The Charcoal Project

We’ve reported here before on the state of Tanzania’s energy poverty and biomass policies.
Tanzania may get more attention than other countries because it’s one of the larger Sub-Saharan states facing all the attendant problems associated with a serious biomass energy crunch.

But Tanzania is also a thriving laboratory of biomass projects where new ideas are constantly being tried out.

Nicholas Harrison is the driving force behind one new idea: the East Africa Briquettes Company.  Harrison purchased the factory in Tanga in March 2009 where he now produces the “mkaa bora,” a briquette that burns “longer, hotter, and cheaper” than conventional vegetable charcoal.

The country consumes about one million tons of wood charcoal each year, so the market is huge. And with a deforestation-to-replacement rate of 3-to-1, there is little chance Tanzania will be able to keep pace with the country’s demand for charcoal, especially in the growing capital.

Harrison took a few moments out of his busy schedule to explain to us how his venture will help close the country’s biomass deficit.

The Charcoal Project: How did you get involved in this venture?

I had been living in Tanzania for four years with my wife farming and working in safaris. I saw the unsustainable demand for tree charcoal that is prevalent in Tanzania and realized any solution would have to be economically profitable for potential distributors in order to be sustainable in the long run.  Instead of buying new machinery I bought a company that had been running for about six years but for several reasons had not been breaking into the market successfully.

How is your company structured?

The company does not have partners per se at the moment but as I expand I will be starting joint ventures with entrepreneurs.

What challenges have you encountered in starting your business?

We are a little behind the curve as I had underestimated the difficulty of selling to the bottom of the pyramid clients. However we are selling 60 tons a month now, which means we can now open a second factory.

What’s the strategy for growing the market?

Close to 97% of Tanzanian’s use charcoal as their primary fuel, so it is a larger market than just the ‘Urban Poor.’ I want to take a larger and larger percentage every year in the urban and peri-urban sector. I am establishing the brand to give confidence to consumers to switch fuel and then I want to franchise out the factories so that local entrepreneurs can make good money by making and distributing the briquettes, as well as protecting their environment.

Unlike community briquette groups, the end product burns hotter and longer than normal charcoal. It also produces no smoke and it’s cheaper than traditional charcoal. By using a franchise system I can assist in keeping the quality very high.

Let’s talk about the briquette itself. How are people responding to it?

People are just starting to embrace the briquettes, due largely to the success of women’s groups (such as EFFORT) who can talk to other users, usually women and show them the benefits. Our marketing campaign, partly funded by USAID, has also started having an impact.

The briquettes burn longer and hotter which is a great benefit once you know how to use them.

However there are other differences which are cultural, for example: cooks want to shake and poke charcoal, if you do that with a compressed briquette once it has been burning for a couple of hours and covered with ash it will break apart and no longer produce good heat. So we have to change people’s habits as well.

People in particular like the fact that there is no smoke so, with normal ventilation, they can cook inside without danger of being ‘smoked’ and the associated health problems that it causes.

How do you partner with the local communities to support your project?

We create a new income stream by purchasing waste and we also teach communities how to carbonize the raw material, which can be almost anything, such as maize stalks, banana leaves, even grass. At our factory in Tanga we use coconut husks, cashew nut shells and chardust (the waste from the traditional charcoal making process, which is normally left to rot). The idea being that we have a recipe that will work in all areas, allowing local agricultural waste to be used.

The carbonistation process is simply burning organic material in controlled oxygen (pyrolysis). We partner with NGOs to assist us with teaching the communities the most efficient way of doing this. For the new factory in Dar we will work with a group called Joint Environmental Techniques.

Are you getting requests from individuals or communities to partner with you?

Because we will buy the raw material (by the bucket or by 20-ton lorry load) and pay cash at the gate we have established a large network of people that supply us full time from young to the nearly infirm! Because our product is cheaper in real terms and is 30% more efficient a normal family saves $87 /year by using Mkaa Bora. Our product is priced to allow the retail price to be below that of charcoal which allows all the distributors to make a fair cut, our new factory will have the added bonus of being much closer to the Dar users which will also reduce transport costs which are reflected in the retail price. We have a lot of people that are interested, some perhaps for a quick buck, but the start up capital usually scares them off. I always insist that people start off as distributors and once they have an established client base we can look at a joint venture with them to put a factory in their location.

Any idea what impact your company has had so far in terms of reducing vegetable charcoal consumption?

Since I bought the company (3 March 09) we have sold 550 tons, it is estimated that each ton of charcoal requires 88 medium size trees to be felled so: 48,400 trees. In 5 years time I hope to be producing 18,000tons/yr from five factories, which will result in the avoided deforestation of 1.5 million trees annually.

Do you think this is a model that could be replicated elsewhere in Africa? What are the limitations/opportunities?

Absolutely! The emphasis of everything that we do is that we can easily and profitably replicate the whole system (collection, production, marketing and distribution) wherever charcoal is used, as long as there is a dedicated entrepreneur to persuade people to get the ball rolling.

What does the future hold for the EABCL?

More factories, we hope!  And more local entrepreneurs who we hope will come forward as the brand gains recognition. I am also developing a firewood alternative (Kuni Bora – Best Firewood) production system that will be aimed mainly at industrial use, which is very high. The challenge is to get the delivered price equal to, or ideally, lower, than that of firewood. Because nearly all firewood is gathered for free, it means the final price reflects only transport and profit charges). Beating that price-point is going to be a healthy challenge! We will use economies of scale to reduce the price.

Any plans to get the program certified so you can sell carbon-offset credits?

We are in the process of receiving our Tanzania Bureau of Standards certificate as well as FSC (Forest Stewardship Council) certification for our firewood alternative. Currently the process for gaining credits for individual users presents a prohibitive administrative burden. This will hopefully change after 2012.

How can the development and investment community help you grow your business?

Investment at this stage would greatly increase our scale-up effort and would have a direct impact on communities, their health and the number of trees left standing upright. It is really as simple as building more factories in as many places as possible.

Tagged: Africa, Briquets, Charcoal market, Poverty, Uncategorized