EAST AFRICA CLEAN COOKING EXPANSION

The project will finance the expansion of clean cooking activity of the company Burn Manufacturing in Kenya, Tanzania and potentially other African countries.

This operation provides access to clean cooking for households and micro-entrepreneurs by co-financing the design, production, distribution, and payment plans of IoT tech-enabled electric induction cooking systems. The operation will generate high socio-economic impact as it results in a significant improvement of indoor air quality for final beneficiaries, it reduces the time required for cooking and fuel collection, it will result in cost savings due to the much higher efficiency of electric cooking, and it will generate strong environmental and climate benefits, as it supports a transition away from polluting and unsustainably harvested biomass towards modern clean cooking.

The EIB financing will support the Promoter in providing clean and sustainable cooking solutions to households which are currently using solid biomass as their primary cooking fuel. The operation thereby contributes to Climate Action, gender equality and sustainable economic development. EIB financing enables the Promoter to finance the growth of its business and offer affordable rates to end customers. Electric clean cooking companies suffer from financing constraints due to the relative novelty of this business model, resulting in a lack of track record, as well as the elevated risk profile due to the credit risk from low-income clients without formal employment. The resulting difficulty to raise funding restrains the possibility of companies to offer lease-to-own schemes which are critical for the affordability for low-income households. Long-term EIB financing enables the Promoter to finance the growth of its business and to lower its cost of capital, resulting in lower cost for the end customers. EIB's due diligence process contributes to familiarising the Promoter with IFI requirements, and the Bank provides support in filling identified gaps. This targeted support increases the quality and soundness of the project, reduces environmental and social risks and may facilitate potential future fundraising by the Promoter. At the same time the EIB is exploring a supporting TA and blending operation under the DESIREE programme, enabling the Promoter to systematically address schools and hospitals with larger clean cooking solutions. It is expected that the operation will create a very high social benefit, by providing clean and reliable cooking solutions and replacing polluting and harmful traditional alternatives. The operation is expected to finance about 1.3 million electric induction cookstoves, reaching about 6.5 million final beneficiaries over the next five years.

Each electric cooking system is expected to contribute CO2 emission reductions in the order of 2-3.5 tons per year (depending on the local cooking-fuel baseline and CO2 intensity of electricity used). The operation is therefore contributing fully to the Bank's Climate Action objective. It is aligned with the Bank's Energy Lending Policy, which includes in its eligibilities for Bank financing "clean cooking solutions for households outside the European Union".

The promoter is a fully private entity, leasing electric cookstoves to its clients, operating in a competitive market and therefore subject to private procurement. The Promoter is required to comply with the EIB Guide to Procurement (GtP) by following private sector procurement practices, as set out in the GtP. Under these conditions, the procurement procedures followed by the Promoter should be competitive, fair and non-discriminatory, and satisfactory to the EIB.