Biogas for a better life

An African Initiative
C6 M94 Y100 K35 C100 M25 Y100 K25 C60 M63 Y54 K0

C100 M0 Y0 K0 C20 M40 Y80 K45

Business Plan: 2006 - 2020

 C6 M94 Y100 K35 C100 M25 Y100 K25 C60 M63 Y54 K0

C100 M0 Y0 K0 C20 M40 Y80 K45

August, 2007

Colofon

Contact details:
Biogas team, www.biogasafrica.net

Photographs:
SNV, AGAMA and Winrock International

Graphic design:
www.vormaat.nl

Useful websites:
www.snvworld.org (click ‘practise areas/ biogas’)
www.bspnepal.org.np (biogas programme in Nepal)
www.biogas.org.vn (biogas programme in Vietnam)
www.idcol.org (biogas project in Bangladesh – click ‘projects’)
www.biogasafrica.net
www.biogsafrica.org
Business Plan: 2006 - 2020

Dignity, Health and Trust

Abbreviations

CBO Community Based Organisation

CDM Clean Development Mechanism

EIRR Economic Internal Rate of Return

ESAMI Eastern and Southern African Management Institute

FIRR Financial Internal Rate of Return

GTZ German Agency for International Cooperation

MFI Microcredit Finance Institute

SNV Netherlands Development Organisation

2
Contents

1. Launching of the initiative 5

1.1 Vision 5
1.2 Aims of the initiative 5

2. Present biogas situation in Africa 6

2.1 Introduction 6
2.2 Technology: how do biogas digesters work? 7
2.3 Supporting evidence: health, economic development, market potential 8

3. New approach 9
3.1 Introduction 9
3.2 Lessons learnt: from top-down technology push to bottom-up marketing 9
3.3 Partners in the Initiative 9
3.4 Branding, Promotion and Communication 10
3.4.2 Promotion 11
3.4.3 Communication 11
3.5 Capacity Building 13
3.5.1 Biogas Market Promotion Programme 13
3.5.2 Financial assessment of household credits 13
3.6 Gender: women in the driving seat 13
3.7 R&D programme 14

4. Project Cycle 15
4.1 The five phases 15
4.2 Guiding principles for national promotion programmes 16

5. Organisation of the initiative 17

5.1 Introduction 17
5.2 Organisational structure 18
5.3 The Trust Fund Manager 19

6. Financing model 20
6.1 Introduction 20
6.2 Options for grant funding 20
6.3 Typical financing models 21
6.4 Loans private sector (entrepreneurs) 21

7. Planning 22
7.1 Technical Potential 22
7.2 Planning of the Initiative 22
7.3 Annual grant fund requirement for the Initiative (US$ millions) 24

3
4
1 Launching of the initiative

The initiative was prepared by a group of 22 develo- 1.2 Aims of the initiative
ping partners in 2006/2007 and further developed
and launched during a conference in Nairobi in May Specific achievements to be reached by 2020:
2007. • Two million fully functioning biogas plants.
The conference marked the first step in launching the • Clean cooking energy for at least 10 million
Biogas Initiative. At this conference, the rationale, Africans.
opportunities and a draft business plan for the initia- • Establishment of 800 private biogas companies and
tive were discussed. Further steps were discussed and 200 biogas appliance manufacturing workshops.
agreed with representatives from African countries. • Creation of at least 100,000 new jobs.
The conference was attended by 140 people from 37 • Development of comprehensive quality standards
countries out of which 27 were African. and quality control systems.
• An operational rate of more than 90% across all
constructed biogas plants.
1.1 Vision • One million toilets constructed and attached to
biogas plants.
The “Biogas for Better Life: an African Initiative” visi- • Eighty percent of the bio-slurry utilised as organic
on is to create a successful market-oriented partner- fertiliser.
ship with governments, private-sector organisations, • Agricultural production increased by up to 25%.
civil society agents and international development • Improved health and living conditions for women
partners in African countries. It aims to provide two and children, reducing women and children deaths
million households with biogas digesters by 2020, by 5,000 per year.
offer business opportunities and improve household • Reduced drudgery by saving 2 to 3 hours per day
livelihoods (good health, sanitation, food security, per household in fetching wood, cooking and
environment and new jobs). It offers households cleaning pots.
opportunities to own, control and operate sustainable • Reduced health costs of around 80 to 125 US$ per
energy for their own kitchens at affordable costs. The family per year.
technology is safe, reliable and manageable for every • Savings of 6,400 tons of fossil fuel per year.
household in Africa. • Savings of 3 to 4 million tons of wood per year.
• Reducing greenhouse gas emissions annually by 10
Women are at the core of the Initiative: it is about million tons of CO equivalent.
better lives for women - less health hazards associa-
ted with cooking, less time spent on collecting fuel-
wood. It is also about the dignity of women and the-
refore we intend to integrate women into the initia-
tive, for example Hauwa Ibrahim is nominated as an
ambassador (see Section 5.2) for the Initiative. In our
marketing drive, we will start from the needs of
women: this means carrying out feasibility studies
that ask women what they need and it means consul-
ting women on how to proceed when preparing mar-
keting programmes.

The Initiative will copy many aspects of the successful

Nepalese biogas programme and close cooperation is
planned with the people and organisations involved.

5
2 Present biogas situation in Africa

2.1 Introduction

Improving the health and the living conditions of

women and children, reducing the use of firewood,
increasing soil fertility and agricultural production,
reducing emissions of greenhouse gasses, creating
new jobs and a new business sector - all these bene-
fits from a single biogas initiative! Is this just a dream
or can it really be done?

Experience in Asia has shown that this is possible. In

Nepal, such a business sector has been developed
and more than 170,000 households use domestic bio-
gas. More than 95% of the digesters are in daily use
and 12,000 people have found employment in the
sector. A similar programme started in Vietnam in
2004 and, so far, more than 35,000 installations have
been built and are operational. The Vietnam pro-
gramme won the 2006 Energy Globe Award. China
has more than 20 million biogas digesters, India
around 4 million.

2.1.1. Background to biogas in Africa

Experience with biogas dissemination for domestic However, the household biogas digester, fed with
use worldwide has been limited, with successes being domestic animal excreta, remains by far the most
recorded in China, India and Nepal. In Africa, howe- widely attempted concept. The biogas produced from
ver, with the exception of Tanzania which has recor- these household systems has been used mostly for
ded modest success with biogas, most biogas projects cooking, with some lighting use.
have been disappointing, being marked by abando-
ned bio-digesters and failed units. Despite the gene- Biogas is particularly suited to meeting small-scale
rally high failure rate, it is important to note that energy needs, can contribute to sanitation and hygie-
there have been successful applications and adoptions ne improvements and is simple enough to avoid pro-
of the technology at the household level, and this duction limitations in rural Africa. Globally, biogas
adds credence to the potential effectiveness and sui- technology seems to have outpaced the diffusion of
tability of the technology for the African context. other decentralised energy technologies, with a repor-
ted 25 million units installed worldwide. The next
Some of the first biogas digesters in Africa were set most common technology is solar PV, with slightly
up in the 1950s in South Africa and Kenya. In other more than 2 million units installed worldwide. The
countries, such as Tanzania, biogas digesters were reverse is true for Africa: solar PV installations far out-
first introduced in 1975 and in other areas even more number biogas ones.
recently (South Sudan in 2001). To date, biogas dige-
sters have been installed in several sub-Saharan coun- The technical viability of small-scale biogas technology
tries*. Biogas digesters have been installed in various has been repeatedly demonstrated in many field tests
situations including commercial farms (such as in chic- and pilot projects, but mass dissemination has not
ken and dairy farms in Burundi), a public latrine block been achieved. Problems include the fact that animals
(in Kibera, Kenya), prisons (in Rwanda), health clinics must be penned for effective collection of animal
and mission hospitals (in Tanzania and Zimbabwe) dung, farmers must own a sufficient number of live-
and collective cooking houses in Addis Ababa. stock to fuel the digester, and the initial installation
* Including Burundi, Botswana, Burkina Faso, Cote d’Ivoire,
Ethiopia, Ghana, Guinea, Lesotho, Namibia, Nigeria, Rwanda,
6 Zimbabwe, South Africa and Uganda.
costs for many may be a deterrent. Linking to human 2.1.2 Implications for the Future
latrines has often failed due to cultural barriers.
Biogas Technology as local knowledge has not been
Although several variants of biogas technology have institutionalised in many parts of Africa. Therefore,
been tried in Africa, the most common approaches expectations should be realistic and modest in the ini-
are based on the Indian Floating Drum and the tial introductory phase of the new Initiative.
Chinese Fixed Dome types. Plastic digesters have also
been tried in a bid to reduce the unit cost and varying Convenience is the key to ensuring long-term opera-
degrees of success have been recorded with the vari- tion and functionality, and this has to be a key design
ous technological options. and installation feature. Key areas include slurry
handling and application in fields, and cow dung
Biogas extension attempts in Africa have mainly been mixing. The distances between cattle stable/pen and
through government programmes. The main actors plant and source of water are important factors in
tended to be governmental agricultural or energy running a successful biogas plant.
research institutions. Across the continent, there has
been a failure to develop deep-rooted operational Plant Size and Subsidy: The larger the plant the less
and managerial know-how and commitment. likely that it will operate under optimum conditions
and therefore consideration should be given to offe-
In most cases, biogas was introduced through a pilot ring most support to smaller plants.
or demonstration project for a few households. The
underlying logic was that once people were exposed Design Adaptation: There may be a need for minor
to the working and the advantages of biogas techno- design adaptations between Nepal and Africa becau-
logy they would take it up and it would grow organi- se of the different physical and cultural contexts:
cally into a market. This approach has proven ineffec- capacity, materials, family land area, etc.
tive.

From the foregoing experiences, the following box 2.2 Technology: how do biogas digesters work?
summarises the lessons that can be distilled from the
wide and varied biogas experiences in Africa: The process mainly involves feeding the installation
with a mixture of dung and water. Biogas digesters
can convert animal dung, human excrement and
LESSONS other organic materials into combustible biogas. The
biogas can then be used in simple gas stoves for coo-
• Despite the wide failure rate, there are cases that king and in lamps to provide illumination. The process
demonstrate the effectiveness of the technology also produces a bio-slurry which can be easily collec-
and its relevance to Africa. ted and then used as an effective organic fertiliser to
improve crop yields.
• The demonstration effect hoped for through one-
off pilot interventions has not materialised pointing Various types of biogas digesters have been develo-
to the need for a long and sustained market- ped including floating drum, fixed dome and plastic
oriented promotion effort. bag designs. Depending on the context, all types are
potentially applicable. Most of the plants so far disse-
• The technological option most widely adopted and minated worldwide are of the fixed dome type. These
recommended is the fixed dome type due to its are made of masonry and/or concrete and, generally,
ease-of-construction and its reliability. most of the plant is below ground level and built in a
family’s yard. Daily tasks include feeding the installati-
• Biogas projects in Africa require the intimate on with a mixture of dung and water; and for farmers
involvement of a project promoter to seed the early with livestock on site and access to water this should
successes. not take more than 20 to 30 minutes per day.
Generally, the fermented material (the bio-slurry) is
• A high quality of work and sticking to a regular and displaced automatically and discharged into a com-
rigorous operation and maintenance routine are key post pit or channel.
in protecting the image of the technology and
building the confidence of end-users. The robust design of fixed dome biogas plants ensu-
res a lifetime of over 15 years. Maintenance is limited

7
 Biogas installations reduce the demand for fuelwood,
and so mitigate deforestation. Applying bio-slurry as
an organic fertiliser closes the nutrient cycle and
checks soil degradation and erosion. In addition, since
the biogas process is carbon neutral, switching to
digesters contributes to a global reduction in green-
house gas emissions.

2.3 Supporting evidence: health, economic

development, market potential

Health
Sketch Biogas plant. Positive effects of biogas plant installations on health
have been widely reported. Biogas installations impro-
to occasional checking and, when necessary, repairs ve health by cooking taking place in a cleaner envi-
of pipes and fittings; the installation itself, provided it ronment. This avoids respiratory and eye diseases
is operated properly, needs little care. Investment caused by the black smoke inherent with traditional
costs range from less than US$ 300 in Asia to ways of cooking, with women being the most likely
US$ 800 - 1,000 in Africa. to suffer eye diseases.

Typically, a farmer with two cows, or seven pigs or Typically with a biogas plant, that manure is directly
170 poultry could generate sufficient gas to meet the fed into the plant. This results in a cleaner farmyard
family’s basic cooking and lighting needs. Using the and a further improvement is possible if latrines are
same basic design, different plant sizes can be con- connected to the digester. However, cultural taboos
structed to match the actual livestock holding and will play a key role here. In Nepal, very few house-
biogas requirements of a family. holds were initially interested in connecting their latri-
nes but today more than 60% of digesters are con-
Automatically feeding the manure from animal stalls nected to a working latrine.
into the digester avoids waste littering the farmyard
and instantly improves the hygiene situation for the Economy
family. Similarly, the family’s own toilet can be con- The Initiative has carried out a financial and economic
nected directly to the installation, significantly enhan- analysis of biogas digesters. The outcome is positive,
cing the poor sanitary arrangements. but strongly depends on the price of fuelwood. While
it is a very attractive option for national economies it
The obvious advantages of domestic biogas plants is less so for households. At the macro-level, biogas
that they provide clean energy for cooking and programmes can be profitable even taking into
lighting in households, and avoid many of the parasi- account all the overall programme costs. The EIRR is
tes found in unconnected latrines. Replacing the need estimated in the Rwandan situation to be more than
for conventional cooking materials, usually fuelwood, 20%. Additional financial benefits arise from impro-
briquettes or dung cakes, digesters not only save ved health, reduced labour in fuel collection, income
money, they also reduce the workload of women and from emission credits, workload reduction (especially
girls. Equally importantly, the indoor air pollution cau- women) and increased agricultural production.
sed by cooking on inefficient woodstoves is virtually
eliminated. The generally improved hygiene will also Potential market for biogas digesters
reduce waterborne diseases. An initial analysis of the market in Africa has been
made based on the availability of domestic cattle,
The bio-slurry discharge from the digester retains all presence of water, scarcity of fuelwood, population
the nutrients present in the original feed material and density and temperature. The study shows a technical
forms an excellent organic fertiliser. The bio-slurry can potential of some 18.5 million installations spread
either be used directly on the land or composted with over various regions in Africa (see also Section 7).
other organic farm residues. With correct application,
the slurry has been shown to provide higher yields
than comparable fertilisation with manure, and provi-
des a viable solution to the nutrient depletion seen in
many agricultural soils in developing countries.

8
3 New approach

3.1 Introduction Past experience with biogas in Africa is likely to lead

to pessimism: a small number of installations have
The “Biogas for Better Life: An African Initiative” con- been built, most of which have fallen into disuse.
ference in Nairobi marked the first step in an African Conversely, optimism is the feeling that arises from
initiative that offers investment and business opportu- experiences in Asia: especially from Nepal and
nities with committed partners. This initiative should Vietnam, but also from India and China. It might be
lead to: argued that the circumstances in Africa differ from
• Local companies producing and selling biogas plants those in Asia. Yet, differences within Asia are as big as
to households who are willing to buy. the differences between Asia and Africa and within
• Households enjoying better health, greater comfort Africa. There do not seem to be any fundamental
and more time to engage in opportunities for their reasons why dedicated marketing programmes should
benefit. not work in Africa.
• New jobs.
• A cleaner environment and sustainable use of The main difference between the current initiative
natural resources. and the past is the strong market orientation which it
is believed can lead to large volumes being sold. This
The initiative’s programmes will focus on countries justifies a substantial promotional programme and
and provinces in Africa that provide the best market long-term commitment. An initial technical market
opportunities, in “pockets of opportunity”. The pro- survey has indicated a market of around 18.5 million
grammes will be implemented by operating agents households in Africa. These numbers justify a dedica-
who will provide liaison with governments and main- ted initiative targeting two million digesters.
tain close contacts with the business community and
operators of finance schemes. The ultimate aim is to “NEVER GIVE AWAY A PRODUCT” is one of the les-
develop a sustainable, commercial biogas sector and sons learnt from the past and, therefore, the
so enable households to have better lives. approach is to focus on a targeted market and to
employ a light touch in overall management. The ini-
The management of the overall initiative will be small tiative will not embark light-heartedly on new pro-
and lean. It will provide leadership, facilitate knowled- grammes in Africa without taking on board past les-
ge exchange, mobilise partnerships, stimulate innova- sons and incorporating the success factors found in
tions and market research and provide a funding Asia. Guidelines and criteria derived from the succes-
channel for national promotion programmes. ses in Asia will be applied rigorously throughout the
initiative. The management team of the biogas pro-
gramme in Nepal has offered all the help they can
3.2 Lessons learnt: from top-down technology push give and are willing to share their knowledge and
to bottom-up marketing experiences with colleagues in Africa. Field missions
to Nepal, and support from Nepalese and foreign
Experience with biogas in Africa has been one of fai- experts to African countries are just two of the possi-
lures and very few success stories. Very few installati- bilities for cooperation. Experts from India and China
ons have been built, most of which have fallen into with long experience have similarly offered support to
disuse over time. Renewable energy dissemination ini- the Initiative.
tiatives in Africa have followed the top-down project
approach and the main lesson learnt is that a techno-
logy that is driven from an engineering and capacity- 3.3 Partners in the Initiative
building point of view does not automatically suc-
ceed. Nepal and Vietnam have shown that a market The core of the initiative will consist of programmes
approach, focussing on suppliers and consumers, is focussed on specific geographical areas: countries or
the way forward. In Nepal, biogas digesters have regions of countries, provinces, large irrigation sche-
been sold to more than 170,000 households of which mes, etc. Programmes will be of a manageable size.
over 95% are still in daily use. The programmes will be facilitated, enabled and run

9
by operating agents – dedicated local development 3.4 Branding, Promotion and Communication
organisations with experience in biogas and with a
proven performance orientation. Transparency will be A communication strategy is a key factor in
the main guiding principle in partnership building and successfully promoting and branding the overall
marketing operations. The operating agents can be Initiative. The national programmes will separately
assisted by external experts if required. Operating develop and implement their own communication
agents can carry out a range of tasks including provi- strategies to reach out to their national stakeholders.
ding institutional support, advising, delivering com- The overall communication strategy will pay special
plete marketing programmes including feasibility stu- attention to women since improving the living condi-
dies, capacity-building support, promotion, develop- tions of women is at the core of the initiative. Further,
ment of local businesses, liaison with donors and fun- in implementing the communication strategy, women
ders and liaison with microcredit agents, national and will play an important role.
local governments and civil society organisation
stakeholders. Markets respond to demands, especially to demands
that are expected to last over a long period. These
Governments will play the appropriate public role for trigger the private sector to invest not only for the
a market-oriented approach by creating an enabling demand of today but also for that of years to come.
environment for the market, providing grants and tax The biogas industry is an infant industry in most
breaks, drawing up standards and legitimising the countries and will therefore require public support
programme. Governments will not have a role at the until it becomes established. Market development
operational level. Special attention will be given to activities, particularly promotion, are expensive and
cross-sectoral issues with special reference to social usually require action at both local and national
and cultural issues, the role of women and family levels.
livelihoods since the initiative addresses such diverse
policy fields as health, employment, regional rural Promotional activities will create demand for the pro-
development, social welfare, job creation, attitude duct. Product availability and turnaround time is the-
change, livestock breeding, agricultural production refore critical. The ability to run promotional activities
and reducing greenhouse gas emissions. may be hindered by a lack of digesters or trained
masons, or the inability to explain the benefits of bio-
The public (national and international) contribution to gas to prospective users without proper
the Initiative amounts to US$ 800 million spread over marketing/promotion tools.
a period of 10-14 years. It is anticipated that these
financial resources will be made available by national
authorities and the international donor community. It
is also possible that some of the resources will be pro-
vided by the voluntary carbon market and/or CDM.
Local development banks, international credit provi-
ders and household cash contributions will finance
the investment component.

Local organisations will play specific roles in promo-

ting, effectively maintaining, sustaining and mobili-
sing consumer trust, service delivery and household
confidence and interest.

Local businesses (contractors, manufacturers, dealers

in appliances and spare parts) will be crucial in deve-
loping the market. Their role will be to mobilise the
supply side. Effective and transparent local governan-
ce of entrepreneurships will assure sustainable and
commercially attractive local biogas businesses. One
aspiration is that local women entrepreneurs will ope-
rate viably in the biogas market.

10
3.4.1 Branding the Initiative schools competition such as the “Best use of Slurry”.

Branding is a proven marketing tool, if used correctly Advertising

it will generate brand loyalty. Branding is much more Well-positioned poster billboards in high-density loca-
than just the labelling of an initiative. It has to be tions, identified in national business plans, can com-
underpinned by strong value associations and the municate biogas messages and be a useful tool.
brand alone should create a sense of commitment to
quality and engender trust in the consumer or end- Rural areas very often rely on the radio as their only
user. As an example, the use of a consistent set of link to the outside world. Care should be taken to
posters, logos, calendars, training materials, marke- create “edutaining” (educating and entertaining) pro-
ting tools etc. has been evident throughout Nepal. grammes, public service announcements and radio
The uniformity has served to make the brand even mini-dramas. Community radio stations are often the
stronger. most credible and affordable medium when commu-
nicating at the grassroots level.
The use of the Biogas for Better Life: An African
Initiative logo should be associated with trust, a The benefits of TV educational shows should not be
healthier lifestyle for the family and dignified living discounted, and television can be used as a very
conditions. This level of trust and positive associations effective tool when trying to change behaviour.
can only be achieved through an integrated process People tend to copy what they see on screen. This
involving the masons (contractors), financial instituti- option can be very costly but its benefits have been
ons (if needed) and the implementing agency. proven.

The most important aspect in branding the Initiative

should be to project it as a symbol of progress. This 3.4.3 Communication
association can be positively created by the calibre of
the early adopters and using their images as leaders The word communication suggests a two-way inter-
and trailblazers. action. In this case, we envisage the customer and
the service provider locked in a discourse that ultima-
tely results in a quality service or product. Such
3.4.2 Promotion exchanges could take place through NGOs,
Community-Based Organisations (CBOs) or govern-
Word of Mouth ment agencies. Women’s groups, hosting talks at cli-
This will be the biggest promoter of biogas in Africa. nics and community radio station talk shows with a
A successful digester that actually improves living live audience are ideal platforms for this type of two-
conditions will be the most powerful tool when pro- way communication.
moting the initiative. Equally, negative images and
reports will be detrimental and it can take a very long Once a customer has purchased a biogas digester,
time to repair brand damage. The need to ensure after-sales user surveys can be used to monitor the
quality when building and maintaining the digester ongoing quality of the digester. In Africa, one should
cannot be stressed enough. not forget oral traditions. If one is to instil trust and
encourage behavioural change then care should be
Events taken not to alienate the user with too much infor-
Ceremonial openings of new biogas plants, with local mation.
dignitaries present trigger positive words of mouth.
They can also provide positive media images and,
with the customer’s permission, photographs can be
taken for promotional use.

Incentives
Encourage excellence by creating prizes in various
categories. Have annual bonuses and penalties for
contractors (masons). National school programmes
can help educate young people about the benefits of
biogas. National level promotions could include a

11
Communicating the positive aspects of biogas can help overcome the social taboos.

Key Messages:

Slurry Benefits
Promote the benefits and use of slurry upfront. If not, the opportunity can be lost and will be difficult to add
later.

Poverty Reduction
The Nepalese initiative shows that focussing on improved household livelihoods (good health, sanitation, jobs,
food security) is an effective way to address poverty issues.

The Role of Women

In Nepal, women play a key role in managing and maintaining the digesters and in repaying the biogas house-
hold credits. Again, an important issue worthy of attention in Africa.

Better Health
Less wood smoke in the house from cooking, leads to better health.

Reduced Drudgery
Cuts down the time consumed on cooking-associated tasks (fuelwood collection, cooking, cleaning) by women
empowering them to do other things with their time i.e. become more active in the community, adult educati-
on programmes, more time to herself.

Encourages Education
Biogas provides a safer, brighter light for children to do school work at night.

Communication Strategies

The following aspects will function as guidelines in drawing up communication strategies for Feasibility Studies
and National Promotion Plans.

Structuring National Communications Policy

• A national communications policy for biogas promotion is needed that will protect the interests of the target
community and engage government, the public, the private sector and civil society.
• The information distributed should be relevant to the livelihoods of the community; a sound policy can
protect the community against exploitation (from banks, contractors or other opportunistic marketers).

Identify Capacities
• Define who best to partner at the national level when communicating Biogas for Better Life: An African
Initiative.

Monitoring and Evaluation Mechanisms

• Clear indicators should be developed.
• As biogas rolls out from country to country one should set benchmarks and establish communication best
practices, this can be achieved through monitoring and assessing interventions.
• Effective feedback from users will be a key factor.
• This can be used as a quality control mechanism and is vital for “word of mouth” promotion.

Identify Local Champions (early adopters of Biogas) such as:

• Village Chiefs
• Sports Heroes
• Politicians

12
Identify credible information channels
• Civil Society Organisations & Community Based Organisations, NGOs
• Print (consider literacy rates)
• Religious Organisations and Churches
• Cultural and Traditional Organisations
• Youth Organisations
• Women’s Organisations
• Private Sector, Business and Trade Organisations

Language and Social Factors

• Number of languages prevalent
• Parochial or Permissive Society (i.e. open to change)
• Matriarchal or Patriarchal
• Gender norms

Identify Effective Communication Channels

• Public (telecommunications, radio, TV, research, existing advisory or information services)
• Private (advisory services, radio, TV, mobile phones)
• Community media
• Word of mouth

3.5 Capacity Building • Biogas consultants

• Development agencies
As part of this initiative, the Eastern and Southern • Financial institutions
African Management Institute (ESAMI) has developed
two draft training courses aimed at building capacity
for the development and management of a market 3.5.2 Financial assessment of household credits
approach to disseminating domestic biogas plants.
These courses will be further developed with ENDA. Objectives
The two courses cover the ‘Biogas Market Promotion Having completed this course, participants will be
Programme’ and ‘Financial assessment of household able to design a credit scheme for biogas that will
credits’. Vocational and practical training, which is provide small credits to households taking into
essential if one is to ensure quality biogas digesters, account the required collaterals, subsidies and client
will be a key part of the national and regional contributions.
programmes.
Target Group
• Credit officers from relevant organisations (financial
3.5.1 Biogas Market Promotion Programme institutions, national biogas programmes)
• Government officers involved in biogas promotion
Objectives • Officers from development/donor agencies
This course is aimed at building the capacity needed • NGO development officers
for a market approach to the dissemination of domes- • Biogas consultants
tic biogas systems. The market approach is seen as • Civil society organisations (community-based
effective vehicle for developing a vibrant biogas sec- organisations (CBOs), churches, etc.)
tor for the wide market-driven promotion and disse-
mination of domestic biogas plants in Africa.
Participants following the programme will be equip- 3.6 Gender: women in the driving seat
ped with knowledge about how to design, implement
and market an effective biogas programme. The core of the initiative is improving the living con-
ditions of women and, therefore, women will be at
Target Group the core of the business. Women will figure heavily in
• Government officers the public presentation of the Initiative, and feasibility
• Biogas programme managers studies will be based on an understanding of the
• NGO officers needs of women and households. In the overall struc-

13
ture, a group has been formed, led by an African
woman who is an expert on both energy and gender,
to monitor and advise on gender issues, and the
Initiative’s research efforts will focus on the needs and
positions of women.

3.7 Resource & Development programme

The Initiative has large but realistic ambitions and in

developing the biogas sector it requires, besides the
development of a sustainable market, a clear R&D
programme to support these developments. The sup-
porting activities would cover design development,
marketing strategies, impact assessment, needs and
position of women, use of slurry in agriculture,
opportunities for large scale application of biogas
(schools, hospitals etc), and cooperation with know-
ledge institutes in Asia and Europe. The current thin-
king is that a consortium of universities and technolo-
gical institutes in Africa should take the lead in deve-
loping and implementing appropriate R&D program-
mes in Africa.

14
4 Project Cycle

The Initiative specifies five phases that are described start on the roles and responsibilities of those to be
below. Each phase may be tendered for using a set of involved in a regional/national programme. The
clear selection criteria. Success by a company or an document should also describe the role and position
organisation in completing one phase will not mean of women in the implementation and how this
that it will automatically be allotted the next phase. reflects their inputs during the previous phase. The
implementation document will clearly state the finan-
cial involvement of all partners. An implementation
4.1 The five phases document will cover a period of 4-5 years. The pre-
paration and negotiations for an implementation
1. Desk study document may take anything up to 12 months
This study will focus, in a given region or country, on depending on scale and complexity.
a limited number of key criteria such as the availabili-
ty of cattle and water, scarcity of wood fuel, accessi- 4. First phase of a Market/Sector programme
bility to credit programmes and the energy policy of The first phase of a Market/Sector programme will
the regional and/or national government. Each desk last four to five years and involve the construction of
study should take approximately two weeks to com- 15,000 – 25,000 biogas digesters. The first year will
plete provided the necessary data are available. have the characteristics of a pilot phase: training,
informing organisations, developing marketing mate-
2. Feasibility study rials, communication, consulting local development
The Terms of Reference established for a feasibility banks and see the installation of perhaps only 500-
study will be based on the outcome of the desk 1000 digesters.
study. The feasibility study will identify the physical
areas with high market potential (the easiest mar- 5. Second phase of a Market/Sector Programme
kets), how to develop the market, the partners to be The lessons from the first period will be taken into
involved in developing that market and in client pro- account in designing the second phase. This phase
motion and communication. In particular, the feasibili- has the objective to develop a mature and sustainable
ty study will focus on the needs of women and market. The target will be to construct a further
households and on the needs and positions of 30,000 to 50,000 digesters. An independent biogas
women. Furthermore, the study will calculate the development agency and a matured biogas private
Internal Rate of Return for the national economy sector will be fully established during this period as
(EIRR) as well as for the households (FIRR). The study part of the sustainability efforts.
will also indicate any need for a subsidy to trigger the
household market and create a substantial one that Summary
would interest business partners, and the level of sub- The proposed market and sector programme will last
sidy required. A feasibility study will take two to four approximately 10 years and consist of five phases.
months to complete. These phases have to amount to a continuous process
in order to keep the momentum going, generate
3. Implementation document for a market program- commitment and build confidence among partners. In
me (both demand and supply sides) all five phases, every effort should be made to ensure
Based on the outcome of the feasibility study, negoti- that women have leading, high profile roles as they
ations with interested partners and individuals will are at the heart of the business.

15
4.2 Guiding principles for national promotion Institutional Factors
programmes • (Good) rural extension system (government or
NGO)
A national promotion programme will clearly indicate • Good rural banking/credit system
the partners in the programme, their roles and res- • Established private sector rural masonry enterprises
ponsibilities, communication lines and decision- • Support by traditional and/or local institutions
making structures. A national promotion programme • Active participation of stakeholders
will be built upon the feasibility study. Such a pro-
gramme will address the following factors: Technical/Resource Factors
• Robust and tested biogas digester standard designs
Social Factors that meet local needs and conditions
• Ensuring the participation of women at all levels • Availability of biogas appliances (valves, stoves,
• Target will be established rural households with lamps) at low cost
some cash income • Availability of after-sales service
• Ownership/land rights linked to households
• Improving environment and health aspects Political Factors
• Favourable social/cultural conditions • Stable and secure rural areas
• Improved agricultural production • Transparency
• Job creation • Commitment by government and private sectors
• Gender differentiation in household expenditure • Initial programme subsidy supported by
decisions government and donors
• Linking up with existing policy frameworks in
Market Factors energy, health, agriculture and sanitation
• Scarcity and/or high fuelwood prices
• Cost of alternative cooking fuels Communication Factors
• Adequate demand density for cost effective • Structuring National Communications Policy
management of programme • Identify capacities
• Effective private sector • Monitoring and evaluation mechanisms
• Demand for services that can be delivered by the • Identify local champions (early adopters of Biogas)
technology • Identify credible information channels
• Develop a marketing and awareness strategy • Language and social factors
• Effective branding strategies
Financial/Economic Factors
• Transparent and direct subsidies lowering the costs All the above factors will be elaborated in the feasibi-
to the end-user and linked to quality control lity study. While a national promotion programme will
• Equity (contribution from own funds in cash and/or be based on the outcome of a feasibility study, it will
kind) - initial investment by households should be also address and further specify, through a participa-
about 20% tory process involving stakeholders, the roles, respon-
• Credit availability (at affordable rates, with or sibilities, decision-making processes and flow of
without collateral through MFI arrangements) resources.

16
5 Organisation of the initiative

5.1 Introduction and budgets

• Select and appoint the Trust Manager, Advisory
The organisation for the overall initiative will be small Committee, Auditor, Ambassador
and lean. Its activities will be limited to what is need- • Approve annual plans and reports of the Host
ed to coordinate the Initiative, and will add value for Organisation
those aspects that it is impossible (or it is difficult) to
address at the national level. It will be concerned with Advisory Committee
issues such as funding channels for grants, knowledge The Advisory Committee will consist of experts from
exchange, networking, Research and Development, national programmes, governments, business commu-
promotion and funding national promotion program- nities, consumer associations and donors. It will con-
mes. As stated, women will be the focus of the busi- vene annually. The Committee will advise the Board
ness. This should also be reflected in the organisation on the orientation of the initiative, not on individual
of the initiative: women will take on key positions proposals for country programmes. It will function as
within the organisation of the initiative. a brainstorming and feedback group.

The organisation at the national level will be mana- Africa Leadership Group
ged and coordinated by independent national imple- The Africa Leadership Group will consist of individuals
menting agencies. with high-level relevant skills and experience. They
will promote the Initiative on this basis rather than as
The proposed governing structure outlined below will representatives of organisations, national bodies or
be further discussed and possibly amended at the governments. The Advisory Committee and African
next workshop in West Africa in May 2008. Leadership Group will advise the Board on the orien-
tation of the Initiative at policy level and not at the
national operational level.
5.2 Organisational structure
Trust Fund Manager, Coordinator of the Initiative
In the long term the Organisation & Institutional The Trust Fund Manager will be responsible for finan-
Structure of the Initiative, to be located in Africa, will cing, accounts, providing support services, manage-
consist of: ment, procurement regulations, reporting, approving
feasibility studies and national implementing initiati-
Biogas Ambassador(s) for the Initiative ves. The Trust Fund Manager is the institutional,
The Ambassador(s) will embody the high-level sup- organisational and financing centre of the Initiative.
port and function as the figurehead of the Initiative. The Trust Fund Management may be incorporated
The Ambassador(s) will promote the Initiative. within an existing organisation or, alternatively, a new
organisation could be established for this specific task.
Independent Board
The Board will consist of three to five individuals, Quality control
selected for their knowledge, their experience, their Expert organisations will be appointed to screen desk
integrity and their wisdom. The Board will take decisi- studies, feasibility studies, implementation plans.
ons based on the Guidelines and Criteria for the
Initiative and provide guidance to the Fund manager.
Risk management
Final responsibility resides with the Board. The Board Rather than install a complex and bureaucratic risk
will: management structure, which would go against the
• Set the Policy Guidelines and Focus for the Initiative’s aim of having a lean management core,
Biogas Initiative some level of risk will be accepted. For example; a
• Supervise the Biogas Initiative Host Organisation feasibility study may fail; a country programme may
• Set the guiding principles for the Initiative achieve a somewhat smaller number of installations
• Approve all new country promotion programmes than anticipated.

17
 Organisational & Fund Management Structure

BIOGAS BOARD
Policy guidelines, Funds Approval

ADVISORY GROUP DONORS

(Financing)

AFRICAN LEADERSHIP AMBASSADORS

GROUP (Promotion)

TRUST FUND BIOGAS INITIATIVE COORDINATION

(Transaction / Accounting) (Coordination / Management /
Account Manager Quality control)

operation agents

Pre-Feasibility Study National / Regional marketing programmes

Feasibility Study
Implementation plan Independent National Implementing Organisation
Private Sectors / Businesses / Marketing Agents
Contractors
Builders
Training Agents
Auditors
National Government Agents
Banks (Credits, Loans, Subsidy)
Support Activities
Household Beneficiary

18
The Nairobi conference has asked for more time to • Implementation of Business Plan
work out the fund management structure. In the • Identifying potential participating countries and
short term, the Initiative will start on a pragmatic securing their agreement to participate.
basis with an account manager. • Business negotiations with operators of marketing
programmes: contracting, monitoring progress,
For the time being, the governing structure will be disbursement of funds.
that of a silent partnership amongst donors involving: • Formulating and implementing an information/best
practices dissemination plan.
• Two Biogas Ambassadors • Preparing for meetings of the Board, meetings of
• Biogas Team the Advisory Committee, and of Ambassadors.
• Biogas Technical Advisors • Preparing Annual Report.
• Web Manager • Launch annual calls for desk studies, feasibility
• Account Manager studies and market promotion programmes.

Major decisions taken within the Trust Fund

5.3 The Trust Fund Manager Management will be guided by the annual plan
• Market promotion programmes (Trust Fund
The Trust Fund Manager will apply stringent rules for Manager and the Board)
tendering and awarding contracts, and will provide • Feasibility studies (the Trust Fund Manager)
professional advice, monitoring, quality control, capa- • Implementation Plans (the Trust Fund Manager)
city-building support and auditing to national promo- • Supporting activities on research and
tion programmes. The Trust Fund Manager will communication (the Trust Fund Manager)
implement a governance structure that satisfies spon-
sors, apply stringent rules for tendering and awarding Within the Trust Management organisation, two
contracts and provide for professional auditing. levels will be identified:
• Director with the final responsibility for the
Main tasks of the Trust Fund Manager: operation and for taking major decisions as
• Business negotiations with donors: grant indicated below.
agreements. • Fund management staff carrying out the tasks
• Business negotiations concerning Carbon Credits indicated below.

TRUST FUND MANAGEMENT, COORDINATION OF THE INITIATIVE

Director Final responsibility for the Initiative.

Decision taking:
• Start of new marketing programmes in consultation with the Board.
• Disbursement of funds > $ 300,000 in consultation with Fund
Management staff.

Fund Manager staff Responsible for:

(2 or 3 persons) • Operations
• Progress Monitoring
• Reporting
• Decisions on disbursement of funds < $ 300,000

Criteria for selection of Trust Management • Broad acceptance by consumers, donors, business
Organisation community, NGOs, Governments
• Strong African focus, experience and mandate • Demonstrable experience in dealing with high-level
• Organisation with international experience representatives of governments and local/
• Sound organisational governance, accountability international financial institutions
and transparency • Minimum of 15 years of working in development
• Experience in fund management

19
6 Financing model

6.1 Introduction However, low-income households do not see such

FIRRs as attractive. Experiences from agriculture have
Two million domestic biogas installations within 10-14 shown that low-income farms/households only beco-
years is the ambitious aim of the initiative. At a total me interested in investing at a FIRR of 30%. The level
cost of US$ 800-1,000 per installation, the total of financial contribution will be set with this figure in
investment requirement is of the order of US$ 2,000 mind and may well differ from country to country.
million. This includes all the costs of construction, The feasibility study will provide the basic information
manufacturing, support to consumers and suppliers, to decide on the level of subsidy.
sector development, promotion, monitoring and
management. The initiative will focus on areas where good market
opportunities are expected. The grant funding moda-
Microcredit, loans and cash contributions will make lity will correspond with this approach. The initiative
up US$ 1,200 million of this total. A grant of requires funding that is not attached to specific coun-
US$ 800 million will be used to finance the down tries but to the most promising market opportunities.
payments on purchasing costs, promotion, training, This requires sponsors that are willing to contribute to
quality control, promotion and management. a fund that is then allocated to regions/countries
where opportunities have been identified and part-
The overall cost per installation and the proposed nerships agreed upon.
sources are as follows:

1 Market promotion and management costs 6.2 Options for grant funding
estimated at US$ 200 to 250 per installation - to be
met from the grant fund. • Foundations such as the Shell Foundation,
2 Initial down payment of US$ 150-250 per digester. HIVOS, etc.
This will be met from the grant fund to bring bio- • Gas distribution companies looking for
gas costs down to a level attractive to households. opportunities for ‘greening’ their operation.
3 Balance of digester costs of US$ 450-550 per • Voluntary carbon compensation schemes need
installation to be met by the end-user through further investigation
microcredit arrangements in combination with a • US Millennium Challenge Account
cash contribution. • Bilateral donors, EC, African Development Bank

A grant fund will cover the costs detailed under 1 and In order to allow the initiative to start and to achieve
2 above and amount to some $ 400 per installation/ some initial successes, some US$ 6.0 million has been
household. The individual contributions (mentioned estimated as the necessary budget to undertake desk
under 3) will come from existing financing mecha- and feasibility studies and to elaborate marketing
nisms with the possibility of additional loans from plans for promising markets. Implementation has
international credit providers. already started in Rwanda, in the second quarter of
2007. Feasibility studies are now ongoing in Ethiopia,
The grant contribution towards the digester costs is Senegal, Kenya, Sudan, Zambia, South Africa, Mali,
required to make biogas financially attractive at the Tanzania, Burkina Faso and Uganda. Desk studies are
household level. The Economic Internal Rate of now underway in Ghana, Malawi, Lesotho,
Return (EIRR) in Africa is typically of the order of Swaziland, Nigeria and the West Africa Region.
20% or more, while the Financial Internal Rate of Other countries are likely to be identified in the
Return (FIRR) for households is in the order of 10%. months to come.

20
6.3 Typical financing models

Model 1: High potential area, e.g. Rwanda

Year 1 2 3 4 5 6 7 8 9 10 Total
Domestic Digesters
(thousands) 1.0 2.5 3.0 4.0 6.0 8.0 10.0 12.0 12.0 12.0 70.5
Subsidy $200 0.2 0.4 0.6 0.8 1.2 1.6 2.0 2.4 9.3
$150 1.8 1.8 3.6
Promotion
International 0.8 0.8 0.8 1.0 1.0 1.0 1.0 0.8 0.7 0.6 8.5
National 0.2 0.3 0.4 0.4 0.4 0.4 0.4 0.5 0.6 0.6 4.2
Voluntary market
$40/household 0.0 0.0 0.1 0.2 0.4 0.6 1.0 1.4 1.8 2.3 7.8
Household
Loans $400 0.4 0.1 1.2 1.6 2.4 3.2 4.0 4.8 4.8 4.8 28.2
Households Cash $150 0.2 0.4 0.5 0.6 0.9 1.2 1.5 1.8 1.8 1.8 10.5
(amounts in million dollars)

Model 2: Average potential, e.g. Ethiopia

Year 1 2 3 4 5 6 7 8 9 10 Total
Domestic Digesters
(thousands) 0.5 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 8.0 44.5
Subsidy $200 0.1 0.2 0.4 0.6 0.8 1.0 1.2 1.4 5.7
$150 1.2 1.2 2.4
Promotion
International 0.6 0.8 0.8 1.0 1.0 1.0 1.0 1.0 0.8 0.8 8.8
National 0.1 0.2 0.3 0.4 0.4 0.4 0.4 0.4 0.3 0.3 3.2
Voluntary market
$40/household 0.0 0.1 0.1 0.3 0.4 0.6 0.9 1.1 1.5 5.0
Household
Loans $400 0.2 0.4 0.8 1.2 1.6 2.0 2.4 2.8 3.2 3.2 17.8
Households Cash $150 0.1 0.2 0.3 0.5 0.6 0.8 0.9 1.1 1.2 1.2 6.7
(amounts in million dollars)

6.4 Loans private sector (entrepreneurs)

In order to develop a market, local private biogas

companies need to be established. Entrepreneurs will
need to invest in purchasing tools, building materials
and to employ people. Such investment should come
from loans provided by the private banks or microcre-
dit institutions.

21
7 Planning

7.1 Technical Potential countries with a technical potential below 100,000

units brings the total number to 18.5 million.
SNV has completed a study for a first assessment on
the technical potential for biogas digesters in Africa. The countries in the table are seen as offering the
The numbers of potential installations in various best opportunities for a good start. Within the
countries are presented in Table 7.1. The table inclu- Initiative, these are the countries that should have
des most of the countries with a technical potential priority when preparing desk studies, feasibility
above 100,000 units and gives a total potential of studies and the formulation of national promotion
approximately 17.5 million biogas digesters. Including programmes.

Table 7.1 Technical potential

COUNTRY Potential (thousands)

Algeria 278
Angola 322
Benin 254
Burkina Faso 876
Cameroon 488
Chad 213
Egypt 980
Ethiopia 916
Ghana 278
Guinea 255
Kenya 1259
Madagascar 678
Mali 839
Mauritania 100
Niger 264
Nigeria 2241
Rwanda 140
Senegal 439
S. Africa 579
Sudan 1784
Tanzania 1781
Uganda 1314
Zambia 341
Zimbabwe 794

Total 17,413

22
In order to achieve the envisaged two million plants, the following numbers of studies and programmes will
have to be implemented:

Phase 1: Desk study

Number of Potential total Expected success Number of studies Total potential

desk studies of biogas digesters rate (percentage of that qualify for biogas digesters
studies that will feasibility study
qualify for a feasibility
study)

70 4,400,000 70% 50 3,100,000

Phase 2: Feasibility study

Number of Potential biogas Expected success Number of studies Number of potential

feasibility digesters rate (percentage of that qualify for biogas digesters
studies studies that will an implementation
qualify for a document for a
market/sector market programme
programme)

50 3,100,000 90% 45 2,800,000

Phase 3: Implementation document for a Market/Sector (demand plus supply side) programme

Number of Potential biogas Expected success Number of studies Number of potential

implemen- digesters rate (percentage of that qualify for biogas digesters
tation studies that will a market/sector
documents qualify for first-phase programme
market programme)

45 2,800,000 90% 40 2,500,000

Phase 4: First phase market/sector programme

Number of Potential biogas Expected success Number of Number of potential

Phase 1 digesters rate (percentage of programmes that biogas digesters
market/sector installations realised) qualify for a 2nd (including 600,000
programmes phase market/sector installed in this
programme phase)

40 2,500,000 80% 40 2,000,000

Phase 5: Second phase market/sector programme

Number of Potential biogas Success rate Number of Number of biogas

Phase 2 digesters programmes digesters installed
market/sector successfully
programmes implemented

40 2,000,000 100% 40 2,000,000

23
7.2 Planning of the Initiative

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015 2017 2018 2019 2020 Total

Number of digesters (thousands)

Annual production of biogas plants 1 2 7 20 50 120 250 250 250 250 250 20 200 150

Accumulated production 1 3 10 30 80 200 450 700 950 1,200 1,450 1,650 1,850 2,000

Studies

Calls for Desk studies x x x x x

Desk studies finished 5 10 15 20 20 70

Calls for feasibility studies x x x x x

Feasibility studies finished 5 7 15 20 3 50

Formulating national promotion

programmes 5 8 10 12 10 45

Calls for promotion programmes x x x x x

Start of Phase 1 national promotion

programmes 3 6 8 8 8 7 40

Start of Phase 2 national market

programmes 3 6 8 8 8 7 40

7.3 Annual grant fund requirement for the Initiative (US$ millions) (not including investments from existing financing mechanisms)

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015 2017 2018 2019 2020 Total

Studies 1.0 1.5 1.5 1.0 - 0.4 0.4 0.2 6

Training 0.5 1.0 1.0 1.0 1.0 0.5 0.5 0.5 6

Research 0.2 0.6 0.8 0.8 1.0 1.0 1.0 0.7 0.7 0.7 0.6 8

Knowledge Management 0.2 0.4 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.4 0.4 0.3 7

Model I country programmes (10x) 2.0 5.4 9.4 13.4 16.4 20.0 24.0 28.4 30.0 29.1 21.9 12.2 4.8 217

Model II country programmes (30x) 2.1 6.5 15.6 27.8 36.8 45.0 53.0 59.4 63.0 66.0 58.4 44.8 24.0 4.0 506

Fund Management / Board 0.2 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 8

Total 6.2 15.9 29.4 45.2 56.4 68.1 80.1 90.4 94.9 97.0 82.1 58.0 29.8 4.9 759

5% contingency 0.3 0.8 1.4 2.3 2.9 3.4 4.0 4.6 4.8 4.9 4.1 2.9 1.5 0.3 38

Total with contingency 7 17 31 48 59 72 84 95 100 102 86 61 31 5 797

24
25
26
C6 M94 Y100 K35 C100 M25 Y100 K25 C60 M63 Y54 K0

C100 M0 Y0 K0 C20 M40 Y80 K45

28