for 725 people and 27 green jobs, and
about 30 small businesses gaining
income through the sales of Mkaa
Mkombozi charcoal briquettes.
334 women (46% of total) trained in
char production, hence empowered to
generate additional income.
Business skills development Indicator: Number of
people trained
MOV: Training
participant records and
reports
A total of 725 farmers have been trained
in char powder manufacturing and 27
production staff in business and
production. Also, about 30 small
businesses gaining income through the
sales of Mkaa Mkombozi charcoal
briquettes.
Reduction of deforestation Indicator: Amount of
wood charcoal replaced
by sustainable charcoal
briquettes
MOV: Amount of
sustainable charcoal
briquettes sold
Approximately 120 tons of traditional
wood charcoal has been replaced by
sustainable charcoal briquettes under
NCF funded activities.
Health benefits through
decrease in Indoor Air
Pollutants (IAPs)
Indicator: Reduction in
IAPs
MOV: Charcoal briquette
test, user interviews and
user feedback
Customer feedback report carried out in
2014 concluded that smoke generation
from the charcoal briquettes is much
lower compared to that of traditional
charcoal.
5. ASSESSMENT OF THE RESULTS AND IMPACTS OF THE PROJECT
5.1 Relevance
About 70% of deforestation in Tanzania is due to fuel wood harvests, directly or indirectly, followed by clearing for agriculture and settlement. These activities contribute to increased GHG and reduced carbon sinks, and reduce Tanzania’s energy security and competitiveness in the longer term.
The project can be judged highly relevant, and well in line with Tanzania’s climate commitments. Tanzanian Intended Nationally Determined Contribution (INDC) published in 2015 highlights the importance of 1) Enhancing forest governance and
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protection of forest resources and 2) Enhancing the use of renewable energy potential across the country (hydro, solar, wind, biomass and geothermal).
With regards to project stakeholders and direct beneficiaries, the intervention builds the capacity of Tanzanian communities to adapt to climate change, as sustainable business creation helps diversify and strengthen local livelihoods, and build resilience to advancing impacts of climate change. CBTL markets and sells a product that is on par in price compared with traditional charcoal; hence the business avoids establishing any new economic barriers for regular consumers.
5.2 Effectiveness
The project has achieved its overall objective of contributing to GHG emission reductions in Tanzania and enabling better access to affordable and sustainable energy through creating a well-functioning and scalable commercial business operation. Major factors contributing to good overall effectiveness and achievement of project goals include 1) establishing a clear joint vision among project partners, 2) identification and allocation of appropriate management resources for project execution (including solid risk analysis and timely capitalization on market demand), and 3) balanced execution with a “learning approach” and continuous attention to feedback and advice from project stakeholders.
5.3 Efficiency
Arti’s previous track record and existing business infrastructure has had a positive effect on the cost efficiency of the charcoal briquette project. The final product, with its varying environmental and social benefits, remains as affordable as other available, non-sustainable competing fuels, such as traditional charcoal. The efficient use of NCF’s financial resources was also possible due to previous support by the World Bank7 and EEP (see Activity 1). Building upon and harnessing such support not only provided financial inputs but helped in clarifying the overall vision as well. The project is therefore assessed to score high in overall efficiency.
5.4 Impact
The project has reduced carbon emissions and created new business opportunities and income sources for over 700 rural families. In particular, the project has established additional, gender equal employment opportunities for 725 farmers, and created 27 new jobs in the actual charcoal briquette manufacturing. Also, about 30 small businesses gaining income through the sales of Mkaa Mkombozi charcoal briquettes.
The project has achieved the targeted objectives with an installed manufacturing capacity at 150 tons of sustainable charcoal briquettes per month. The daily
7 The project "Promotion of charcoal briquettes in Tanzania” was conceived and successfully implemented by ARTI-TZ with funding from the World Bank, under the Biomass Energy Initiative for Africa (BEIA) program.
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manufacturing volumes vary between 3.75–6.50 tons (equivalent to app. 75–150 tons/month). Central measures for achieving these results include i) the incorporation of CBTL, ii) training of producers of raw material and production staff, iii) establishment of production operations, iv) defining sales target groups, v) organizing sales operations, and vi) establishing a process for continual quality improvement. The project has disseminated information about the environmental and socio-economic benefits of sustainable charcoal briquettes through interaction with public officials, participation in local and international seminars, and via the Harvest Fuel Initiative8. The project has also been able to build upon the parallel activities of the EEP project “Scaling up sustainable charcoal briquette production in Tanzania”. The project was implemented by ARTI and Gaia and ended in 2014.
5.5 Innovativeness and learning
The innovativeness of the project lies primarily in recognizing the possibility of utilizing existing market and societal structures in creating a new value chain that can be viable in and of itself. The experiences gained during this project allow highlighting some lessons learned, including:
• The sustainability of the climate benefits, and in particular the upscaling
potential, is interlinked with the viability of the business benefits. In a manufacturing environment, identifying opportunities to harness economies of scale are essential.
• People buy into a brand, not necessarily into a business or business model. The creation and development of an attractive and sustainable brand is crucial for success in charcoal briquette manufacturing and sales.
• Building partnerships with solid, locally established businesses presents
multiple advantages. By providing credibility and grounded robustness to the business model, carefully chosen and prepared partnerships can increase the odds for success considerably.
• Clear and active communication between project partners are critical for success.
• Ability to secure a steady and high quality supply once demand increases is
critical for upscaling efforts. This means that the three main steps – raw material supply, production and sales – must function smoothly and without friction.
8 Harvest Fuel Initiative promotes biomass fuel alternatives and clean combustion technologies in the developing World. Harvest Fuel Initiative currently operates in East Africa with plans to expand into SSA and Asia. Harvest Fuel Initiative is collaboration between the The Charcoal Project (www.charcoalproject.org ) and MIT’s D-Lab (MIT’s highly regarded educational and technology development program; https://d-lab.mit.edu/)
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• Bankability contains the key for securing future funding. This means that thepath to profitability must be developed already during a demonstration phase.
The project experience also confirms a finding made in previous projects implemented by Gaia, noting that building a sustainable consumer business and brand in a developing country takes time. Hence, identifying complementary funding options for sustainable business development should be an integral part of project planning and development activities from early project implementation stage.
6. SUSTAINABILITY AND POTENTIAL FOR SCALING UP AND FOLLOW-UP
INVESTMENTS
A central tenet of the project has been to establish a sustainable business model, and later brand, that can be further up-scaled in other regions. By the end of 2015, CBTL’s operation at Salasala have reached a level where a sustainable rate of return and viable business development is well within reach.
The current strategy period (2016-2018) focusses on the continued strengthening of company operations, and the next steps of expansion include establishing new sales points in selected locations in Tanzania. Subsequently expansion to other regions in Tanzania is a realistic scenario. The business model also has the potential for replication in countries experiencing similar contexts as Tanzania.
7. FINANCIAL REPORTING
Funding and financial contributions by milestone, and Total (EUR)
Milestone 1 Milestone 2 Milestone 3 Total
NCF funding 71 313,78 120 445,22 67 491,00 259 250,00
Spent by Gaia 50 832,95 91 300,27 47 811,04 189 944,25
Spent by Arti 20 480,83 29 144,95 19 679,96 69 305,74
Grantee's financial
contribution
13 837,39 5 500,00 14 136,27 33 473,66
Local partner's
financial contribution
1 541,17 8 965,79 29 621,02 40 127,97
Grand total 332 851,63
8. CONCLUSIONS AND RECOMMENDATIONS
Climate profit rests on business profit, and sustainable business development has a pivotal role in meeting future challenges, more so than traditional development cooperation. Business development aims at developing the skills and abilities of the
Sales revenues of EUR 40,385 excluded
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people employed, and in turn markets, societies, and environments in large. Business development allows for job creation that not only provides income, but more importantly gives people hope, dignity, and the possibility of planning and building a future for themselves.
Addressing climate challenge requires new and innovative approaches that can harness major funding streams and engage the private sector as a solutions provider and true partner for climate compatible development. Sustainable business development is a principal approach, and creates lasting and enduring positive impacts that will be for future generations to harvest.
This project exemplifies some of the challenges as well as opportunities on the low-carbon pathway, having established an innovative business – through replacing unsustainable wood charcoal with charcoal briquettes produced from agricultural and other biomass waste – with realistic upscaling potential beyond 2015.
Maintaining competitive pricing and high quality of charcoal briquettes will remain cornerstones to the overall success of Mkaa Mkombozi. In order to harvest the full potential of the business model the following issues will be of critical importance and remain under specific attention:
• The bankability of CBTL must be strengthened through continuousdevelopment of production operations and sales. The quality managementsystems must be maintained and further developed to meet competition.Sales operations should be aligned with potentially shifting market demands,and overall management and governance structures need to be well in placeto ensure timely and accurate follow up on profitability.
• In order to sustain an increasing demand, the raw material supply chains mustbe constantly monitored and developed in terms of delivery capacity. Thisbecomes particularly important when entering the larger retail sector.
• Tanzania’s manufacturing sector is still developing. Lack of formal educationwithin the sector creates a continuous need for vocational training of bothoperational staff and management throughout the value chain.
• Awareness raising and promotions should be more tailored to specific targetsgroups in Tanzania in order to ensure efficiency and effectiveness ofmarketing operations.
• The sustainability of raw material and production process must not becompromised as production grows. The value chain should continue tocontribute to national and international climate targets, keep itsenvironmental impacts at minimum and provide income opportunities for thepoor without compromising the profitability of the business.
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Annex 1 Updated Logical Framework Matrix (as updated in MS2, June 23, 2015)
Updates to the logical framework are detailed in bolded italics.
Narrative Summary Objectively Verifiable
Indicators (OVIs)
Means of verification
(MOVs)
External Factors
(Assumptions)
Development Objective
To contribute to the reduction of deforestation and to support environmentally, socially and economically sustainable energy business development in Tanzania.
Reduction in forest losses
Energy market development in Tanzania.
National forest cover and energy market statistics in Tanzania.
Government policies remain supportive towards sustainable energy solutions.
Immediate Objective
Establish and introduce a sustainable business model for community-based non-wood charcoal briquette producing enterprises (CBEs).
Production capacity development of one CBE.
Upscaling of Sustainable Charcoal Company.
CBE production and sales accounts.
Sustainable Charcoal Company sales accounts.
Business regulations do not restrict setting up community-based and joint venture business models.
Output (Results)
1. The technical capacityof the productionfacility and the twochar powder production andcollection CBEs has been improved nearlytenfold by providing improved technologyfor charcoal briquette manufacturing. 2000tons of wood based charcoal is replaced by sustainable charcoal briquettes annually leading toapp. 700 tons ofcarbon dioxide (CO2)emission reductions.
The production facility and the two CBEs produce a total of 2000 tons of charcoal briquettes annually.
2000 tons of sustainable charcoal briquettes sold in local markets annually.
Production reports.
Sales reports, climate impact assessment.
Power supply at the town centres where CBEs are located remains stable.
The cultural habits remain supportive for charcoal use in households.
2. A total of 770 people are trained in charpowder and briquette production,marketing, sales and CBE administration in Bagamoyo and Kibahadistricts, as well as atthe productionfacility at Salasala.
18 training sessions for 40 char producers each have been organised. Briquette production, marketing and sales training has been conducted for 50 CBE staff members.
Training reports. Sufficient number of people is interested to participate in the trainings.
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3. Sustainable, well-functioning and replicable business model for sustainable charcoal briquette production. Logistics and marketing has been developed and implemented in twoCBSs and thecatchment area ofproduction facility.
The business can be easily replicated, and it is easily scalable. The charcoal briquette value chain is efficient and affordable, and the CBEs can handle their own internal marketing efforts according to the Sustainable Charcoal Company (CBTL) standards.
Two CBEs produce and deliver 2000 tons of charcoal briquettes annually, and the products reach markets and end users without limiting barriers. Requests for business model replication in other districts have been presented.
Regulations do not ban charcoal briquette production and sales.
4. The benefits ofsustainable charcoalproduction and consumption are familiar to charcoalusers in Dar es Salaam and the demand for charcoalbriquettes has increased
Charcoal users are interested to buy charcoal briquettes and the demand meets or exceeds the availability of the product.
Sales reports. End users accept the new product.
5. Charcoal briquettes have comprehensive sustainability criteriacovering the value chain from rawmaterials to end-users.
Sustainability criteria for charcoal briquettes have been produced.
Sustainability criteria report.
The data needed for creating the criteria is available.
Activities 1.1. Production of 120
kilns for char powder production
1.2. Procurement and installation of 2 mixers, 2 extruders, and 2 grinders.
1.3. Charcoal briquette production reaches the full capacity
1.1. 120 kilns have been produced and put in place
1.2. Two mixers and two extruder, as well as two grinders have been bought and installed at the production facility.
1.3. Annual production of charcoal briquettes reached 2000 tons in the two CBEs
Receipts, training reports and MOUs with char powder producers. Invoices
Production reports.
Sufficient amount of used metal drums is available for briquette production. Exchange rates do not change dramatically.
External reasons do not disturb briquette production.
2.1 Organising 18 two day long training sessions for 720 new char powder producers
2.2 Organising training for 50 new CBE staff members in charcoal briquette production
2.1 Training for 720 char powder producers has been organised.
2.2 Training for 50 new CBE staff members in charcoal briquette production and
Training reports.
Training reports
SHG/CBO/ Village councils cooperate in selection of training participants.
Sufficient number of interested and suitable candidates for CBE staff is available.
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and CBE administration
2.3 Charcoal briquette brand and packaging development
administration has been organised
2.3 Sustainable Charcoal Company products have a well known and positive brand among stores and end-users.
Store keeper and end user interviews and feedback. Competitors do not try to
fake the brand.
3.1 CBE and retail sector business skills development through trainings and awareness raising
3.2 Logistics development together with CBEs and wood charcoal transporters
3.3 Establishment and initial business development of Sustainable Charcoal Company
3.1 Business training has been organised and training material has been produced for CBE staff, transporters and retailers.
3.2 Logistic chain functions well from char producers to CBEs and from CBEs to retailers to shops
3.3 Sustainable Charcoal Company exists
Training reports and materials.
Time and costs spent for transporting charcoal briquettes.
Company establishment documents and accounts.
Retail sector can be motivated to participate in the training.
Transport fuel prices increase will not reduce charcoal briquettes competitiveness compared to alternative household fuels
Authorities do not restrict establishment of the Joint Venture
4 Charcoal briquette marketing and promotion strategy development and implementation
Sustainable Charcoal Company has a well functioning marketing and promoting strategy.
Demand for charcoal briquettes has increased and the Sustainable Charcoal Company label is well known.
End users accept the new product.
5 Charcoal briquette sustainability and quality criteria development and introduction
Sustainability and quality criteria for charcoal briquettes have been developed. Sustainable Charcoal Company briquettes meet the criteria.
Sustainability criteria report.
Labelling and sample tests.
The data needed for creating the criteria is available.
Inputs
171 working days from Gaia
251 working days from ARTI
€56 000 investments in machinery
€280 000 investment in other costs including training and marketing materials, business development, travel and administration costs
31 months project period (due to 8 months no-cost extension, as original project period was 24 months)
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Annex 2 Pictures
Figure A2.1: Quality control of incoming char powder (© Daniel Hayduk)
Figure A2.2: Bagging and making ready char powder for briquette manufacturing (© Daniel Hayduk)
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Figure A2.3: Woman cooking with Mkaa Mkombozi (© Daniel Hayduk)
Figure A2.4: Grilling meat using Mkaa Mkombozi (© Daniel Hayduk)
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