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Cookstoves startup Burn raises Sh10bn for expansion to Zambia
Founder and CEO of Burn Manufacturing Peter Scott which manufactures Jikokoa, an energy saving Charcoal stove, during an interview at the company in Ruiru on August 13, 2020.
Kenyan-born cooking appliances maker Burn Manufacturing has secured Sh10.3 billion ($80 million) funding from the Trade and Development Bank (TDB) Group, to expand into Zambia and boost supply in two of its markets, supporting its regional growth drive.
The funding package –comprising debt and a performance-based grant from the regional financier with support from the World Bank– was announced last Wednesday on the sidelines of the Africa Energy Forum (AEF) in Cape Town, South Africa.
Burn, the maker of Jikokoa and Ecoa stoves, says the funding will be used to subsidise prices in the Democratic Republic of Congo (DRC) and Mozambique, where it is already selling, and expand operations into Zambia. In addition to wood and charcoal stoves, Burn also manufactures electric, LPG, and ethanol cookstoves.
The company plans to repay the debt using revenue from carbon credits, a model it already uses in Kenya to make its cookstoves more affordable.
“This particular funding is meant to help reach underserved communities in DRC, Mozambique, and Zambia. We’re manufacturing in Kenya and will continue to do so, but the stoves will be distributed in these three countries,” said Leif Haerum, Burn’s Chief Financial Officer, during the signing.
The two financial facilities are expected to help subsidise 429,127 cookstoves across the three countries, although the specific stove models were not disclosed.
While Burn already operates in DRC and Mozambique, this marks its entry into the Zambian market, supplying Kenyan-made stoves designed to be more energy-efficient than traditional cookstoves. The company also has a presence in Tanzania, Somalia, Ghana, and Nigeria.
The firm’s business model hinges on selling carbon credits –earned by the reduction of carbon emissions through the use of its energy-saving stoves – and using the proceeds to subsidise product prices and promote uptake, especially among low-income households.
A carbon credit represents a certificate for avoiding the emission of one tonne of carbon dioxide equivalent. These credits can be sold to companies looking to offset their own greenhouse gas emissions.
This is the first time Burn is taking a loan to be repaid through future carbon credit revenues, marking a shift in its financing model. But CEO Peter Scott said the company expects to pursue more such arrangements in the near future.
“Burn is confident that this will be the first of many such deals with TDB and similar institutions,” he said following the signing in Cape Town.
TDB, the financial arm of the Common Market for Eastern and Southern Africa (Comesa), primarily funds trade and infrastructure projects for public and private entities across the region.
This financing is part of a broader partnership with the World Bank to accelerate access to clean energy across Africa through a mix of debt, grants, and equity directed at small and medium-sized enterprises in the sector.
The move also aligns with the Mission300 initiative – launched by the World Bank and the African Development Bank (AfDB) in January – which aims to connect 300 million Africans to modern, affordable, and clean energy by 2030.
