Description
As outlined, the Acholi sub-region is a relatively more rural and poor area of Uganda. These factors, combined with poor transportation infrastructure, lack of business services, and limited commercial development make the market context significantly different to other parts of the country, notably Kampala where most FES activity is focused.
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Market Analysis for Fuel Ef?cient Cook Stoves
in the Acholi Sub-Region, Uganda mercycorps.org
mercycorps.org
David Nicholson and Kim Beevers
Market Analysis for Fuel Ef?cient Cook Stoves
in the Acholi Sub-Region, Uganda
Photos: Kim Beevers/Mercy Corps
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Market Analysis for Fuel Ef?cient Cook Stoves
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Disclaimer
This assessment is made possible by the generous support of the American people through the
United States Agency for International Development (USAID) under the terms of Cooperative
Agreement No. FFP-A-00-08-00075-00. The contents are the responsibility of Mercy Corps and
the Healthy Practices, Strong Communities (HPSC) Program and do not necessarily re?ect the
views of USAID or the United States Government.
Acknowledgements
The authors would like to thank the Mercy Corps Uganda team for their support during the
research and development of this assessment. Particular thanks go to the Economic Development
Team managed by Atifu Kilaga with support from Patrick Anywar, Francis Emol and Godfrey Otika.
Their hard work to organize and to gather primary data is the heart of this work. We would also like
to acknowledge all the organizations, entrepreneurs and individuals who assisted with research by
sharing their knowledge, experience and opinions.
For further information on the assessment or Mercy Corps’ global energy programming in general,
please contact Senior Energy Adviser David Nicholson: [email protected]. For
inquiries speci?c to Mercy Corps Uganda, please contact Economic and Market Development
Program Manager Kim Beevers: [email protected]
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Market Analysis for Fuel Ef?cient Cook Stoves
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Table of Contents
Executive Summary 1
Introduction 4
Background on Acholi Sub-region 4
Mercy Corps Uganda 4
Mercy Corps Market Facilitation Programming in Uganda 5
Methodology 6
Supply Side Market Analysis 10
Macro Context: Fuel Ef?cient Stove Market 10
Acholi Market Analysis 11
Value Chain Analysis: Charcoal Stoves 16
Consumer Energy Use Analysis 22
Household Wealth 22
Cooking Methods 23
Current FES Use 28
Observations and Recommendations 30
General Observations 30
Recommendations for Stove Actors 31
Facilitation Role for Mercy Corps 34
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Market Analysis for Fuel Ef?cient Cook Stoves
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Energy poverty is a major driver of the developing world’s overall poverty cycle; it results in ill
health, environmental degradation and limited economic growth where it is needed most. However,
in recent years companies have begun to distribute innovative, consistent and affordable energy
options like solar lanterns and fuel-ef?cient stoves that offer highly bene?cial, cost-saving
alternatives to traditional energy sources. Though these products reduce the energy burden
and improve the quality of life and opportunity for the most marginalized members of the global
community, they are also failing to rapidly and broadly reach their target markets.
This report details the results of a fuel ef?cient stove (FES) market assessment carried out across
four districts in the Acholi sub-region of northern Uganda throughout April and May 2012. This
assessment is part of a broader examination of the energy market within the sub-region carried
out by Mercy Corps Uganda to inform its intervention strategy in this sector.
Report ?ndings indicate demand for FES across the Acholi sub-region as well as opportunities for
FES actors to meet this demand with products available on the Ugandan market.
Key ?ndings are as follows:
SUPPLY-SIDE:
• FES investment within Uganda is increasing and evolving rapidly. There are multiple Ugandan
mass-production facilities that are growing production and expanding distribution. Further,
several international companies are beginning to import high quality FES units. Carbon
?nancing supports both locally produced and imported FES.
• FES sector has not yet broadly reached the Acholi sub-region. Though FES do exist on the
Acholi market, most are artisan models with a total combined production of fewer than 250
units a month. Mud and clay-based FES are more common, built for either wood or charcoal
and based on models propagated by NGOs when most inhabitants were living in IPD camps.
Neither Ugandan FES mass-producers nor imported FES have made substantive inroads into
the Acholi market.
• All local manufactures are single person enterprises and most have not attempted to increase
production capacity to serve a larger market. Challenges to up-scaling local stove manufacturing
within Acholi include dif?culty in commercializing mud and clay stoves, varying input costs,
inef?cient supply chains and low production capacity of FES makers.
• There are two notable Ugandan stove manufacturers that are able to produce stoves in larger
quantities. Both manufacturers are able to access cursory funding to lower stove costs to the
end user and to subsidize the costs of building distribution channels and raising awareness for
their products. Barriers that inhibit these mass-producers to enter the Acholi market include
high transportation costs, lack of ef?cient distribution systems, minimal sub-vendor liquidity
to purchase inventory and low sub-vendor business skill and acumen to creatively adapt
distribution mechanisms.
Executive Summary
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Market Analysis for Fuel Ef?cient Cook Stoves
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DEMAND-SIDE FINDINGS:
• Almost all households within Acholi (98%) identifed a biomass-based cooking method as
their primary cooking method. Of these, 76% use three-stone fres, 14% use wood burning
stoves and 8% use charcoal burning stoves. Levels of satisfaction for current cooking methods
amongst residents in the sub-region suggest a willingness to adopt new stove technologies.
• Consistent with primary cooking methods, frewood is the dominant fuel used in Acholi. The
bulk of wood used is collected by members of the household itself – not purchased. Overall,
93% of households collect frewood, 11% purchase frewood and 18% purchase charcoal.
Proximity to a trading center in?uences household fuel and thus stove preferences. Charcoal
stoves are more widely used amongst the urban segment; charcoal use declines steadily as
households become more rural, where wood use increases.
• Close proximity to an urban center and higher level of dissatisfaction with open fre cooking
correlate to increased household willingness to purchase FES. Households that report less
smoke emission from their FES are not more likely to be satis?ed with their FES than people
who do not report less smoke emission.
• The time investment required for a household to collect wood is directly correlated to a
willingness to purchase fuel (either wood or charcoal) -- the likelihood that a household will
purchase fuel increases as time to collect ?rewood increases. Sourcing fuel is a dynamic
picture at the household level; households regularly supplement or substitute their preferred
fuel with alternatives as either costs or available resources vary.
• Annual Acholi household fuel expenditures according to fuel preference are US$78 for
charcoal and US$56 for frewood. For household collecting frewood, the average total weekly
investment in collecting wood is 6 hours and 4 minutes. According to the shadow price
calculation based on prevailing agricultural labor costs, collected ?rewood costs a household
an average of US$94 per year.
• Average monthly household expenditures on charcoal total US$6 –US$7; the payback
period for a metal-cased FES is between two and three months. Average monthly household
expenditures on frewood total US$4.50; the payback period for a Lorena stove model is one
month.
Key observations and recommendations are as follows:
• Key Market Segments: There are two distinct segments within the Acholi FES market. The ?rst
segment is comprised of urban and peri-urban households that purchase fuel, possess more
income and are less satis?ed with their current cooking technology. This segment is more likely
to adopt FES technologies that are imported from Ugandan mass-producers or imported into
the country than the second segment.
The second segment is comprised of rural households that cook on three stone ?res and
collect most ?rewood themselves. The second segment is particularly price-sensitive and
unlikely to adopt FES imported into Acholi. However, this segment may be willing to adopt
inexpensive mud FES. Propagation of high quality stoves has not resulted from Training of
Trainer models implemented within Acholi. Moreover, commercial models for mud FES do not
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yet exist within the sub-region. Commercialization of simple FES is possible, however. In order
to commercialize low-cost mud stoves, experimentation with effective business models along
with product innovations is required.
• Awareness: Conditions for market stimulation are promising due to a high general level of
awareness about FES in the market, increasing dif?culty sourcing ?rewood, increasing fuel
costs, and signi?cant dissatisfaction with cooking on an open ?re. Current information on the
economic advantages of FES adoption is required to help build the market. For charcoal FES,
the opportunity to recoup fuel costs quickly by adopting FES is the likely entry point for FES
sales. Designing marketing and sales strategies based on payback periods with respect to fuel
cost savings is a potent strategy for targeting FES sales to charcoal users. For mud FES, as
monetary bene?ts of FES are much less tangible for rural wood users, alternative messaging
for boosting FES appreciation are required to penetrate the market. Recent efforts to test
health messaging have been effective toward increasing FES adoption.
Purpose of this Document
This document is designed to inform energy actors of the potent market opportunity for new,
innovative, cost-saving and energy-saving fuel ef?cient stoves within the Acholi sub-region. The
report highlights opportunities and offers recommendations for energy actors to innovate on
current business and distribution models to more broadly reach this market. It also outlines the
weaknesses in the existing systems that Mercy Corps has identi?ed as key points for future
intervention. Lastly, the document offers transferable lessons for companies targeting similar rural,
agriculturally-based and transitional markets across Africa for distribution and sale of cost-saving
and bene?cial products.
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Background on Acholi Sub-region
In 2006, the Ugandan government and the Lord’s Resistance Army ended over two-decades of
armed con?ict that displaced millions of people and destroyed economic productivity within the
Acholi sub-region of northern Uganda. During the con?ict, the humanitarian community stepped-
in to provide material support where the market was failing to function. Working in concentrated
locations for a prolonged period, aid drove the provision of products and services to meet population
needs. Concurrently, ?nancial institutions, government and businesses chose to invest in other,
more accessible regions, leaving Acholi underdeveloped and disconnected. In recognition of the
changing post-con?ict context, humanitarian agencies have steadily cycled out of Acholi while
a small amount of outside investment has trickled in. However, what was once a humanitarian
challenge has now become a long-term, complex development challenge. The protracted con?ict
handicapped growth, inhibiting agricultural productivity, hampering trade and impeding investment.
As humanitarian agencies have scaled-down their involvement in the region, a gaping hole in
product and service provision has remained.
The Acholi economic environment is a complex and systemic challenge that has resulted in costly,
inef?cient and fragmented Acholi markets that are failing to spur inclusive economic expansion
and more widespread competition. As a result, more readily available, high quality products and
services that meet the needs of households and businesses alike are absent. This absence is
signi?cant. At its most basic level, this means that the quality of life and the opportunities it holds
for the Acholi are poor. In other words, day-to-day activities are dif?cult, time-consuming and
expensive for families across Acholi. This is particularly true for women. More often than not,
Acholi women are solely responsible for the welfare of their families in addition to the economic
productivity of their households.
Mercy Corps Uganda
Mercy Corps helps people in the world’s toughest places turn the crises of natural disaster, poverty
and con?ict into opportunities for progress and has worked in East Africa for more than 20
years. Mercy Corps is also a recognized global leader in the design and implementation of market
development programming; our experts are skilled in improving core market relationships and
transactions and supporting functions and rules of market systems to improve access, and the
terms of that access, to the poor. When applying market-driven development, Mercy Corps is
consistently facilitative, working behind local actors to improve performance sustainably. Mercy
Corps employs ?ve main principles throughout market-driven programming: systemic approach,
evidence-based interventions, contextually driven, sustainability, and partnerships.
Mercy Corps began work in Uganda in 2006, offering humanitarian assistance and peace-building
support to internally displaced populations within the Acholi region. Mercy Corps has expanded
programming within Acholi as well as into Karamoja, focusing on integrating well-targeted,
short-term humanitarian assistance within a larger program of market-oriented development.
By addressing a number of overlapping and associated needs within a wide range of activities
Introduction
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Market Analysis for Fuel Ef?cient Cook Stoves
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(livelihoods, peace building, agriculture, water and sanitation, health and nutrition, ?nancial access
and economic development), Mercy Corps applies a broad but integrated approach that addresses
challenges to product and service availability, access and utilization.
Mercy Corps Market Facilitation Programming in Uganda
Within the Acholi sub-region, Mercy Corps has worked to spearhead the transition ?rst to
post-con?ict recovery and now to market-driven and facilitative development. Throughout 2011,
Mercy Corps implemented a pilot solar project with the goal to facilitate sustained access to
affordable solar products for inhabitants of Pader District in northern Uganda. To realize the pilot
project goal using a systemic and facilitative approach, Mercy Corps chose to mitigate barriers
that prevented Kampala-based company entry into the Pader market while also incentivizing
local actors to sell solar in the District. The project resulted in substantial, unsubsidized product
sales that are continuing to grow exponentially in number and to move over sustained distribution
channels over a year after the project has concluded. Moreover, the success of the pilot has
illuminated a potentially robust market with high demand for products that are not currently
available to consumers and are not likely to be available to consumers soon without outside
intervention – like fuel ef?cient stoves.
Building on the success of the solar pilot model and to best meet needs arising from the changing
Acholi development context, Mercy Corps has integrated a new Economic Development Team
(EDT). The goal of the team is to speed the pace at which businesses adapt to meet the needs
of the poor across our geographic area of programming and areas of technical focus, partnering
with private sector actors to build local capacity for the provision of vital goods and services. To do
this, the EDT demonstrates that Acholi is a viable market, offers tools to extend reach, crowds-in
tailored products and services, and then documents and shares learning so that more businesses
can enter this market and innovate on earlier models to better meet the needs of the poor.
Amongst EDT projects is a focus on initiatives to improve the Acholi energy markets’ performance,
adapting and growing the solar pilot model to best incorporate fuel ef?cient stoves and other
products and services that reduce energy poverty. Energy poverty is a major driver of the
developing world’s overall poverty cycle; it results in ill health, environmental degradation and
limited economic growth where it is needed most. Moreover, energy poverty negatively impacts
women and girls disproportionately to their male counterparts. Females are almost exclusively
responsible for household cooking, in-home chores, wood collection and nearly daily incremental
fuel purchases. As a result, females are also disproportionately impacted by respiratory illness
and eye diseases that result from indoor air pollution, risks of injury from open ?res and kerosene
lanterns and lost economic opportunities that result from time spent gathering energy sources
rather than on productive livelihoods.
In recent years companies have begun to distribute innovative, consistent and affordable energy
options like solar lanterns and fuel-ef?cient stoves that offer highly bene?cial, cost-saving
alternatives to traditional energy sources. Though these products improve the quality of life and
opportunity for the most marginalized members of the global community, they are also failing to
rapidly and broadly reach their target markets.
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Market Analysis for Fuel Ef?cient Cook Stoves
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The following study outlines the Acholi cooking energy market and opportunities to innovate on
business and distribution models to crowd-in new, innovative, energy-saving products to reach the
market at scale.
This assessment was carried out during April and May 2012 across four districts within the Acholi
sub-region: Kitgum, Lamwo, Pader and Agago. The assessment can be divided into two sections:
The ?rst section delineates demand for FES according to consumer segment while the second
section maps and analyzes stove supply-side market dynamics.
The consumer market research was conducted during April and May 2012 by an experienced
group of Mercy Corps Economic Development Team members based in Kitgum. Households from
each of the four districts in Acholiland were targeted in order to develop as broad an understanding
of the region as possible. Reaching suf?cient remote, rural communities was recognized as a
challenge, and therefore two survey methods were employed to overcome this dif?culty:
1). In-person interviews carried out in each district. These interviews were conducted in the local
language in towns, trading centers and villages throughout the districts. Interviews were divided
evenly among tiers to ensure a wide and representative coverage. Interviewees were selected
with the help of local government of?cials to ensure that participants from nearby households only
were selected. In as much as possible, of?cials also helped to identify participants across income
and gender strata.
2). Mobile-based surveys carried out with support from 99 Community Knowledge Workers
(CKWs) backed by the Grameen Foundation AppLab across Kitgum, Pader and Agago Districts.
Currently, no CKWs operate in Lamwo District. CKWs, village-level agricultural extension agents
charged with disseminating agricultural information to nearby farmers utilizing mobile technology,
were asked to interview fellow farmers throughout their geographic areas. Most CKWs live in small
and medium town centers or in rural locations; they do not live in urban settings. Surveys conducted
by CKWs included questions to support consumer segmentation across geography. CKWs have
operated for nearly one year under Mercy Corps programming and have received considerable
training and support from the AppLab team in order to carry out regular data collection accurately.
Mercy Corps utilizes this channel for data collection purposes often.
In total 252 in-person interviews and 237 CKW-interviews were conducted, giving a total sample
of 489 respondents. Both questionnaires contained mostly forced-choice questions and mirrored
each other as much as possible. Results from the in-person interviews were examined for accuracy
and error at the end of each day and were then recorded in a pre-designed Excel document for
ease of analysis. Data entry was also monitored for accuracy and error. CKW survey results were
collected via mobile and uploaded to a central database in real-time. Results were also monitored
and cleaned for accuracy.
Methodology
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Market Analysis for Fuel Ef?cient Cook Stoves
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Based in part on the results of a small-scale energy assessment
in the Pader District of Acholi and in part from ongoing desk
research, the Mercy Corps team hypothesized that geographic
proximity to trading centers (TC), accounting for the variation in
size of the TC, would be a key determinant for behavior around
energy use. Typically, household location in urban or rural settings
is an important determinant of fuel type and fuel type determines
which stove a household will use. With this in mind, consumers
were divided into four market segments based on geographic
proximity of their household to the nearest TC. Survey respondents
were asked to self-identify household distance from the nearest TC. These responses were used
to segment the market as shown in the table. The terms used are relative and it should be noted
that “urban” in the context of Acholiland simply means within a trading center and “peri-urban”
means within 2km of a trading center. In reality both would be considered rural in the context of
the country as a whole.
The chart illustrates how the segments were
broken down in terms of proportions as well as
the survey technique that was used to reach
them. As expected the face-to-face interviews
captured more people from the urban segment,
whereas the CKWs were able to reach more
from the per-urban and rural segments. In
the end the combination of the consumer
pro?le interviews and CKW surveys resulted
in a solid spread between the segments. The
“other” category represents a combination of
no response, unsure of distance, and other
unclassi?ed responses. These segments are
used in the consumer data analysis section
to test the hypothesis that proximity to a TC
impacts cooking behavior.
Moreover, both surveys were supplemented by
a total of 33 focus group discussions conducted in TCs. Participants were selected according
to the same methodology as in-person interviews. Local offcials also helped to identify
participants and, in as much as possible, careful attention was made to ensure gender balance
and appropriate representation of varying income segments amongst each group. Again,
Mercy Corps Economic Development Of?cers led each FGD according to a predetermined set of
questions designed to add depth to survey results.
Concurrently, information on the supply side of the cook stove market was gathered. The
Mercy Corps team mapped stove retailers, distributors and manufacturers across the region. A
similar exercise was conducted at the national level, using the recent market assessment by the
Global Alliance for Clean Cooking (GACC) as a guide.
1
The purpose of both exercises was to
outline the current stove supply chain, from producers to retailers, identifying actors that are either
Distance to TC Segment
0km Urban
1 – 2km Peri-urban
3 – 5km Rural 1
5 – 10km Rural 2
1 GACC, Uganda Market Assessment - Sector Mapping. 2012
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already active in the market or that have the capacity to become active in Acholiland over the
coming year. This time frame ruled out inclusion of some newly imported stoves poised to enter
the Kampala market with the in?ux of carbon revenue expected in 2013.
Once the mapping exercise was complete, structured interviews were conducted with each actor.
These interviews were designed to gather as much information as possible about the products
themselves, the functions of the existing supply and value chains, and major trends in supply and
demand. Product testing was not a part of this assessment; however, results from ef?ciency tests
were obtained when available.
Challenges
As with any information gathering exercise, a number of challenges were encountered by the Mercy
Corps team. First, although the CKW tool provides an excellent way to reach many widespread
rural households inexpensively, it was not possible to replicate exactly the questions contained in
the consumer pro?le questionnaire. CKW survey questions are deliberately limited in number as
CKWs are only obligated to complete a certain number of survey questions monthly. Moreover,
shorter questionnaires result in more accurate responses; AppLab also limits surveys accordingly.
However, as a result, analysis of the full sample was not always possible.
Second, gathering accurate information on key issues was a challenge, particularly for household
income population data. Income is a key measurement in the energy assessment as it allows
for the calculation of proportional expenditure on fuel. However, the geographic area is reliant
on income derived from agriculture. Agricultural income is both seasonal and varied and most
households record income over time. Consequently, households are often unaware of income
levels and responses are likely estimates. Similar
challenges are re?ected in responses about distances
traveled or time taken for fuel collection activities.
Accurate, self-monitoring for these metrics is not a
common occurrence and responses re?ect subjective
estimates.
Notable, reliable data on the size of the potential
market in Kitgum, Lamwo, Pader and Agago Districts
is dif?cult to obtain. However, a combination of data
from recent and reliable sources, including the UN and
UBOS are reasonably applied for market projections in
this assessment.
A combination of data from a UN water study of the
region and a government household survey in 2010
was used to develop an estimated population ?gure
of 870,000 people and 144,800 households. This
estimate goes not represent of?cial government
2 Water Sources, Accessibility, and Operation Status Report, OCHA 2010
3 Uganda Bureau of Statistics, National Household Survey 2009 / 10
Market Size Estimates
Population Figures
2
:
Lamwo 158,100
Pader and Agago 481,800
Kitgum 228,900
Total Population 868,800
Average Household size
3
6.0
# of Households 144,800
% Urban / Peri-urban Population 33%
# Urban Households 47,784
# Rural Households 97,016
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Market Analysis for Fuel Ef?cient Cook Stoves
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?gures. However since the last full census was almost 10 years ago and therefore out of date in
a region that had undergone signi?cant transition in recent years, it is considered that the water
study ?gures provide a more accurate ?gure.
The estimation of the proportion of households of living in urban (within trading centers) and peri-
urban (1-2 km from trading centers) settings was also based on the 2010 UN water survey which
provided population density maps for each district. These maps were used to estimate the number
of people in each urban area. This method does not provide a truly accurate ?gure, however it
uses the most accurate ?gures available to date, and provides a usable picture of the market size
and distributio
Third, the approach to focus group discussions yielded limited ?ndings. It was dif?cult for the
team to set up focus groups according to distinct consumer segments. Namely, isolating focus
groups to include women only could have resulted in more data regarding this particular segment.
However, though not isolated, all focus groups did include a breadth of participants across
consumer segments.
Finally, the informal nature of the local stove manufacturing industry combined with the remote
nature of many communities created challenges in identifying all actors during the mapping
exercise. This was particularly true for mud stove makers, many of whom worked on an occasional
basis and did no real promotional activities, making them dif?cult to locate.
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The following section summarizes the macro fuel ef?cient stove (FES) market as well as the
speci?cations and position of the products expected to be relevant to the Acholi market. It also
provides a SWOT analysis of the major product categories and then presents analysis of the
existing supply chains in order to identify major market barriers where intervention is required.
Macro Context: Fuel Effcient Stove Market
Biomass accounts for 91% of total energy used in Uganda, where only 11% of the population has
access to the grid. Unsustainable wood and charcoal use has resulted in massive deforestation
and associated steep fuel price increases. Consequently, access to cooking energy sources and
clean cooking options is an increasingly important challenge in Uganda.
According to a recent assessment by the Global Alliance on Clean Cooking (GACC), 3.8 million
of Uganda’s 7 million households cook on open ?res in an enclosed space. Nearly 1 million
additional households cook on traditional charcoal stoves with high exposure to carbon monoxide.
Awareness of indoor air pollution (IAP) amongst the general population is virtually non-existent
despite the global attention being given to negative health implications of traditional cooking
practices. Many urban households aspire to cook with kerosene, liquefed petroleum gas (LPG) or
even electric stoves as they are cleaner and more convenient. However, only a small segment of
the market can afford to do so. This leaves the vast majority of the population reliant on biomass
for cooking fuel.
A commercial market for biomass fuel ef?cient stoves does exist in Uganda. Rising demand for
biomass FES mirrors parallel rising fuel costs. Despite strong demand, supply-side constraints
inhibit greater FES market penetration. Nearly all FES stove production and distribution is focused
in Kampala where a densely populated market dominated by charcoal users with more disposable
income drive sales. Few stove producers have reached scale and those that have are plagued by
high costs associated with distribution beyond the capital city including costs required to build
networks of retailers, to advertise a “push” product and to transport bulky stoves long distances
over dilapidated roads.
Currently, there are two notable companies with distribution beyond the vicinity of the capital
and with the capacity to expand to new markets: International Lifeline Fund (IFL), based in Lira,
and Ugastove, based in Kampala. Approximately ?ve other FES charcoal stove manufacturers
are operational in Kampala, none of which currently produce more than 500 units a month.
Additional constraints to FES supply-side growth include limited access to land or premises for
manufacturing and product sourcing needs, inadequate access to investment required to grow
businesses, rising raw material costs and high variability of stove quality. As a result of the many
challenges to growth, the FES business is dominated by artisans who are only able to glean small
pro?t margins for their products.
Supply Side Market Analysis
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Carbon Finance
Carbon ?nance for fuel ef?cient stoves has been active in Uganda for several years and has
proved it can play an important role in attracting investment and reducing the costs of better
quality stoves. Uganda hosts the world’s ?rst Gold Standard voluntary market stove project, run by
Impact Carbon and Ugastove, which has generated credits for three years. In addition to voluntary
market activity, the development of new rules for projects in the UNFCCC Clean Development
Mechanism (CDM) through Programme of Activity (PoA) projects has opened the door to carbon
?nance from the regulated market. This revenue potential has brought in outside donors and
investors for a variety of cook stove projects that are currently in the process of registration. Once
registered with the UN, these projects could funnel investment to local manufacturers to help
improve the quality of stoves and the scale of stove market penetration. These projects might also
ensure the arrival of high-quality, imported FES.
Carbon ?nance could represent a paradigm shift in the FES market and is therefore relevant to
this analysis. In this model, manufacturers and importers would derive most pro?t from carbon
returns that are expected to run well above the cost of stoves themselves over time. This provides
a signi?cant opportunity for local and foreign FES manufacturers to attract ?nancing to increase
their production and distribution capacity to reach previously unreachable market segments. It
also provides an opportunity for consumers who may be able to access high quality stoves at
signi?cantly reduced cost. In this way, carbon ?nancing can serve as an important subsidy. Carbon
?nancing does come with a burden of proof challenge. According to the monitoring rules, all FESs
must be in use in order to claim carbon credits. In practice this means that accurate consumer
details must be taken at point of sale and detailed databases must be maintained over time. This
encourages suppliers to maintain close control over distribution modes.
Carbon ?nance, though a potential boon to the FES sector, will not result in blanket adoption
across all regions of Uganda alone. Research into consumer cooking and fuel use behaviour within
key market segments is so far limited, particularly among rural communities which generally use
?rewood as their main cooking fuel.
4
As 81% of the Ugandan population is currently classifed as
rural , innovative approaches to extend commercial FES availability and access for this population
is also needed.
Acholi Market Analysis
As outlined, the Acholi sub-region is a relatively more rural and poor area of Uganda. These
factors, combined with poor transportation infrastructure, lack of business services, and limited
commercial development make the market context signi?cantly different to other parts of the
country, notably Kampala where most FES activity is focused. This section analyzes the market
conditions speci?c to this region, looking at the size of the market, the range of products available,
how well they are suited to the market, and the respective value chains.
The current range of FES available in Acholi can be divided into two categories, wood-burning and
charcoal-burning. Multi-fuel stoves that can burn both fuels do exist but these were not found in
the region. The various models on offer are outlined in the following tables.
4 Uganda Bureau of Statistics, National Household Survey 2009 / 10
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WOOD BURNING STOVES
Producer /
Model
Design and Specs % reduction
wood use (vs
open ?re)
Costs and
price
Production
Capacity
Market Segment and
Penetration
3 Stone Fire Traditional cooking
method
N/A Free N/A Used as primary cook-
ing method by 75.9% of
households
Mud Lorena
Stove
Various designs are
found in the region,
mostly adapted from
models introduced by
NGOs in IDP camps.
Most use a clay brick
chamber surrounded
by ant-hill mud, built
indoors or outside
against the wall.
Chimneys and multiple
burners are included in
some models but are
not common.
Estimated 40% Free – 5,000 Unknown,
number
of trained
people
The major wood burn-
ing stove in the region
observed in many rural
and urban locations.
Identifed by only 12%
of FES owners, although
40% did not know the
type of stove they have.
The signi?cantly lower
price means Lorena-
type stoves are likely to
represent the majority of
the 14% of all house-
holds using a FES. Many
are built by the owners
themselves.
Ugastove
Rocket stove
Rocket-type design
made from heavy clay.
Stoves are high off the
ground and distinctive
in shape. Not part of
the Ugastove carbon
project and is there-
fore not subsidized by
carbon revenue.
60% (claimed
by Ugastove)
Retail 30,000 < 50 /month
Capacity to
increase with
demand
The rocket stove is cur-
rently available in Gulu
but not yet distributed
within the four study
districts. High cost rules
out most rural house-
holds who collect wood,
therefore the target
market segment is wood
purchasing households
in or near to TCs.
G-3300 En-
viro?t Rocket
Stove
Imported model from
Enviro?t and designed
by Colorado State
University and made
in China. The stove is
a high-quality, widely-
tested, portable rocket
stove. Up-Energy is
launching a CDM
project and the stove
is being sold at an
initial subsidized rate
based on future carbon
return.
52%
5
Wholesale -
45,000
Retail - 55,000
Imported in
containers
from China.
Planned as-
sembly plant
in Kenya for
2013.
The G-3300 is being im-
ported and distributed by
Kampala based Up-En-
ergy, a for-pro?t venture
part owned by Impact
Carbon. Up-Energy has
recently toured Acholi,
giving demonstrations,
targeting both NGOs
and retailers. Price is
very high for the region
so target market is
middle-upper class wood
buyers, or NGOs.
5 USAID, 2010. Evaluation of Manufactured Wood Stoves in
Dadaab Refugee Camps, Kenya
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Market Analysis for Fuel Ef?cient Cook Stoves
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CHARCOAL BURNING STOVES
Producer
/ Model
Design and Specs % red. fuel use
(vs tin stove)
Costs and
price
Production
Capacity
Market Segment and
Penetration
Mud
Charcoal
Stove
Widely referred to as a
‘GOAL’ stove as it was
introduced by the INGO
GOAL in the IDP camps in
the region. The design uses
clay bricks and mud to form
a combustion chamber, with
a metal racking inserted
for the charcoal to sit on.
The preferred material for
the rack is a front cog from
a bicycle. The stoves are
generally built permanently
against the wall on the
outside of the house.
Unknown Inputs:
Bricks
600-900
Insert: 3,000
Retail price:
5,000
Currently
limited by
supply of
bike cogs.
Low cost and simplicity
to make mean this is a
popular stove among
charcoal users, particularly
in Kitgum, the largest
TC and site of a major
IDP camp where GOAL
previously worked.
Penetration dif?cult to
measure but likely to make
up a large proportion of the
8% of households using a
charcoal FES.
Local
FES -
Jiko style FES made by 10+
independent artisan stove
makers across the four
districts. Stoves are portable
and metal-cased, with a
purpose built clay liner.
Designs are either copies
of the typical Jiko shape
or similar to the Ugastove
model. Some makers replace
the clay liner ?oor with iron
bars to increase strength,
but this decreases ef?ciency.
Unknown Inputs:
Clay mold
- 1-2,000
Metal case
- 12-18,000
Retail price:
20,000 –
28,000
10 – 40 per
artisan.
Total
< 250 /
mth
Stoves are generally sold
directly by the artesian. Low
production and marketing
capacities limit market
penetration to households
living in the close vicinity
to the production site.
The stoves enjoy a good
reputation among their
small customer base, which
knows them and trusts
the quality of the product.
However, when sold next
to mass produced models
they appear inconsistent in
quality.
ILF FES
– Okello
Kuc
ILF stove model used
internationally based on 6
purpose-built clay bricks that
form an ef?cient combustion
chamber. Bricks are held
together by concrete and
sealed in a thin metal
casing. The stoves are
made in Lira in three sizes,
with a consistent source of
quality clay provided for the
bricks. The stove has been
independently tested and will
soon be certi?ed under the
UCB CDM PoA.
(35% thermal
ef?ciency)
Costs:
Wholesale:
15/17.5/20k
Retail:
18.5/22/25k
Currently up
to 2000 /
mth.
Enjoys wide recognition in
and around the production
center of Lira, an area many
traders from Acholiland
purchase product. Only
mentioned by a single
FES owner in the sample
group but distribution in
Acholiland has just started
and stoves are currently
visible 4 Kitgum retail
stores but no other TC. Two
local distributors brought in
over 200 units each in April
and plan widespread radio
promotions during June
and July 2012.
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Market Analysis for Fuel Ef?cient Cook Stoves
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CHARCOAL BURNING STOVES (cont.)
Producer
/ Model
Design and Specs % red. fuel use
(vs tin stove)
Costs and
price
Production
Capacity
Market Segment and
Penetration
Ugastove
FES
Ugastove charcoal stove is
a portable metal shell with a
thick clay lining. The clay is
sourced in Kampala and the
stove has been certi?ed for
carbon credits under a Gold
Standard voluntary scheme.
Stove produced in three
sizes.
(38% thermal
ef?ciency)
Costs:
Wholesale:
14/16/20,000
Retail:
17/23/27,000
Currently
5000 / mth.
Increasing
to 10,000
The most widely recognized
FES across Uganda, with
relatively high volume
sales in Kampala and other
regions. New focus on
north with a storage facility
in Gulu that will become
an assembly plant. Not
currently distributing in four
study districts but well-
placed to supply from Gulu
if a model is found.
SWOT ANALYSIS
Model Key Actors Product Strengths Product Weaknesses Market Opportunities Market Challenges
Mud Wood
Stoves
- CBT
- NGOs
- Individuals
- Brick makers
- Simple to make,
repair
- Low cost (3-5k)
- Good ef?ciency
gains
- Local materials
- Frequent repair
required
- Slow to start
- Labor-intensive
- Long drying time
- Uses wood:
fuel of choice
- Trained resources
in communities
- Familiar model
- No affordable
competition
- NGOs crowding
out
- Perception of
being free
- Limited value-add
as a commercial
product
- Dif?cult to
standardize
‘Imported’
Wood FES
(National
stoves
Imported
into the
region)
- Manufacturers
- Importers /
Distributors
- Sub-Vendors
- Carbon
?nance groups
- High, proven
ef?ciency
- Standardized
product
- Warranty
(year 1)
- Subsidized
(reduced cost)
- Imbedded
services (training,
marketing)
- High production
/ import capacity
- Producers willing
to invest
- Expensive, luxury
product
- Limited market
penetration
- Long supply
chain and repair
turnaround
- Can be heavy, high
transport costs
- Uses wood:
fuel of choice
- High desirability
factor as a foreign
product
- Highest quality
product on the
market
- Low cost of wood
= long pay-back
period
- Target market
is rural and
dispersed
- Lack of consumer
?nancing
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Market Analysis for Fuel Ef?cient Cook Stoves
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SWOT ANALYSIS (cont.)
Model Key Actors Product Strengths Product Weaknesses Market Opportunities Market Challenges
Locally
Made FES
- Manufacturers
/ Assemblers
- Retailers/
maintenance
- Clay molders
- Black/tin
smiths
- Retailers
- Potential high
ef?ciency
- Custom design
options
- Portable
- Local
maintenance
- Low production
capacity
- Lack of
standardization
- Relatively expensive
- Inef?cient supply
chain
- No distribution
system
- Retailers report
many complaints
about weak
combustion
chambers
- Customer
accessibility
- Perception of quality
- Market knowledge
of FE increasing
(cursory bene?ts)
- Custom design
potential
- High cost of
charcoal
- No brand /
recognition
- Subsidized
imported
competition
- Fractured
assembly and
bottlenecks
- No capital
availability
- Limited market
knowledge
‘Imported’
Charcoal
FES
(nb:
imported
into region)
- ILF/Ugastove
- Distributors
- Sub-venders
- Carbon Credit
Actors
- High, proven
ef?ciency
- Standardized
product
- Warranty (year
1+)
- Subsidized
(reduced cost)
- Imbedded
services (training,
marketing)
- High
production/
distribution
capacity & willing
to invest
- Limited market
penetration in north
- Long supply
chain and repair
turnaround
- Affordable price
point
- Limited local
competition
- Brand building
potential
- High cost of
charcoal
- Access to capital
for distribution and
marketing
- Transportation
costs
- Limited
distribution
networks
- Low capacity sub-
vendors
- Dif?culties in
completion of
warranty / carbon
cards
- Limited market
knowledge
- Lack of consumer
?nancing
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Market Analysis for Fuel Ef?cient Cook Stoves
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Value Chain Analysis: Charcoal Stoves
1. Lorena / Mud Charcoal Stoves
Production and Distribution
These stoves are made and sold by a dispersed and informal network of individuals throughout
the region. Most were either trained directly by various NGOs in the IDP camps during the past
decade, or were subsequently trained through the trainer of trainer models introduced by the
WFP and various other organizations. It is impossible to estimate the number of trained people
in the region, particularly since it appears that most engage in stove building on an occasional
basis.
The Mercy Corps team did not ?nd any examples of formalized commercial operations offering
a stove building service. However, informal services where individuals build stoves on an ad hoc
basis are fairly widespread. These informal stove builders barely cover costs and often have
little knowledge of stove ef?ciency. This effectively impedes the potential for a commercial
market by spreading low cost products with no quality control and no guarantees of ef?ciency,
thus minimizing the consumer gains for investing in a FES.
Key Bottlenecks and Challenges
• Commercializing mud stoves is a major challenge. The perceived simplicity of the design and
availability of materials means people are reluctant to pay more than a nominal service fee
on top of the material cost.
• The charcoal mud stoves found in several of the larger TCs are built with a bicycle part as
the charcoal tray; reliance on this particular part is a clear bottleneck to increased production.
This part could be easily replaced with a clay liner but the supply of liners is also limited,
creating a further bottleneck.
2. Local FES
Production
Local FES are manufactured by a web of metal workshops, dedicated manufacturers and
assembler / retailers. A total of ten artisan manufacturers were interviewed across the
four districts - in Kitgum (6), in Padibe East (3), and Agago (1). The manufacturers can be
disaggregated according to the following production models:
• Retailers with hardware or general household goods stores that contract metal and clay
molder to make the components and then assemble the stoves themselves (3)
• Metal workshops that purchase clay molds but make other components and assemble
themselves (3)
• Dedicated stove makers working from home that make their own clay and either contract
metal workshops or make their own casings (4)
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Market Analysis for Fuel Ef?cient Cook Stoves
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Total production across the 10 identi?ed producers in the region is up to 250 a month and
a maximum of 3000 a year, although production slows considerably during the wet seasons
when it is hard to ?re and dry the clay. Assuming each unit has a lifespan of 2 years (as
estimated by producers); these ?gures suggest a maximum of 6000 households have a locally-
manufactured FES, a market penetration of less than 4% of the households.
Local FES Value Chain:
The major inputs for the stoves are metal sheeting and clay. Metal sheeting is sourced from
Lira or Kampala by hardware stores or directly by the artisan. Some manufacturers use local
scrap metal when available. Metal sheeting costs have grown dramatically over the last year,
leading to increased local FES costs. Clay is locally-sourced and the molds are obtained from
a small number of clay molders who have a reputation for quality clay and work. Clay molds for
the Kitgum area, the largest town with the most active FES market in the region, are almost
entirely sourced from a single clay molder in town. Though the molder does not change prices,
she often runs out of stock and is a major bottleneck for local stove production.
Distribution and Sales
Most artisan FES makers sell the products directly to customers by setting up stalls in front of
their houses or at their own shops. At least one local FES make used to sell through additional
retailers as well; however, dif?culties in collecting money forced the maker to stop distributing.
Some retailers of traditional metal sheet stoves are now making their own FES. None of the
dedicated stove makers or metal workshops engages in any form of branding or consistent
Metal Sheet
Suppliers:
Kampala
Local
Clay Mold
Suppliers (3-3)
Local
Metal Workers
(numerous)
Retailers
Local FES
Manufacturers/
Assemblers
(10+)
Customers
6000 6000 1500
15000
4000
24,000
25,000
25,000
8000
Traditional
charcoal stoves
000 - Average input cost (UGX) 000 - Average sales price (UGX)
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Market Analysis for Fuel Ef?cient Cook Stoves
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marketing activities, the result is a very niche market that could not satisfy any signi?cant
increase in demand for their product.
Key Bottlenecks and Challenges
• The price of metal sheeting varies and has recently increased signifcantly. Metal is the most
expensive single component; the cost uncertainly and the lack of bulk purchasing discounts
make it dif?cult to compete with the carbon subsidized Okello Kuc and Ugastove stoves.
• The large distance and high transport costs associated with sheet metal providers mean
supply occasionally dries up.
• Access to quality clay molds is a major bottleneck in the value chain, production capacity
of clay liners is very low and manufacturers often have to wait several weeks to receive an
order.
• There is a lack of trust between retailers and producers. This means producers are reluctant
to supply without up-front payment, inhibiting wider product availability.
• Manufacturers do not have suffcient capital to expand production and widely report this to
be a major barrier to increasing sales of FES.
• All local manufactures are single person enterprises and most have not made any real
attempt to increase production capacity to serve a larger market. Often, stove production is
a supplementary income option for manufacturers.
3. Ugandan Mass-Produced FES
There are two notable Ugandan stove manufacturers that are able to produce stoves in larger
quantities. Both manufacturers are able to access cursory funding to lower stove costs to the
end user and to subsidize the costs of building distribution channels and raising awareness for
their products.
International Lifeline Fund (ILF) – Okello Kuc Stove: ILF is an international non-proft
active in four countries in East Africa as well as Haiti. ILF has been active in Uganda since
2006, dedicated to providing water and sanitation services and, chie?y, to stimulating the FES
market. ILF designed the Okello Kuc stove, its main product.
Ugastove: Ugastove is a privately owned Ugandan company based in Kampala that has been
manufacturing cook stoves for over a decade. In 2009, in partnership with Impact Carbon,
Ugastove registered the ?rst Gold Standard carbon credit cook stoves project on the voluntary
carbon market. This has injected signi?cant investment into the company, allowing it to expand
production and to invest to build a wider retail presence and to market more extensively to pull
demand for their product.
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Market Analysis for Fuel Ef?cient Cook Stoves
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Production
ILF: The ILF production facility and sales base is on the edge of Lira, the major city to the south
of Acholi. The manufacturing process includes: forming specially-shaped bricks from locally-
sourced clay, cutting and shaping metal sheeting purchased from Kampala by hand, setting
stove components with cement, and painting and branding stove. Production is completed
on premises. Three different sizes of household stoves are produced, of which a consistent
stock is maintained. Additionally, institutional stoves are made to order. Production capacity is
72 stoves per day (around 2000 a month); although at the time of this assessment demand
dictated an average production of 45 per day – a result of recent increased stove prices.
Notably, ILF produces clay bricks for mud stove lining as well. At times, orders for this project
(funded by the World Food Programme) do slow production for Okello Kuc.
Ugastove: The Ugastove production facility and sales base is located on a single site close
to central Kampala. The manufacturing process including: sourcing and transporting clay from
a single location north of Kampala, mixing the clay with a formula of wood chips and other
inputs that fortify the liner, forming the liners using standard molds and blasting liners in a
single large furnace. Further, metal casings are cut, shaped, painted and branded by hand at
the same facility. Three sizes of the household charcoal stove are made and kept in stock on
the premises along with a smaller stock of the wood-burning rocket stoves. Institutional stoves
are also made to order.
Distribution and Sales
ILF: ILF acts as its own distributor for the Okello Kuc stove, transporting the products by
truck directly to retailers around the country. The majority of sales occur within the Lira region;
although teams regularly visit other districts to recruit new vendors. Stoves are priced at
UGX
6
18,500 (US$7.55), 22,000 (US$8.98) and 25,000 (US$10.20) for the three available
sizes. Prices are painted on the stove to ensure that the price is maintained. The wholesale
price provides a mark-up of 19-25% for the retailer, with all transport costs covered by ILF. A
purchase of 10 stoves is all that is needed for a vendor to receive wholesale price and delivery,
although generally no credit is provided.
ILF recently signed agreements with two vendors in Kitgum, both of which purchased 200
units. One of these vendors is building a network of sub-vendors across the four study districts
and is well placed to become a distributor for the region.
The stoves are currently sold at below total production cost to make them more accessible to
the market, subsidized by donor funding. The stove has been certi?ed for entry into a CDM PoA
being developed by the Uganda Carbon Bureau which will provide carbon ?nance to support
the stove subsidization and potentially allow for a further price reduction. The registration
process for this PoA has been underway for several years and it is expected to be registered
during 2012 and to start receiving carbon revenue in 2013. Revenue is expected to be at least
UGX 15,000 (US$6.12) per stove per year, suffcient to cover the price subsidy and transport
costs, and to make pro?t on stoves that remain in the system for multiple years. The products
come with a warranty for two free repairs as long as the warranty card is ?lled out at the point
6 All exchange rates based on UGX2450 to $US1.
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Market Analysis for Fuel Ef?cient Cook Stoves
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of purchase. Gathering customer details in this fashion is vital to the monitoring of sales for the
carbon project and must be tightly controlled to maximize revenue.
Ugastove: Much like ILF, Ugastove essentially acts as its own distributor with no wholesalers
or distribution agents in the supply chain. Stoves are sold directly to vendors in Kampala and
an increasing number of districts throughout Uganda. The stoves offer a set retail price of UGX
17,000 (US$6.94), 21,000 (US$8.57), and 25,000 (US$10.20). The wholesale price provides
a mark-up of 19-25% for the retailer, with all transport costs covered. Ugastove hires sales
agents directly to travel to new locations to recruit new retailers, to sell directly to consumers
and to advertise the Ugastove product.
The company has been investigating ways to expand further into northern Uganda and recently
opened stores in Gulu and Lira. Currently, the stores act as a distribution base for retailers
in Gulu and Lira as well as a factory outlet for customers. The company plans to open an
assembly plant in Gulu in the near future which will enable the company to cut transport costs
by carrying only the clay liners – which need to be consistent for the carbon project – with metal
casings made either at the new site or transported in for assembly only. From Gulu, assembled
products can be transported onto retailers across the north more ef?ciently. At present, a truck
carrying around 500 stoves travels to Gulu every two months; the truck capacity will increase
to 800 where implements are ?at-packed and to 2,000 where just clay liners are transported.
Ugastove currently does not presently supply further into the Acholi sub-region. However, a
base in Gulu makes Acholi market penetration signi?cantly more feasible and cost-effective.
Revenue from the carbon credit generation is split between Impact Carbon and Ugastove.
Ugastove receives around UGX 10,000 (US$4.08) per stove per year, this allows the company
to subsidize the cost of the product in the ?rst year, and represents pro?t in subsequent years
with which to fund marketing and increasing distribution.
Ugandan Mass-Produced
FES Value Chain:
Metal Sheet
Suppliers:
Kampala
Local
Clay & Raw Material
Suppliers
Carbon Finance
Entity -
Monitoring
Retailers
Ugandan
Mass FES
Production Units
(ILF/Ugastove)
Customers
Costs Revenue
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Market Analysis for Fuel Ef?cient Cook Stoves
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Key Bottlenecks and Challenges
• Transportation costs are exceptionally high and represent a major challenge to reaching
a wider market. Poor road quality makes journeys long, slow and heavy on fuel while also
resulting in high vehicle repair costs and frequent down time. Additionally, both the current
ILF and Ugastove distribution model is ineffcient with special trips being made to individual
retailers with only a small number of stoves. This adds cost to each unit and keeps the price
relatively high despite the subsidies and carbon credit revenue. Ugastove’s current Kampala-
based production facility is notably farther from the four study districts than ILF’s Lira-based
production center. Transport to Acholi will be a greater burden for Ugastove relative to its
major competitor.
• The data collection requirements to comply with the carbon fnance rules – in this case
accurate completion of warranty cards – encourages participants to keep tight control over
distribution and work directly with retailers. This creates a barrier to the introduction of a
more ef?cient supply chain with streamlined transport and distribution. It also inhibits risk-
taking to open new channels utilizing new business models and sales schemes.
• Building networks of vendors with the fnancial capacity to purchase stock upfront and the
diligence to ensure warranty cards are completed correctly is a major challenge. Problems
with reclaiming payment in the past means that credit is given on a limited basis and only
once a relationship has been developed over time. This limits the number of potential retailers
considerably.
• Vendors are rarely able to access outside fnancing to support the buildup of stock on
any scale. This further inhibits access to bulk purchasing discounts for nearly all vendors.
Purchases are therefore fragmented; additional inef?ciencies result with regard to distribution
here as well.
• Once sourced, vendors often require extensive training on technical product specs plus a
range of business skills that are important for increasing product sales. Though ILF does
offer some skills development for its vendors, neither ILF nor Ugastove have the capacity or
resources to deliver skills training on a broad scale. However, creative business models that
embedded business management and sales and technical training could be effective.
Cost and revenue pro?le for a single small unit
ILF Ugastove
Production Costs 25,000 24,000
Transport Costs Additional Included
Wholesale Price 15,000 14,000
Retail Price 18,500 17,000
Current Carbon Revenue / yr None 10 – 12,000
Anticipated Carbon Revenue /yr 15 -18,000 + 10 – 12,000
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Market Analysis for Fuel Ef?cient Cook Stoves
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• The free repair service that both offer involves both shipping stoves back to the factory and
then returning the stove back to the consumer. Depending on location this may take well
over a month, leaving the consumer to return to traditional cooking methods.
• Awareness levels of the benefts of fuel effciency and cleaner cooking is generally low
among the target market. The cost of advertising to raise awareness and to pull demand
is high and diffcult to manage given the current proft margin gleaned from FES. Limited
awareness of the fuel-ef?ciency problem as well as poor product recognition is an impediment
to accelerating demand for the product. Greater investment is requisite.
Household Wealth
The main sources of household income are
dominated by farming across the four districts.
The combined results from both surveys found
that 87% of respondents derive most of their
income from farming. Commercial activity plays
a larger role as a main income source for those
living in larger trading centers. The proportion of
shop owners and casual laborers increases in
urban areas. There is also a signi?cant increase
in the ‘other’ category, with the majority of
responses here indicating service industry
income derived from restaurants, carpentry
and motorcycle taxis. However, even in the
TCs farming remains the dominant source with
three quarters of the population directly reliant
on seasonal crop sales for income. This in turn
impacts traders and all other small businesses in
the region, which rely on increased purchasing
around agricultural income in?uxes as well.
Since seasonal farming is the overwhelmingly
dominant source of income, monthly income is a very dif?cult concept for people to measure.
The average reported income is UGX 67,000 (US$27.35), with the average around 20% higher
among the urban market segment than the peri-urban or rural 2 group
7
. The rural 1 sample group
of responders for the income question was very small and the result was skewed by a single
Consumer Energy Use Analysis
7 Median is more commonly used when looking at income ?gures, however the large number of households reporting
zero or very little income at this point of the year made the median ?gure very low (UGX30,000). Because of this the
mean is considered to be a better re?ection of likely household income in this case.
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Market Analysis for Fuel Ef?cient Cook Stoves
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AVERAGE INCOME (UGX)
Per Month Per Year Per Year (seasonally adjusted)
Overall 67,449 809,388 337,245
Urban 72,991 875,890 364,955
Peri-urban 60,000 720,000 300,000
Rural 1 88,300 1,059,600 441,500
Rural 2 60,684 728,213 303,420
(Ave HH expenditure) 136,850 1,642,200 -
large outlier. The income ?gure found by this survey is very low compared to other studies of rural
regions of similar make-up, which may in part be due to the survey being conducted in April which
is the planting season and therefore a period of little income for farmers.
According to the Ugandan Bureau of Statistics household study in 2010, the average monthly
expenditure for rural households in the northern regions is UGX 136,850 (US$55.86), around
twice the income reported in this survey. A recent examination of seasonal variations in cash in?ux
for rural households by Grameen Foundation AppLab concluded that households typically brought
in income 5 months out of the year, which makes annual income much lower once adjusted for
seasons as shown in the table
8
. Since true income measures were not possible through the survey,
this combination of estimates provides a useful frame of reference.
Cooking Methods
In line with the low and seasonal income, and
the lack of grid access that characterizes the
Acholi region, almost all households rely on
biomass for cooking and heating water. Of the
489 respondents across both surveys, 98%
identi?ed a biomass-based cooking method as
the primary method in their household. An open,
or “three stone”, ?re is the traditional cooking
method which is still practiced by 76% of the
sample. Wood stoves and charcoal stoves are
the other prominent cooking methods, combined
accounting for 22% of households. Only the
face to face interviews asked if respondents
specifcally owned a FES and 23% claimed they
did own either a wood or charcoal burning FES. However, the primary cooking data indicates not
all of them are used as the primary cooking method.
8 Grameen Foundation AppLab: Annual Presentation to Partners, presented to Mercy Corps in May 2012.
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Market Analysis for Fuel Ef?cient Cook Stoves
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It was hypothesized by the Mercy Corps team that primary cooking methods would vary with
market segment. The graphs below show the results of the market segment analysis for fuel
use. As can be seen, the proportion of people cooking on a three stone ?re does not change
signifcantly across each segment; however, a clear pattern can be seen among 20-25% of stove
users. Charcoal stoves are more widely used in the urban segment and charcoal use declines
steadily as households become more rural, with an inverse relationship in evidence for wood
stove use.
Satisfaction with open ?re cooking is a key measurement
as it can help estimate the willingness of the market to
pay for an improved cooking method. Satisfaction levels
among residents in the region suggest a willingness to
adopt new techniques does exist. In total, 39% stated they
are very or somewhat satis?ed with open ?re use, leaving
24% of those that use an open fre dissatisfed. This
population segment is also likely to be willing to invest in a
change to adopt new, improved techniques. A further 22%
demonstrate no commitment to open ?re cooking and
represent the second potential target group. Satisfaction
levels were analyzed by market segment but the results
remained consistent across each group.
16%
75%
8%
5%
83%
9%
6%
77%
15%
3%
74%
18%
URBAN PERI-URBAN RURAL 1 RURAL 2
Open ?re Charcoal stove Wood stove
Households: 93% collect ?rewood 11% purchase ?rewood 18% purchase charcoal
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Market Analysis for Fuel Ef?cient Cook Stoves
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Consistent with the primary cooking methods, ?rewood is the dominant fuel used in the region, and
the bulk of this wood is collected by members of the household itself– not purchased. Proximity to
a TC has a clear impact on fuel collection decisions. Charcoal and ?rewood is much more widely
purchased by households in or close to TCs; 34% of households in TCs purchase charcoal and
between 18% and 19% of households located in or within 2km of TCs purchase frewood. The
number of households buying charcoal is double that of households using charcoal stoves as the
primary cooking method, indicating many TC households vary their cooking methods.
The average time taken to collect ?rewood among respondents for both survey tools is 2 hours
and 14 minutes. Dividing by segment, it takes people in the urban segment over an hour longer to
collect ?rewood (2 hours 46 minutes) than it does for those living in more remote rural areas (1 hour
43 minutes) -- a difference of 64%. Time investment needed to collect wood and the likelihood of
purchasing fuel (either wood or charcoal) appears correlated, as illustrated in the graph. As can be
seen, the proportion of households purchasing fuel increases as time to collect ?rewood increases
(the graph assumes straight line progression between data points). This does not prove a causal
relationship and, the rapid decline in fuel purchasing against time taken suggests other factors
are involved. However, a correlation between effort needed to collect ?rewood and willingness to
purchase fuel is in line with the expected results when considering opportunity costs.
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Market Analysis for Fuel Ef?cient Cook Stoves
in the Acholi Sub-Region, Uganda mercycorps.org
Results from Mercy Corps’ Pader energy assessment
9
demonstrated that the time needed to
collect ?rewood has increased dramatically in recent years due to diminishing wood supplies.
Although adequate data on this point was not achieved in this survey to quantify this point, the
increasing dif?culty in collecting wood around urban centers is a common issue faced by countries
throughout Sub-Saharan Africa. Rising populations place growing pressure on forestry resources
for use as fuel, timber and agricultural land. As populations continue to rise across Acholi and
urban settings grow, the time and effort required for households to collect ?rewood will only
increase. Ultimately, alternative fuel sources as well as technologies that reduce fuel consumption
will continue to grow in importance.
Of the households claiming to purchase frewood, 88% also collect frewood. At the same time,
66% of households that purchase charcoal also collect frewood. These facts, combined with
the fact that a large number of households purchase charcoal as a secondary fuel, indicate that
sourcing fuel is a dynamic picture at the household level, with households supplementing their
regular fuel with alternatives as either costs or available resources vary from day to day.
Across the four study districts, charcoal is made in rural zones and sold wholesale to small retailers
in large sacks. Charcoal is also a supplementary source of income for many small farmers who
sell multiple bags to travelling traders. For consumption, charcoal is typically sold to individuals in
“basins” around TCs. The average cost of a basin is UGX 3,063 (US$1.25), with a mode of UGX
• Average time to collect frewood per year: 263.5 hours (11 days)
• Average cost of frewood per year: $55.86
• Average cost of charcoal per year: $77.73
9 Mercy Corps Uganda, Catalyzing the Solar Market, Pader Pilot Assessment, 2011
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Market Analysis for Fuel Ef?cient Cook Stoves
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Who Collects Firewood
Adult female 87.3%
Adult male 7.8%
Female child 26.2%
Male Child 6.8%
3,000 and the highest price reported at UGX 5,000 (US$2.04). Firewood is sold in bundles, that
appear to vary somewhat is size and weight, at an average cost of UGX 2,265 (US$0.92) and a
mode of UGX 2,000.
At an annualized rate based on the average number of units purchased per month, the average
cost for the households purchasing charcoal is US$77.73, and US$55.86 for those purchasing
?rewood. The exact proportion of annual income this investment represents is dif?cult to calculate
due to the challenges with measuring income as discussed earlier. However, it is clear that costs
associated with fuel purchase are signi?cant for households.
Most households collect wood and therefore perceive it to be free. However, investment in fuel
is not only measured in direct monetary terms, but by the opportunity cost of time invested in
fuel collection. Since 92.8% of households stated that they collected frewood, this opportunity
cost is a major impediment to overall local economic productivity and growth. Sample wide, the
average time needed to collect ?rewood was 134 minutes (2 hours 14 minutes), with an average
of 2.72 collections per week making it 364 minutes (6 hours 4 minutes) invested every week
per household in ?rewood collection. As shown in the table, the collection responsibilities fall
heavily on the female members of the household, limiting their opportunity to engage in alternative
income generating activities.
Quantifying this opportunity cost in terms of its monetary value in a region
such as Acholi is dif?cult. A practice found in some recent literature on
this topic, including fuel wood use studies in Ethiopia
10
and Nepal
11
, is to
determine the average daily rate for manual labor in the area, and to apply
this value to the time dedicated to ?rewood collection. This is referred to as
the ‘shadow price’ of collected ?rewood. According to informal data collected
by the Mercy Corps team in the Kitgum region, the prevailing day rate for
agricultural labor is UGX 6,500 (US$2.65), including food costs. The rate
for construction work is higher, however since the vast majority of wood
collection is done by women, and women are far more likely to engage in agricultural labor than
construction, the agricultural ?gure is applied as a more conservative estimate of the shadow
price. The following table shows the calculations for the shadow price of collected fuel by market
segment.
Fuel % Purchasing Ave units /mth Cost /unit (UGX) Cost /yr (UGX) Cost /yr (US$)
Firewood
(Bundle)
11.0% 5.2 2265 141,336 $55.86
Charcoal
(Basin)
18.4% 5.35 3063 196,645 $77.73
10 Damte, Abebe, et al. “Coping with Fuel wood Scarcity: Household Responses in Rural Ethiopia”. 2012, Environment for
Development
11 Nepal, Mani, et al. “Unbelievable but improved cookstoves are not helpful in reducing ?rewood demand in Nepal”. 2010,
Environment and Development Economics
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Market Analysis for Fuel Ef?cient Cook Stoves
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Hours Spent Collecting Shadow Price Potential “Savings”
from using a wood FES
Per Trip Per week Per month UGX / month UGX / month
Urban 2.77 7.53 30.10 24,457 12,229
Per-urban 2.07 5.62 22.49 18,269 9,135
Rural 1 1.88 5.12 20.49 16,649 8,324
Rural 2 1.72 4.67 18.68 15,175 7,588
Average 2.23 6.07 24.30 19,743 9,871
According to the shadow price calculation displayed in the table above (based on an average
of 8 hours’ work a day), the average household spends the equivalent of almost UGX 20,000
(US$8.16) on collected frewood each month, which is US$93.64 per year. Due to the difference
in time requirements for fuel wood collection for different segments, this cost is UGX 24,500
(US$10) for urban households and UGX 15,000 (US$6.12) for the most rural households. The
potential savings of adopting a FES are based on a fuel wood reduction of 50%
12
and show the
income that could be made during the time saved on wood collection. Although this is a generalized
picture, it demonstrates that the opportunity cost of using an open ?re to burn ?rewood rather
than a FES is signi?cant compared with average household income. Additionally, the savings
available per month are less than the cost of a Lorena or equivalent mud or clay FES.
Current FES Use
The consumer pro?le survey contained
an extra set of questions speci?cally for
households that currently own a FES.
Of the 252 respondents, 23% claimed
to own a FES, with 17% identifying it as
the primary cooking method. As the pie
chart shows, the majority of stoves were
either made by the owner themselves or a
community member was paid to help them,
suggesting they are the simpler-to-make
mud or clay brick models. Close to a quarter
were bought from a retailer; more likely to
be the metal based charcoal stoves, with
only a small number built by an NGO. Most NGO stove activity was during the IDP camps, with
people bringing the skills to build but not the actual stoves with them as they left the camps. The
12 This is based on a HH that previously used an open ?re switching to using the FES for every meal and no longer using
an open ?re.
Retailer
22.9%
Local
manufacturer
6.3%
Made it
43.8%
NGO built
4.2%
Paid someone
to build it
6.3%
N/A
14.6%
Sources of FES
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Market Analysis for Fuel Ef?cient Cook Stoves
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proportion of FES users whose primary source of income comes from farming is 63%, lower than
the overall average for households in TCs of 79%, indicating FES owners are more likely to have
regularly paying income sources.
The main drivers of the decisions to adopt a FES are spread across the range of options
provided. When asked to select all that applied, 40% of respondents identifed fuel saving and
30% identifed reduced time collecting fuel as their motivation for adopting fuel effcient cooking
technology. However, only 12% of
respondents made the link from
reduced fuel use to saving money
as a motivation for purchasing.
The fact that reduced wood
collection time is a signi?cant
factor supports the relationship
uncovered above between
purchasing fuels and time taken to
collect ?rewood by demonstrating
that reducing the time investment
in ?rewood collection is a desirable
outcome and one that a signi?cant
proportion of households are
willing to invest money into.
Those able to recall fuel use under
their previous cooking method
largely con?rmed reductions in fuel use. The average estimated reduction of fuel use among the
24 FES charcoal stove owners that were able to quantify change in fuel use was 19%. For FES
wood stove owners, the change in fuel use was quantifed as 27%. The reduction of smoke was
highlighted as a reason for purchase by 21% of respondents, however 85% of FES owners stated
that their FES stove produces either “less” or “much less” smoke than their previous cooking
method.
While the sample size of FES owners is small, it was possible to run some basic statistical analysis
to help identify several determinants of the likelihood of households purchase and satisfaction
with FESs. Most relationships cannot be measured with the data available, but the conclusions
that can be drawn from this analysis are:
• The factors that make a difference to the likelihood that a household will purchase a FES
are close proximity to an urban center and a higher level of dissatisfaction with open ?re
cooking.
• People who report less smoke emissions from FESs are not more likely to be satisfed with
their FES than people who do not report less smoke emissions.
The second of these results is particularly signi?cant as it supports the previous suggestion that
despite reduced smoke being a recognized bene?t of stoves, health considerations do not appear
to be a major factor in the decision to purchase a FES. This is in line with studies and research in
various parts of the world indicating that the negative health impacts of indoor air pollution are not
well understood in most communities that cook on open ?res. Without this understanding, smoke
is not seen as a major problem for those accustomed to it, and therefore its presence is not a
driver of change.
Saves time
collecting
30%
Saves money
12%
Uses less fuel
40%
Friends
have one
5%
Cooks faster
16%
Produces
less smoke
21%
Reasons for Adopting a FES
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Market Analysis for Fuel Ef?cient Cook Stoves
in the Acholi Sub-Region, Uganda mercycorps.org
Based on the analysis of both the supply and demand side of the FES market, this section presents
general observations on the market for FES as well as recommendations for stove manufacturers,
distributors and retailers planning to enter the market across the study area. It also looks at the
major challenges and provides recommendations for how Mercy Corps could intervene to help
facilitate the development of the FES market across Kitgum, Lamwo, Pader and Agago Districts.
General Observations
Gleaned from the study, the following observations are relevant to FES adoption within the Acholi
sub-region:
Awareness
Conditions for market stimulation are good thanks to a high general level of awareness about
FES in the market, increasing dif?culty sourcing ?rewood, increasing fuel costs, and signi?cant
dissatisfaction with cooking on an open ?re.
There have been no broad public messaging around the concepts of FES since the IDP camps. Up
to date information on the economic advantages is required to help build the market.
Financing
Access to capital for retailers and distributors is a major challenge that needs to be addressed.
The inability of vendors to purchase large stocks and act as distributors to sub-vendors is a major
bottleneck in the supply chain.
Conservative payback period calculations show a return on investment that is likely to be attractive
to customers if the information is well presented. Creative sales and customer ?nancing models
are required to give access to higher quality FESs to a greater proportion of the population.
Flexibility in fuel use suggests high fuel price sensitivity. Households are aware of the relative
costs of both types of fuel (charcoal and wood) and they are willing to substitute usage depending
on changes in cost or their own access to cash.
Distribution/Transport
Supply chain ef?ciency can be increased signi?cantly for imported FES through the development
of distribution hubs. These could minimize the cost of transporting products from Lira, Gulu and
Kampala into the area. Lowering these costs in turn will bring down the total production costs and
support price reductions or greater pro?tability.
Observations and Recommendations
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Market Analysis for Fuel Ef?cient Cook Stoves
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Competition
Entry of carbon ?nance-subsidized stoves into nearby markets will make it harder for local artisan
manufacturers to compete. However, local manufacturers will have an opportunity to create a
niche for custom stoves as awareness of FES increases.
Commercialization of mud stoves has not been attempted in the region. An opportunity exists to
exploit some value added mud stove models, focused initially at areas within 2 km of TCs where
?rewood purchasing is more common. Rural households do have access to cash at least some of
the year and this suggests a commercial model can be attempted. It was not possible, though, to
get an accurate picture of rural incomes and access to cash.
Recommendations for Stove Actors
The information presented proves that a genuine market for FES exists within the region. However,
demand is currently suppressed and a targeted approach is required in order to unlock it. The
consumer market segmentation table below shows that cooking habits can be delineated by
geography and that geographic segmentation is relevant for any FES manufacturers or suppliers
who intend to enter the study area market:
MARKET SEGMENT COMPARISON
Urban Peri-Urban Rural 1 Rural 2
Income (month) 72,991 60,000 - 60,684
% Farmers 78 90 94 94
Primary Cooking Method
- Open Fire 75% 77% 83% 74%
- Wood Stove 8% 15% 9% 18%
- Charcoal Stove 16% 6% 5% 3%
Satis?ed with Open Fire 33% 11% 47% 31%
Fuel Sources
- Collect Firewood 87% 95% 98% 100%
- Purchase Firewood 18% 19% 6% 0%
- Purchase Charcoal 34% 15% 7% 5%
Ave Time to Collect Firewood (minutes) 166 124 113 103
Shadow Cost of Collected Firewood (UGX per month) 24,457 18,269 16,649 15,175
Heard of FES 71% 73% 69% 63%
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Market Analysis for Fuel Ef?cient Cook Stoves
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Although many patterns are consistent across the market segments, this analysis highlights two
distinct target markets:
TARGET MARKET 1: Fuel Purchasing Households
This target market group is comprised of largely urban and peri-urban households which regularly
purchase fuel, face a higher shadow cost for collected ?rewood, have a slightly higher income
level, and are less satis?ed with open ?re cooking.
Economic bene?ts and ?nancial returns create a relatively straight forward and potentially
compelling argument for the adoption of a FES. This makes this ?rst identi?ed group the key
market segment for actors looking to access FES demand. There is an estimated 50,000 urban
and peri-urban households in the region, at least half of which are regularly purchasing fuel;
two thirds are unsatis?ed with open ?re cooking; and all face high shadow costs for ?rewood
collection.
A clear opportunity exists within this segment as market penetration is currently very low for both
charcoal and wood burning stoves among this target group. Only 16% of the urban market owns
a charcoal stove, with most of these being the traditional, non-ef?cient model. Penetration of
charcoal FES is estimated to be only 4% of this market, although the proportion using charcoal
burning mud stoves is unknown. The penetration of wood burning FES is less.
If the reductions in fuel cost are to be a convincing argument for FES adoption then an important
?gure to calculate is the estimated payback period. The high household fuel expenditure
demonstrated in this assessment creates an opportunity for FES suppliers through low payback
periods for the investment in a FES. The average household monthly expenditure on charcoal
of US$6 –US$7 produces a payback period for a metal cased FES of between two and three
months, assuming a 40% - 50% reduction in charcoal consumption. At the same time, the average
monthly expenditure on frewood of US$4.50 means that the payback period for a Lorena stove
would be just one month, and around four to ?ve months for a rocket stove. These ?gures present
a solid marketing case and should form the center of marketing messages for this ?rst target
group.
It is important for suppliers to understand the dif?culty in drawing overarching generalizations about
the cooking behavior for households in the urban and peri-urban target group. Many households
use fuels inter-changeably depending on access and around half of all these households still use
open ?res and do not purchase any fuel. This is a re?ection of the fact that “urban” areas in Acholi
are small and with rural-based economies (78% of income derives from farming). Therefore,
households in the study area do not follow patterns of larger urban areas in Uganda where FES
suppliers like Ugastove and ILF currently operate.
• Average payback period for a charcoal burning FES = 2-3 Months
• Average payback period for a wood burning rocket FES = 4-5 Months
• Average payback period for a Lorena mud FES = 1 Month
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Market Analysis for Fuel Ef?cient Cook Stoves
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Even among this market segment, which has a slightly higher income level, the issue of price and
access to ?nance comes through strongly. Awareness of FES is quite high but they are widely
perceived as being too expensive, creating a major obstacle. The average price paid by current
FES owners indicates that at the current time people are only willing to pay roughly the cost of
2 weeks’ worth of charcoal or ?rewood for a FES. The higher likelihood of current FES users to
derive income from non-farming sources suggests a more regular income is a factor. This means
suppliers and retailers need to investigate methods for consumer ?nancing in order to stimulate
the suppressed demand. The fact that no respondent owns a FES purchased on credit or in
installments indicates that at this point there is no consumer ?nancing available, con?rming the
?ndings from discussions with retailers.
Recommendations
• Flexible fnancing schemes:
Income, regardless of geographic dispersion, ?uctuates according to the agricultural
seasonal calendar. Spending is also rigid. Accordingly, market penetration is reliant
on ?exible ?nancing mechanisms that most closely re?ect current cooking and fuel
expenditures. Companies that are able to experiment with incremental payment plans,
credit mechanisms, partnerships with local fnancial institutions or VSLA channels and even
with barter mechanisms (produce for stoves, for example) will sell the most products.
• Targeted marketing:
The opportunity to recoup fuel costs quickly by adopting FES is the likely entry point for FES
sales. Designing marketing and sales strategies based on payback periods with respect to
fuel cost savings is a potent strategy for targeting FES sales to charcoal users.
TARGET MARKET 2: Firewood Collecting Households
The rural population is a more congruous market segment, with the vast majority cooking on three
stone ?res and almost all collecting ?rewood themselves. This population is largely comprised of
farmers who derive some cash income from crop sales. This segment also includes around half of
all urban and peri-urban households which do not currently purchase fuel, making it a larger but
more challenging market segment to reach.
The major challenge in targeting this segment lies in the incentive structure. The collection rather
than purchasing of fuel means the ?nancial incentive is not as clear to consumers. Placing a
monetary value on time or presenting the shadow price of collected wood is not easily or well
understood. In addition, the pressure on forestry resources is lower the further away from TCs
you travel. This lowers the time burden felt by more rural communities. The reduction in time
collecting wood is a signi?cant factor behind the purchasing decisions of the current FES owners;
however, all FES owners identi?ed are urban based for whom the shadow cost of collected wood
is substantially greater.
Since economic arguments are less potent for this group actors need to promote other incentives
in order to promote FESs, and an alternative is the health bene?ts. Current awareness of health
34
Market Analysis for Fuel Ef?cient Cook Stoves
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problems from indoor smoke pollution is low and the survey fails to identify health factors as major
determinant factor for cooking behavior.
The second major barrier to building a commercial market for FES among communities that
collect ?rewood and cook on open ?re is the limited commercial value of the wood-burning mud
stoves, such as the Lorena stove. Many people are familiar with how to make basic wood burning
FESs with mud and local materials, and the simplicity of the model and access to materials makes
commercialization dif?cult.
Recommendations
• Targeted Messaging:
As monetary bene?ts of FES are much less tangible for rural wood users, alternative
messaging for boosting FES appreciation are required to penetrate the market. Recent
efforts to test health messaging have been effective toward increasing FES adoption.
Research in Uganda under the USAID-funded Traction Project has shown that once
knowledge of health impacts is spread, health concerns become a major driver of decisions
to purchase FES.
• Product Innovation:
The simplicity of FES mud stoves has inhibited its value as a commercial product, resulting in
less ef?cient models and limited propagation. Commercialization of simple FES is possible,
however. Adding value to a product such as utilizing bricks that add ef?ciency or applying a
metal top to boost ease of use could stimulate commercial demand while maintaining a low
enough cost.
• Business Model Innovation:
To commercialize low-cost mud stoves, experimentation with effective business models
along with product innovations is required. Propagation of high quality stoves has not
resulted from Training of Trainer models implemented in the region. However, the opportunity
exists to test innovative commercial models, including the following: group training classes;
experienced and skilled stove technicians that offer stove-building services, shops that offer
a range of FES products targeted to speci?c market segments. Commercial efforts should
be focused initially within 2 km of TCs where ?rewood purchasing is more common and
alternative, fuel-saving stoves have more tangible value for potential customers.
Facilitation Role for Mercy Corps
Following the assessment, Mercy Corps believes that there is tremendous merit in FES adoption
as well as a potent FES market opportunity within Acholi. Across the sub-region, Mercy Corps
can play a valuable role in helping to accelerate access by reducing barriers to product availability
while concurrently catalyzing consumer demand for FES.
Mercy Corps is dedicated to a market-based approach to facilitate energy poverty reduction.
Rather than serving as a direct actor, Mercy Corps works to target key leverage points. We place
our resources both where the market is failing to function effectively and, at the same time, where
35
Market Analysis for Fuel Ef?cient Cook Stoves
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the resources will result in the greatest possible and lasting impact. Mercy Corps may lead the
following interventions within Acholi:
Improve distribution strategy
There are ineffciencies within the current distribution models employed by ILF and Ugastove.
Such inef?ciencies will limit FES market penetration in Acholi where poor infrastructure adds
signi?cant costs to transportation and coordination. Mercy Corps may work with these partners,
as well as other competing partners, to identify and to model improved distribution strategies.
One strategy will be to partner with the companies to help them to identify viable and active
distribution partners; entering markets through active distributors with large networks of sub-
venders rather than entering markets through dispersed and individual retailers will likely reduce
costs and improve ef?ciency.
Stringent monitoring requirements for carbon ?nancing impinge on increasingly decentralizing
distribution strategies to reach an ever-growing market. However, distribution channels do offer
opportunities to embed information within the channel. It will be important to maintain monitoring
requirements while concurrently expanding distribution ef?ciently. One way to do this will be to
enhance the capacity of actors in the supply chain and particularly retailers who are responsible
for the data collection. Mercy Corps could play an effective role in helping to design new models
for embedding training for retailers within distribution channels. Mercy Corps could also partner
with other organizations that already provide effective training services to retailers to transfer this
training.
Identify commercial models for mud FES
Distribution schemes are also important when considering mud stoves for the rural market.
Commercial models for these stoves are not currently in existence in the region and commercial
actors do not now few this product as a viable commercial opportunity. With this said, the study
proves that the opportunity is there with appropriate product and business model adaptation.
Mercy Corps could play a valuable role to identify and to innovate on mud FES products. Further,
Mercy Corps could develop and test competing commercial business models, identifying which
components lead to highest access and adoption. In this role, Mercy Corps could bring together
community members that are involved in making these FES and help to design potential business
models that can be tested for commercial feasibility. This would include looking at the product
design itself and identifying ways to add value to facilitate commercialization.
Build awareness through social marketing
Though a potent market for FES does exist within Acholi, consumers not only lack access to the
product but are unaware of the many bene?ts of adoption. Working to crowd-in FES supply is
only one part of the equation; it will also be important to stimulate demand for FES as well. One
role that Mercy Corps could play to help to catalyze demand would be to disseminate information
about the bene?ts of adopting this technology as well as advertising new, local FES availability.
A nuanced approach to demand-pull is required. Some market segments will respond to messaging
that targets the monetary bene?ts of fuel-saving as quanti?ed within the study. Other market
segments, however, will require messaging targeted to the health bene?ts of FES adoption. This
36
Market Analysis for Fuel Ef?cient Cook Stoves
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type of marketing should be pursued by stove makers and suppliers themselves. However, the
actors relevant to this market do not have the resources or capacity to reach suf?cient proportions
of the market. Mercy Corps can play a valuable role in producing and disseminating general social
messaging as well as pulling together private actors and facilitating coordinated action in order to
maximize the impact of the limited marketing each actor is capable of investing in.
Facilitate access to ?nance
Limited fnancial resources inhibit access to FES for all actors within the value chain. Though
credit does exist within the value chain itself, it is only available for a small minority of actors.
Manufacturers are unable to access the capital they need to grow their businesses to scale.
Distributors and retailers are unable to access the capital required to build inventory and to expand
their consumer base. Consumers are unable to pay for products in a single purchase. Limited
access to ?nance within the FES value chain creates signi?cant inef?ciencies that severely inhibit
market growth and product access.
Mercy Corps may be able to facilitate access to ?nance along the value chain. Mercy Corps could
leverage existing relationships with banks and SACCOs to generate ?exible ?nancial products for
businesses. Mercy Corps could also work to design and to facilitate alternative business ?nancing
schemes such as micro-consignment models. With respect to consumer ?nance, Mercy Corps
could help to design loan products in partnership with ?nancial institutions for FES themselves.
Institutions could connect with distributors or suppliers and provide loans speci?cally for cook
stoves, loans that are bundled with other products such as solar lighting, or even loans that are
folded into other offerings.
Mercy Corps could also help to identify micro-lenders with the capacity to take on the distributor
role and connect them with product suppliers – both local and from elsewhere in Uganda – to
help to promote the product among members. Mercy Corps could also work with suppliers and
distributors to help them to design and to experiment with ?exible ?nancing options.
Strengthen business acumen
Developing retailer, distributor and supplier capacity to design innovative models and to manage
successful businesses will improve access and adoption of FES. Rather than working with each
group directly, Mercy Corps would be more effective by working with business support services
in the region. Several private sector entities already exist that provide business planning and
management consulting services. By working to strengthen these groups and the quality of their
product as well as to connect them to retailers, distributors and suppliers, Mercy Corps can have
a wide and longer-lasting impact on business skills within the region.
doc_745188752.pdf
As outlined, the Acholi sub-region is a relatively more rural and poor area of Uganda. These factors, combined with poor transportation infrastructure, lack of business services, and limited commercial development make the market context significantly different to other parts of the country, notably Kampala where most FES activity is focused.
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Market Analysis for Fuel Ef?cient Cook Stoves
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mercycorps.org
David Nicholson and Kim Beevers
Market Analysis for Fuel Ef?cient Cook Stoves
in the Acholi Sub-Region, Uganda
Photos: Kim Beevers/Mercy Corps
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Market Analysis for Fuel Ef?cient Cook Stoves
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Disclaimer
This assessment is made possible by the generous support of the American people through the
United States Agency for International Development (USAID) under the terms of Cooperative
Agreement No. FFP-A-00-08-00075-00. The contents are the responsibility of Mercy Corps and
the Healthy Practices, Strong Communities (HPSC) Program and do not necessarily re?ect the
views of USAID or the United States Government.
Acknowledgements
The authors would like to thank the Mercy Corps Uganda team for their support during the
research and development of this assessment. Particular thanks go to the Economic Development
Team managed by Atifu Kilaga with support from Patrick Anywar, Francis Emol and Godfrey Otika.
Their hard work to organize and to gather primary data is the heart of this work. We would also like
to acknowledge all the organizations, entrepreneurs and individuals who assisted with research by
sharing their knowledge, experience and opinions.
For further information on the assessment or Mercy Corps’ global energy programming in general,
please contact Senior Energy Adviser David Nicholson: [email protected]. For
inquiries speci?c to Mercy Corps Uganda, please contact Economic and Market Development
Program Manager Kim Beevers: [email protected]
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Table of Contents
Executive Summary 1
Introduction 4
Background on Acholi Sub-region 4
Mercy Corps Uganda 4
Mercy Corps Market Facilitation Programming in Uganda 5
Methodology 6
Supply Side Market Analysis 10
Macro Context: Fuel Ef?cient Stove Market 10
Acholi Market Analysis 11
Value Chain Analysis: Charcoal Stoves 16
Consumer Energy Use Analysis 22
Household Wealth 22
Cooking Methods 23
Current FES Use 28
Observations and Recommendations 30
General Observations 30
Recommendations for Stove Actors 31
Facilitation Role for Mercy Corps 34
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Energy poverty is a major driver of the developing world’s overall poverty cycle; it results in ill
health, environmental degradation and limited economic growth where it is needed most. However,
in recent years companies have begun to distribute innovative, consistent and affordable energy
options like solar lanterns and fuel-ef?cient stoves that offer highly bene?cial, cost-saving
alternatives to traditional energy sources. Though these products reduce the energy burden
and improve the quality of life and opportunity for the most marginalized members of the global
community, they are also failing to rapidly and broadly reach their target markets.
This report details the results of a fuel ef?cient stove (FES) market assessment carried out across
four districts in the Acholi sub-region of northern Uganda throughout April and May 2012. This
assessment is part of a broader examination of the energy market within the sub-region carried
out by Mercy Corps Uganda to inform its intervention strategy in this sector.
Report ?ndings indicate demand for FES across the Acholi sub-region as well as opportunities for
FES actors to meet this demand with products available on the Ugandan market.
Key ?ndings are as follows:
SUPPLY-SIDE:
• FES investment within Uganda is increasing and evolving rapidly. There are multiple Ugandan
mass-production facilities that are growing production and expanding distribution. Further,
several international companies are beginning to import high quality FES units. Carbon
?nancing supports both locally produced and imported FES.
• FES sector has not yet broadly reached the Acholi sub-region. Though FES do exist on the
Acholi market, most are artisan models with a total combined production of fewer than 250
units a month. Mud and clay-based FES are more common, built for either wood or charcoal
and based on models propagated by NGOs when most inhabitants were living in IPD camps.
Neither Ugandan FES mass-producers nor imported FES have made substantive inroads into
the Acholi market.
• All local manufactures are single person enterprises and most have not attempted to increase
production capacity to serve a larger market. Challenges to up-scaling local stove manufacturing
within Acholi include dif?culty in commercializing mud and clay stoves, varying input costs,
inef?cient supply chains and low production capacity of FES makers.
• There are two notable Ugandan stove manufacturers that are able to produce stoves in larger
quantities. Both manufacturers are able to access cursory funding to lower stove costs to the
end user and to subsidize the costs of building distribution channels and raising awareness for
their products. Barriers that inhibit these mass-producers to enter the Acholi market include
high transportation costs, lack of ef?cient distribution systems, minimal sub-vendor liquidity
to purchase inventory and low sub-vendor business skill and acumen to creatively adapt
distribution mechanisms.
Executive Summary
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DEMAND-SIDE FINDINGS:
• Almost all households within Acholi (98%) identifed a biomass-based cooking method as
their primary cooking method. Of these, 76% use three-stone fres, 14% use wood burning
stoves and 8% use charcoal burning stoves. Levels of satisfaction for current cooking methods
amongst residents in the sub-region suggest a willingness to adopt new stove technologies.
• Consistent with primary cooking methods, frewood is the dominant fuel used in Acholi. The
bulk of wood used is collected by members of the household itself – not purchased. Overall,
93% of households collect frewood, 11% purchase frewood and 18% purchase charcoal.
Proximity to a trading center in?uences household fuel and thus stove preferences. Charcoal
stoves are more widely used amongst the urban segment; charcoal use declines steadily as
households become more rural, where wood use increases.
• Close proximity to an urban center and higher level of dissatisfaction with open fre cooking
correlate to increased household willingness to purchase FES. Households that report less
smoke emission from their FES are not more likely to be satis?ed with their FES than people
who do not report less smoke emission.
• The time investment required for a household to collect wood is directly correlated to a
willingness to purchase fuel (either wood or charcoal) -- the likelihood that a household will
purchase fuel increases as time to collect ?rewood increases. Sourcing fuel is a dynamic
picture at the household level; households regularly supplement or substitute their preferred
fuel with alternatives as either costs or available resources vary.
• Annual Acholi household fuel expenditures according to fuel preference are US$78 for
charcoal and US$56 for frewood. For household collecting frewood, the average total weekly
investment in collecting wood is 6 hours and 4 minutes. According to the shadow price
calculation based on prevailing agricultural labor costs, collected ?rewood costs a household
an average of US$94 per year.
• Average monthly household expenditures on charcoal total US$6 –US$7; the payback
period for a metal-cased FES is between two and three months. Average monthly household
expenditures on frewood total US$4.50; the payback period for a Lorena stove model is one
month.
Key observations and recommendations are as follows:
• Key Market Segments: There are two distinct segments within the Acholi FES market. The ?rst
segment is comprised of urban and peri-urban households that purchase fuel, possess more
income and are less satis?ed with their current cooking technology. This segment is more likely
to adopt FES technologies that are imported from Ugandan mass-producers or imported into
the country than the second segment.
The second segment is comprised of rural households that cook on three stone ?res and
collect most ?rewood themselves. The second segment is particularly price-sensitive and
unlikely to adopt FES imported into Acholi. However, this segment may be willing to adopt
inexpensive mud FES. Propagation of high quality stoves has not resulted from Training of
Trainer models implemented within Acholi. Moreover, commercial models for mud FES do not
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yet exist within the sub-region. Commercialization of simple FES is possible, however. In order
to commercialize low-cost mud stoves, experimentation with effective business models along
with product innovations is required.
• Awareness: Conditions for market stimulation are promising due to a high general level of
awareness about FES in the market, increasing dif?culty sourcing ?rewood, increasing fuel
costs, and signi?cant dissatisfaction with cooking on an open ?re. Current information on the
economic advantages of FES adoption is required to help build the market. For charcoal FES,
the opportunity to recoup fuel costs quickly by adopting FES is the likely entry point for FES
sales. Designing marketing and sales strategies based on payback periods with respect to fuel
cost savings is a potent strategy for targeting FES sales to charcoal users. For mud FES, as
monetary bene?ts of FES are much less tangible for rural wood users, alternative messaging
for boosting FES appreciation are required to penetrate the market. Recent efforts to test
health messaging have been effective toward increasing FES adoption.
Purpose of this Document
This document is designed to inform energy actors of the potent market opportunity for new,
innovative, cost-saving and energy-saving fuel ef?cient stoves within the Acholi sub-region. The
report highlights opportunities and offers recommendations for energy actors to innovate on
current business and distribution models to more broadly reach this market. It also outlines the
weaknesses in the existing systems that Mercy Corps has identi?ed as key points for future
intervention. Lastly, the document offers transferable lessons for companies targeting similar rural,
agriculturally-based and transitional markets across Africa for distribution and sale of cost-saving
and bene?cial products.
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Background on Acholi Sub-region
In 2006, the Ugandan government and the Lord’s Resistance Army ended over two-decades of
armed con?ict that displaced millions of people and destroyed economic productivity within the
Acholi sub-region of northern Uganda. During the con?ict, the humanitarian community stepped-
in to provide material support where the market was failing to function. Working in concentrated
locations for a prolonged period, aid drove the provision of products and services to meet population
needs. Concurrently, ?nancial institutions, government and businesses chose to invest in other,
more accessible regions, leaving Acholi underdeveloped and disconnected. In recognition of the
changing post-con?ict context, humanitarian agencies have steadily cycled out of Acholi while
a small amount of outside investment has trickled in. However, what was once a humanitarian
challenge has now become a long-term, complex development challenge. The protracted con?ict
handicapped growth, inhibiting agricultural productivity, hampering trade and impeding investment.
As humanitarian agencies have scaled-down their involvement in the region, a gaping hole in
product and service provision has remained.
The Acholi economic environment is a complex and systemic challenge that has resulted in costly,
inef?cient and fragmented Acholi markets that are failing to spur inclusive economic expansion
and more widespread competition. As a result, more readily available, high quality products and
services that meet the needs of households and businesses alike are absent. This absence is
signi?cant. At its most basic level, this means that the quality of life and the opportunities it holds
for the Acholi are poor. In other words, day-to-day activities are dif?cult, time-consuming and
expensive for families across Acholi. This is particularly true for women. More often than not,
Acholi women are solely responsible for the welfare of their families in addition to the economic
productivity of their households.
Mercy Corps Uganda
Mercy Corps helps people in the world’s toughest places turn the crises of natural disaster, poverty
and con?ict into opportunities for progress and has worked in East Africa for more than 20
years. Mercy Corps is also a recognized global leader in the design and implementation of market
development programming; our experts are skilled in improving core market relationships and
transactions and supporting functions and rules of market systems to improve access, and the
terms of that access, to the poor. When applying market-driven development, Mercy Corps is
consistently facilitative, working behind local actors to improve performance sustainably. Mercy
Corps employs ?ve main principles throughout market-driven programming: systemic approach,
evidence-based interventions, contextually driven, sustainability, and partnerships.
Mercy Corps began work in Uganda in 2006, offering humanitarian assistance and peace-building
support to internally displaced populations within the Acholi region. Mercy Corps has expanded
programming within Acholi as well as into Karamoja, focusing on integrating well-targeted,
short-term humanitarian assistance within a larger program of market-oriented development.
By addressing a number of overlapping and associated needs within a wide range of activities
Introduction
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Market Analysis for Fuel Ef?cient Cook Stoves
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(livelihoods, peace building, agriculture, water and sanitation, health and nutrition, ?nancial access
and economic development), Mercy Corps applies a broad but integrated approach that addresses
challenges to product and service availability, access and utilization.
Mercy Corps Market Facilitation Programming in Uganda
Within the Acholi sub-region, Mercy Corps has worked to spearhead the transition ?rst to
post-con?ict recovery and now to market-driven and facilitative development. Throughout 2011,
Mercy Corps implemented a pilot solar project with the goal to facilitate sustained access to
affordable solar products for inhabitants of Pader District in northern Uganda. To realize the pilot
project goal using a systemic and facilitative approach, Mercy Corps chose to mitigate barriers
that prevented Kampala-based company entry into the Pader market while also incentivizing
local actors to sell solar in the District. The project resulted in substantial, unsubsidized product
sales that are continuing to grow exponentially in number and to move over sustained distribution
channels over a year after the project has concluded. Moreover, the success of the pilot has
illuminated a potentially robust market with high demand for products that are not currently
available to consumers and are not likely to be available to consumers soon without outside
intervention – like fuel ef?cient stoves.
Building on the success of the solar pilot model and to best meet needs arising from the changing
Acholi development context, Mercy Corps has integrated a new Economic Development Team
(EDT). The goal of the team is to speed the pace at which businesses adapt to meet the needs
of the poor across our geographic area of programming and areas of technical focus, partnering
with private sector actors to build local capacity for the provision of vital goods and services. To do
this, the EDT demonstrates that Acholi is a viable market, offers tools to extend reach, crowds-in
tailored products and services, and then documents and shares learning so that more businesses
can enter this market and innovate on earlier models to better meet the needs of the poor.
Amongst EDT projects is a focus on initiatives to improve the Acholi energy markets’ performance,
adapting and growing the solar pilot model to best incorporate fuel ef?cient stoves and other
products and services that reduce energy poverty. Energy poverty is a major driver of the
developing world’s overall poverty cycle; it results in ill health, environmental degradation and
limited economic growth where it is needed most. Moreover, energy poverty negatively impacts
women and girls disproportionately to their male counterparts. Females are almost exclusively
responsible for household cooking, in-home chores, wood collection and nearly daily incremental
fuel purchases. As a result, females are also disproportionately impacted by respiratory illness
and eye diseases that result from indoor air pollution, risks of injury from open ?res and kerosene
lanterns and lost economic opportunities that result from time spent gathering energy sources
rather than on productive livelihoods.
In recent years companies have begun to distribute innovative, consistent and affordable energy
options like solar lanterns and fuel-ef?cient stoves that offer highly bene?cial, cost-saving
alternatives to traditional energy sources. Though these products improve the quality of life and
opportunity for the most marginalized members of the global community, they are also failing to
rapidly and broadly reach their target markets.
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Market Analysis for Fuel Ef?cient Cook Stoves
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The following study outlines the Acholi cooking energy market and opportunities to innovate on
business and distribution models to crowd-in new, innovative, energy-saving products to reach the
market at scale.
This assessment was carried out during April and May 2012 across four districts within the Acholi
sub-region: Kitgum, Lamwo, Pader and Agago. The assessment can be divided into two sections:
The ?rst section delineates demand for FES according to consumer segment while the second
section maps and analyzes stove supply-side market dynamics.
The consumer market research was conducted during April and May 2012 by an experienced
group of Mercy Corps Economic Development Team members based in Kitgum. Households from
each of the four districts in Acholiland were targeted in order to develop as broad an understanding
of the region as possible. Reaching suf?cient remote, rural communities was recognized as a
challenge, and therefore two survey methods were employed to overcome this dif?culty:
1). In-person interviews carried out in each district. These interviews were conducted in the local
language in towns, trading centers and villages throughout the districts. Interviews were divided
evenly among tiers to ensure a wide and representative coverage. Interviewees were selected
with the help of local government of?cials to ensure that participants from nearby households only
were selected. In as much as possible, of?cials also helped to identify participants across income
and gender strata.
2). Mobile-based surveys carried out with support from 99 Community Knowledge Workers
(CKWs) backed by the Grameen Foundation AppLab across Kitgum, Pader and Agago Districts.
Currently, no CKWs operate in Lamwo District. CKWs, village-level agricultural extension agents
charged with disseminating agricultural information to nearby farmers utilizing mobile technology,
were asked to interview fellow farmers throughout their geographic areas. Most CKWs live in small
and medium town centers or in rural locations; they do not live in urban settings. Surveys conducted
by CKWs included questions to support consumer segmentation across geography. CKWs have
operated for nearly one year under Mercy Corps programming and have received considerable
training and support from the AppLab team in order to carry out regular data collection accurately.
Mercy Corps utilizes this channel for data collection purposes often.
In total 252 in-person interviews and 237 CKW-interviews were conducted, giving a total sample
of 489 respondents. Both questionnaires contained mostly forced-choice questions and mirrored
each other as much as possible. Results from the in-person interviews were examined for accuracy
and error at the end of each day and were then recorded in a pre-designed Excel document for
ease of analysis. Data entry was also monitored for accuracy and error. CKW survey results were
collected via mobile and uploaded to a central database in real-time. Results were also monitored
and cleaned for accuracy.
Methodology
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Based in part on the results of a small-scale energy assessment
in the Pader District of Acholi and in part from ongoing desk
research, the Mercy Corps team hypothesized that geographic
proximity to trading centers (TC), accounting for the variation in
size of the TC, would be a key determinant for behavior around
energy use. Typically, household location in urban or rural settings
is an important determinant of fuel type and fuel type determines
which stove a household will use. With this in mind, consumers
were divided into four market segments based on geographic
proximity of their household to the nearest TC. Survey respondents
were asked to self-identify household distance from the nearest TC. These responses were used
to segment the market as shown in the table. The terms used are relative and it should be noted
that “urban” in the context of Acholiland simply means within a trading center and “peri-urban”
means within 2km of a trading center. In reality both would be considered rural in the context of
the country as a whole.
The chart illustrates how the segments were
broken down in terms of proportions as well as
the survey technique that was used to reach
them. As expected the face-to-face interviews
captured more people from the urban segment,
whereas the CKWs were able to reach more
from the per-urban and rural segments. In
the end the combination of the consumer
pro?le interviews and CKW surveys resulted
in a solid spread between the segments. The
“other” category represents a combination of
no response, unsure of distance, and other
unclassi?ed responses. These segments are
used in the consumer data analysis section
to test the hypothesis that proximity to a TC
impacts cooking behavior.
Moreover, both surveys were supplemented by
a total of 33 focus group discussions conducted in TCs. Participants were selected according
to the same methodology as in-person interviews. Local offcials also helped to identify
participants and, in as much as possible, careful attention was made to ensure gender balance
and appropriate representation of varying income segments amongst each group. Again,
Mercy Corps Economic Development Of?cers led each FGD according to a predetermined set of
questions designed to add depth to survey results.
Concurrently, information on the supply side of the cook stove market was gathered. The
Mercy Corps team mapped stove retailers, distributors and manufacturers across the region. A
similar exercise was conducted at the national level, using the recent market assessment by the
Global Alliance for Clean Cooking (GACC) as a guide.
1
The purpose of both exercises was to
outline the current stove supply chain, from producers to retailers, identifying actors that are either
Distance to TC Segment
0km Urban
1 – 2km Peri-urban
3 – 5km Rural 1
5 – 10km Rural 2
1 GACC, Uganda Market Assessment - Sector Mapping. 2012
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already active in the market or that have the capacity to become active in Acholiland over the
coming year. This time frame ruled out inclusion of some newly imported stoves poised to enter
the Kampala market with the in?ux of carbon revenue expected in 2013.
Once the mapping exercise was complete, structured interviews were conducted with each actor.
These interviews were designed to gather as much information as possible about the products
themselves, the functions of the existing supply and value chains, and major trends in supply and
demand. Product testing was not a part of this assessment; however, results from ef?ciency tests
were obtained when available.
Challenges
As with any information gathering exercise, a number of challenges were encountered by the Mercy
Corps team. First, although the CKW tool provides an excellent way to reach many widespread
rural households inexpensively, it was not possible to replicate exactly the questions contained in
the consumer pro?le questionnaire. CKW survey questions are deliberately limited in number as
CKWs are only obligated to complete a certain number of survey questions monthly. Moreover,
shorter questionnaires result in more accurate responses; AppLab also limits surveys accordingly.
However, as a result, analysis of the full sample was not always possible.
Second, gathering accurate information on key issues was a challenge, particularly for household
income population data. Income is a key measurement in the energy assessment as it allows
for the calculation of proportional expenditure on fuel. However, the geographic area is reliant
on income derived from agriculture. Agricultural income is both seasonal and varied and most
households record income over time. Consequently, households are often unaware of income
levels and responses are likely estimates. Similar
challenges are re?ected in responses about distances
traveled or time taken for fuel collection activities.
Accurate, self-monitoring for these metrics is not a
common occurrence and responses re?ect subjective
estimates.
Notable, reliable data on the size of the potential
market in Kitgum, Lamwo, Pader and Agago Districts
is dif?cult to obtain. However, a combination of data
from recent and reliable sources, including the UN and
UBOS are reasonably applied for market projections in
this assessment.
A combination of data from a UN water study of the
region and a government household survey in 2010
was used to develop an estimated population ?gure
of 870,000 people and 144,800 households. This
estimate goes not represent of?cial government
2 Water Sources, Accessibility, and Operation Status Report, OCHA 2010
3 Uganda Bureau of Statistics, National Household Survey 2009 / 10
Market Size Estimates
Population Figures
2
:
Lamwo 158,100
Pader and Agago 481,800
Kitgum 228,900
Total Population 868,800
Average Household size
3
6.0
# of Households 144,800
% Urban / Peri-urban Population 33%
# Urban Households 47,784
# Rural Households 97,016
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?gures. However since the last full census was almost 10 years ago and therefore out of date in
a region that had undergone signi?cant transition in recent years, it is considered that the water
study ?gures provide a more accurate ?gure.
The estimation of the proportion of households of living in urban (within trading centers) and peri-
urban (1-2 km from trading centers) settings was also based on the 2010 UN water survey which
provided population density maps for each district. These maps were used to estimate the number
of people in each urban area. This method does not provide a truly accurate ?gure, however it
uses the most accurate ?gures available to date, and provides a usable picture of the market size
and distributio
Third, the approach to focus group discussions yielded limited ?ndings. It was dif?cult for the
team to set up focus groups according to distinct consumer segments. Namely, isolating focus
groups to include women only could have resulted in more data regarding this particular segment.
However, though not isolated, all focus groups did include a breadth of participants across
consumer segments.
Finally, the informal nature of the local stove manufacturing industry combined with the remote
nature of many communities created challenges in identifying all actors during the mapping
exercise. This was particularly true for mud stove makers, many of whom worked on an occasional
basis and did no real promotional activities, making them dif?cult to locate.
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The following section summarizes the macro fuel ef?cient stove (FES) market as well as the
speci?cations and position of the products expected to be relevant to the Acholi market. It also
provides a SWOT analysis of the major product categories and then presents analysis of the
existing supply chains in order to identify major market barriers where intervention is required.
Macro Context: Fuel Effcient Stove Market
Biomass accounts for 91% of total energy used in Uganda, where only 11% of the population has
access to the grid. Unsustainable wood and charcoal use has resulted in massive deforestation
and associated steep fuel price increases. Consequently, access to cooking energy sources and
clean cooking options is an increasingly important challenge in Uganda.
According to a recent assessment by the Global Alliance on Clean Cooking (GACC), 3.8 million
of Uganda’s 7 million households cook on open ?res in an enclosed space. Nearly 1 million
additional households cook on traditional charcoal stoves with high exposure to carbon monoxide.
Awareness of indoor air pollution (IAP) amongst the general population is virtually non-existent
despite the global attention being given to negative health implications of traditional cooking
practices. Many urban households aspire to cook with kerosene, liquefed petroleum gas (LPG) or
even electric stoves as they are cleaner and more convenient. However, only a small segment of
the market can afford to do so. This leaves the vast majority of the population reliant on biomass
for cooking fuel.
A commercial market for biomass fuel ef?cient stoves does exist in Uganda. Rising demand for
biomass FES mirrors parallel rising fuel costs. Despite strong demand, supply-side constraints
inhibit greater FES market penetration. Nearly all FES stove production and distribution is focused
in Kampala where a densely populated market dominated by charcoal users with more disposable
income drive sales. Few stove producers have reached scale and those that have are plagued by
high costs associated with distribution beyond the capital city including costs required to build
networks of retailers, to advertise a “push” product and to transport bulky stoves long distances
over dilapidated roads.
Currently, there are two notable companies with distribution beyond the vicinity of the capital
and with the capacity to expand to new markets: International Lifeline Fund (IFL), based in Lira,
and Ugastove, based in Kampala. Approximately ?ve other FES charcoal stove manufacturers
are operational in Kampala, none of which currently produce more than 500 units a month.
Additional constraints to FES supply-side growth include limited access to land or premises for
manufacturing and product sourcing needs, inadequate access to investment required to grow
businesses, rising raw material costs and high variability of stove quality. As a result of the many
challenges to growth, the FES business is dominated by artisans who are only able to glean small
pro?t margins for their products.
Supply Side Market Analysis
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Carbon Finance
Carbon ?nance for fuel ef?cient stoves has been active in Uganda for several years and has
proved it can play an important role in attracting investment and reducing the costs of better
quality stoves. Uganda hosts the world’s ?rst Gold Standard voluntary market stove project, run by
Impact Carbon and Ugastove, which has generated credits for three years. In addition to voluntary
market activity, the development of new rules for projects in the UNFCCC Clean Development
Mechanism (CDM) through Programme of Activity (PoA) projects has opened the door to carbon
?nance from the regulated market. This revenue potential has brought in outside donors and
investors for a variety of cook stove projects that are currently in the process of registration. Once
registered with the UN, these projects could funnel investment to local manufacturers to help
improve the quality of stoves and the scale of stove market penetration. These projects might also
ensure the arrival of high-quality, imported FES.
Carbon ?nance could represent a paradigm shift in the FES market and is therefore relevant to
this analysis. In this model, manufacturers and importers would derive most pro?t from carbon
returns that are expected to run well above the cost of stoves themselves over time. This provides
a signi?cant opportunity for local and foreign FES manufacturers to attract ?nancing to increase
their production and distribution capacity to reach previously unreachable market segments. It
also provides an opportunity for consumers who may be able to access high quality stoves at
signi?cantly reduced cost. In this way, carbon ?nancing can serve as an important subsidy. Carbon
?nancing does come with a burden of proof challenge. According to the monitoring rules, all FESs
must be in use in order to claim carbon credits. In practice this means that accurate consumer
details must be taken at point of sale and detailed databases must be maintained over time. This
encourages suppliers to maintain close control over distribution modes.
Carbon ?nance, though a potential boon to the FES sector, will not result in blanket adoption
across all regions of Uganda alone. Research into consumer cooking and fuel use behaviour within
key market segments is so far limited, particularly among rural communities which generally use
?rewood as their main cooking fuel.
4
As 81% of the Ugandan population is currently classifed as
rural , innovative approaches to extend commercial FES availability and access for this population
is also needed.
Acholi Market Analysis
As outlined, the Acholi sub-region is a relatively more rural and poor area of Uganda. These
factors, combined with poor transportation infrastructure, lack of business services, and limited
commercial development make the market context signi?cantly different to other parts of the
country, notably Kampala where most FES activity is focused. This section analyzes the market
conditions speci?c to this region, looking at the size of the market, the range of products available,
how well they are suited to the market, and the respective value chains.
The current range of FES available in Acholi can be divided into two categories, wood-burning and
charcoal-burning. Multi-fuel stoves that can burn both fuels do exist but these were not found in
the region. The various models on offer are outlined in the following tables.
4 Uganda Bureau of Statistics, National Household Survey 2009 / 10
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Market Analysis for Fuel Ef?cient Cook Stoves
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WOOD BURNING STOVES
Producer /
Model
Design and Specs % reduction
wood use (vs
open ?re)
Costs and
price
Production
Capacity
Market Segment and
Penetration
3 Stone Fire Traditional cooking
method
N/A Free N/A Used as primary cook-
ing method by 75.9% of
households
Mud Lorena
Stove
Various designs are
found in the region,
mostly adapted from
models introduced by
NGOs in IDP camps.
Most use a clay brick
chamber surrounded
by ant-hill mud, built
indoors or outside
against the wall.
Chimneys and multiple
burners are included in
some models but are
not common.
Estimated 40% Free – 5,000 Unknown,
number
of trained
people
The major wood burn-
ing stove in the region
observed in many rural
and urban locations.
Identifed by only 12%
of FES owners, although
40% did not know the
type of stove they have.
The signi?cantly lower
price means Lorena-
type stoves are likely to
represent the majority of
the 14% of all house-
holds using a FES. Many
are built by the owners
themselves.
Ugastove
Rocket stove
Rocket-type design
made from heavy clay.
Stoves are high off the
ground and distinctive
in shape. Not part of
the Ugastove carbon
project and is there-
fore not subsidized by
carbon revenue.
60% (claimed
by Ugastove)
Retail 30,000 < 50 /month
Capacity to
increase with
demand
The rocket stove is cur-
rently available in Gulu
but not yet distributed
within the four study
districts. High cost rules
out most rural house-
holds who collect wood,
therefore the target
market segment is wood
purchasing households
in or near to TCs.
G-3300 En-
viro?t Rocket
Stove
Imported model from
Enviro?t and designed
by Colorado State
University and made
in China. The stove is
a high-quality, widely-
tested, portable rocket
stove. Up-Energy is
launching a CDM
project and the stove
is being sold at an
initial subsidized rate
based on future carbon
return.
52%
5
Wholesale -
45,000
Retail - 55,000
Imported in
containers
from China.
Planned as-
sembly plant
in Kenya for
2013.
The G-3300 is being im-
ported and distributed by
Kampala based Up-En-
ergy, a for-pro?t venture
part owned by Impact
Carbon. Up-Energy has
recently toured Acholi,
giving demonstrations,
targeting both NGOs
and retailers. Price is
very high for the region
so target market is
middle-upper class wood
buyers, or NGOs.
5 USAID, 2010. Evaluation of Manufactured Wood Stoves in
Dadaab Refugee Camps, Kenya
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Market Analysis for Fuel Ef?cient Cook Stoves
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CHARCOAL BURNING STOVES
Producer
/ Model
Design and Specs % red. fuel use
(vs tin stove)
Costs and
price
Production
Capacity
Market Segment and
Penetration
Mud
Charcoal
Stove
Widely referred to as a
‘GOAL’ stove as it was
introduced by the INGO
GOAL in the IDP camps in
the region. The design uses
clay bricks and mud to form
a combustion chamber, with
a metal racking inserted
for the charcoal to sit on.
The preferred material for
the rack is a front cog from
a bicycle. The stoves are
generally built permanently
against the wall on the
outside of the house.
Unknown Inputs:
Bricks
600-900
Insert: 3,000
Retail price:
5,000
Currently
limited by
supply of
bike cogs.
Low cost and simplicity
to make mean this is a
popular stove among
charcoal users, particularly
in Kitgum, the largest
TC and site of a major
IDP camp where GOAL
previously worked.
Penetration dif?cult to
measure but likely to make
up a large proportion of the
8% of households using a
charcoal FES.
Local
FES -
Jiko style FES made by 10+
independent artisan stove
makers across the four
districts. Stoves are portable
and metal-cased, with a
purpose built clay liner.
Designs are either copies
of the typical Jiko shape
or similar to the Ugastove
model. Some makers replace
the clay liner ?oor with iron
bars to increase strength,
but this decreases ef?ciency.
Unknown Inputs:
Clay mold
- 1-2,000
Metal case
- 12-18,000
Retail price:
20,000 –
28,000
10 – 40 per
artisan.
Total
< 250 /
mth
Stoves are generally sold
directly by the artesian. Low
production and marketing
capacities limit market
penetration to households
living in the close vicinity
to the production site.
The stoves enjoy a good
reputation among their
small customer base, which
knows them and trusts
the quality of the product.
However, when sold next
to mass produced models
they appear inconsistent in
quality.
ILF FES
– Okello
Kuc
ILF stove model used
internationally based on 6
purpose-built clay bricks that
form an ef?cient combustion
chamber. Bricks are held
together by concrete and
sealed in a thin metal
casing. The stoves are
made in Lira in three sizes,
with a consistent source of
quality clay provided for the
bricks. The stove has been
independently tested and will
soon be certi?ed under the
UCB CDM PoA.
(35% thermal
ef?ciency)
Costs:
Wholesale:
15/17.5/20k
Retail:
18.5/22/25k
Currently up
to 2000 /
mth.
Enjoys wide recognition in
and around the production
center of Lira, an area many
traders from Acholiland
purchase product. Only
mentioned by a single
FES owner in the sample
group but distribution in
Acholiland has just started
and stoves are currently
visible 4 Kitgum retail
stores but no other TC. Two
local distributors brought in
over 200 units each in April
and plan widespread radio
promotions during June
and July 2012.
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Market Analysis for Fuel Ef?cient Cook Stoves
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CHARCOAL BURNING STOVES (cont.)
Producer
/ Model
Design and Specs % red. fuel use
(vs tin stove)
Costs and
price
Production
Capacity
Market Segment and
Penetration
Ugastove
FES
Ugastove charcoal stove is
a portable metal shell with a
thick clay lining. The clay is
sourced in Kampala and the
stove has been certi?ed for
carbon credits under a Gold
Standard voluntary scheme.
Stove produced in three
sizes.
(38% thermal
ef?ciency)
Costs:
Wholesale:
14/16/20,000
Retail:
17/23/27,000
Currently
5000 / mth.
Increasing
to 10,000
The most widely recognized
FES across Uganda, with
relatively high volume
sales in Kampala and other
regions. New focus on
north with a storage facility
in Gulu that will become
an assembly plant. Not
currently distributing in four
study districts but well-
placed to supply from Gulu
if a model is found.
SWOT ANALYSIS
Model Key Actors Product Strengths Product Weaknesses Market Opportunities Market Challenges
Mud Wood
Stoves
- CBT
- NGOs
- Individuals
- Brick makers
- Simple to make,
repair
- Low cost (3-5k)
- Good ef?ciency
gains
- Local materials
- Frequent repair
required
- Slow to start
- Labor-intensive
- Long drying time
- Uses wood:
fuel of choice
- Trained resources
in communities
- Familiar model
- No affordable
competition
- NGOs crowding
out
- Perception of
being free
- Limited value-add
as a commercial
product
- Dif?cult to
standardize
‘Imported’
Wood FES
(National
stoves
Imported
into the
region)
- Manufacturers
- Importers /
Distributors
- Sub-Vendors
- Carbon
?nance groups
- High, proven
ef?ciency
- Standardized
product
- Warranty
(year 1)
- Subsidized
(reduced cost)
- Imbedded
services (training,
marketing)
- High production
/ import capacity
- Producers willing
to invest
- Expensive, luxury
product
- Limited market
penetration
- Long supply
chain and repair
turnaround
- Can be heavy, high
transport costs
- Uses wood:
fuel of choice
- High desirability
factor as a foreign
product
- Highest quality
product on the
market
- Low cost of wood
= long pay-back
period
- Target market
is rural and
dispersed
- Lack of consumer
?nancing
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Market Analysis for Fuel Ef?cient Cook Stoves
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SWOT ANALYSIS (cont.)
Model Key Actors Product Strengths Product Weaknesses Market Opportunities Market Challenges
Locally
Made FES
- Manufacturers
/ Assemblers
- Retailers/
maintenance
- Clay molders
- Black/tin
smiths
- Retailers
- Potential high
ef?ciency
- Custom design
options
- Portable
- Local
maintenance
- Low production
capacity
- Lack of
standardization
- Relatively expensive
- Inef?cient supply
chain
- No distribution
system
- Retailers report
many complaints
about weak
combustion
chambers
- Customer
accessibility
- Perception of quality
- Market knowledge
of FE increasing
(cursory bene?ts)
- Custom design
potential
- High cost of
charcoal
- No brand /
recognition
- Subsidized
imported
competition
- Fractured
assembly and
bottlenecks
- No capital
availability
- Limited market
knowledge
‘Imported’
Charcoal
FES
(nb:
imported
into region)
- ILF/Ugastove
- Distributors
- Sub-venders
- Carbon Credit
Actors
- High, proven
ef?ciency
- Standardized
product
- Warranty (year
1+)
- Subsidized
(reduced cost)
- Imbedded
services (training,
marketing)
- High
production/
distribution
capacity & willing
to invest
- Limited market
penetration in north
- Long supply
chain and repair
turnaround
- Affordable price
point
- Limited local
competition
- Brand building
potential
- High cost of
charcoal
- Access to capital
for distribution and
marketing
- Transportation
costs
- Limited
distribution
networks
- Low capacity sub-
vendors
- Dif?culties in
completion of
warranty / carbon
cards
- Limited market
knowledge
- Lack of consumer
?nancing
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Value Chain Analysis: Charcoal Stoves
1. Lorena / Mud Charcoal Stoves
Production and Distribution
These stoves are made and sold by a dispersed and informal network of individuals throughout
the region. Most were either trained directly by various NGOs in the IDP camps during the past
decade, or were subsequently trained through the trainer of trainer models introduced by the
WFP and various other organizations. It is impossible to estimate the number of trained people
in the region, particularly since it appears that most engage in stove building on an occasional
basis.
The Mercy Corps team did not ?nd any examples of formalized commercial operations offering
a stove building service. However, informal services where individuals build stoves on an ad hoc
basis are fairly widespread. These informal stove builders barely cover costs and often have
little knowledge of stove ef?ciency. This effectively impedes the potential for a commercial
market by spreading low cost products with no quality control and no guarantees of ef?ciency,
thus minimizing the consumer gains for investing in a FES.
Key Bottlenecks and Challenges
• Commercializing mud stoves is a major challenge. The perceived simplicity of the design and
availability of materials means people are reluctant to pay more than a nominal service fee
on top of the material cost.
• The charcoal mud stoves found in several of the larger TCs are built with a bicycle part as
the charcoal tray; reliance on this particular part is a clear bottleneck to increased production.
This part could be easily replaced with a clay liner but the supply of liners is also limited,
creating a further bottleneck.
2. Local FES
Production
Local FES are manufactured by a web of metal workshops, dedicated manufacturers and
assembler / retailers. A total of ten artisan manufacturers were interviewed across the
four districts - in Kitgum (6), in Padibe East (3), and Agago (1). The manufacturers can be
disaggregated according to the following production models:
• Retailers with hardware or general household goods stores that contract metal and clay
molder to make the components and then assemble the stoves themselves (3)
• Metal workshops that purchase clay molds but make other components and assemble
themselves (3)
• Dedicated stove makers working from home that make their own clay and either contract
metal workshops or make their own casings (4)
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Market Analysis for Fuel Ef?cient Cook Stoves
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Total production across the 10 identi?ed producers in the region is up to 250 a month and
a maximum of 3000 a year, although production slows considerably during the wet seasons
when it is hard to ?re and dry the clay. Assuming each unit has a lifespan of 2 years (as
estimated by producers); these ?gures suggest a maximum of 6000 households have a locally-
manufactured FES, a market penetration of less than 4% of the households.
Local FES Value Chain:
The major inputs for the stoves are metal sheeting and clay. Metal sheeting is sourced from
Lira or Kampala by hardware stores or directly by the artisan. Some manufacturers use local
scrap metal when available. Metal sheeting costs have grown dramatically over the last year,
leading to increased local FES costs. Clay is locally-sourced and the molds are obtained from
a small number of clay molders who have a reputation for quality clay and work. Clay molds for
the Kitgum area, the largest town with the most active FES market in the region, are almost
entirely sourced from a single clay molder in town. Though the molder does not change prices,
she often runs out of stock and is a major bottleneck for local stove production.
Distribution and Sales
Most artisan FES makers sell the products directly to customers by setting up stalls in front of
their houses or at their own shops. At least one local FES make used to sell through additional
retailers as well; however, dif?culties in collecting money forced the maker to stop distributing.
Some retailers of traditional metal sheet stoves are now making their own FES. None of the
dedicated stove makers or metal workshops engages in any form of branding or consistent
Metal Sheet
Suppliers:
Kampala
Local
Clay Mold
Suppliers (3-3)
Local
Metal Workers
(numerous)
Retailers
Local FES
Manufacturers/
Assemblers
(10+)
Customers
6000 6000 1500
15000
4000
24,000
25,000
25,000
8000
Traditional
charcoal stoves
000 - Average input cost (UGX) 000 - Average sales price (UGX)
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Market Analysis for Fuel Ef?cient Cook Stoves
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marketing activities, the result is a very niche market that could not satisfy any signi?cant
increase in demand for their product.
Key Bottlenecks and Challenges
• The price of metal sheeting varies and has recently increased signifcantly. Metal is the most
expensive single component; the cost uncertainly and the lack of bulk purchasing discounts
make it dif?cult to compete with the carbon subsidized Okello Kuc and Ugastove stoves.
• The large distance and high transport costs associated with sheet metal providers mean
supply occasionally dries up.
• Access to quality clay molds is a major bottleneck in the value chain, production capacity
of clay liners is very low and manufacturers often have to wait several weeks to receive an
order.
• There is a lack of trust between retailers and producers. This means producers are reluctant
to supply without up-front payment, inhibiting wider product availability.
• Manufacturers do not have suffcient capital to expand production and widely report this to
be a major barrier to increasing sales of FES.
• All local manufactures are single person enterprises and most have not made any real
attempt to increase production capacity to serve a larger market. Often, stove production is
a supplementary income option for manufacturers.
3. Ugandan Mass-Produced FES
There are two notable Ugandan stove manufacturers that are able to produce stoves in larger
quantities. Both manufacturers are able to access cursory funding to lower stove costs to the
end user and to subsidize the costs of building distribution channels and raising awareness for
their products.
International Lifeline Fund (ILF) – Okello Kuc Stove: ILF is an international non-proft
active in four countries in East Africa as well as Haiti. ILF has been active in Uganda since
2006, dedicated to providing water and sanitation services and, chie?y, to stimulating the FES
market. ILF designed the Okello Kuc stove, its main product.
Ugastove: Ugastove is a privately owned Ugandan company based in Kampala that has been
manufacturing cook stoves for over a decade. In 2009, in partnership with Impact Carbon,
Ugastove registered the ?rst Gold Standard carbon credit cook stoves project on the voluntary
carbon market. This has injected signi?cant investment into the company, allowing it to expand
production and to invest to build a wider retail presence and to market more extensively to pull
demand for their product.
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Market Analysis for Fuel Ef?cient Cook Stoves
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Production
ILF: The ILF production facility and sales base is on the edge of Lira, the major city to the south
of Acholi. The manufacturing process includes: forming specially-shaped bricks from locally-
sourced clay, cutting and shaping metal sheeting purchased from Kampala by hand, setting
stove components with cement, and painting and branding stove. Production is completed
on premises. Three different sizes of household stoves are produced, of which a consistent
stock is maintained. Additionally, institutional stoves are made to order. Production capacity is
72 stoves per day (around 2000 a month); although at the time of this assessment demand
dictated an average production of 45 per day – a result of recent increased stove prices.
Notably, ILF produces clay bricks for mud stove lining as well. At times, orders for this project
(funded by the World Food Programme) do slow production for Okello Kuc.
Ugastove: The Ugastove production facility and sales base is located on a single site close
to central Kampala. The manufacturing process including: sourcing and transporting clay from
a single location north of Kampala, mixing the clay with a formula of wood chips and other
inputs that fortify the liner, forming the liners using standard molds and blasting liners in a
single large furnace. Further, metal casings are cut, shaped, painted and branded by hand at
the same facility. Three sizes of the household charcoal stove are made and kept in stock on
the premises along with a smaller stock of the wood-burning rocket stoves. Institutional stoves
are also made to order.
Distribution and Sales
ILF: ILF acts as its own distributor for the Okello Kuc stove, transporting the products by
truck directly to retailers around the country. The majority of sales occur within the Lira region;
although teams regularly visit other districts to recruit new vendors. Stoves are priced at
UGX
6
18,500 (US$7.55), 22,000 (US$8.98) and 25,000 (US$10.20) for the three available
sizes. Prices are painted on the stove to ensure that the price is maintained. The wholesale
price provides a mark-up of 19-25% for the retailer, with all transport costs covered by ILF. A
purchase of 10 stoves is all that is needed for a vendor to receive wholesale price and delivery,
although generally no credit is provided.
ILF recently signed agreements with two vendors in Kitgum, both of which purchased 200
units. One of these vendors is building a network of sub-vendors across the four study districts
and is well placed to become a distributor for the region.
The stoves are currently sold at below total production cost to make them more accessible to
the market, subsidized by donor funding. The stove has been certi?ed for entry into a CDM PoA
being developed by the Uganda Carbon Bureau which will provide carbon ?nance to support
the stove subsidization and potentially allow for a further price reduction. The registration
process for this PoA has been underway for several years and it is expected to be registered
during 2012 and to start receiving carbon revenue in 2013. Revenue is expected to be at least
UGX 15,000 (US$6.12) per stove per year, suffcient to cover the price subsidy and transport
costs, and to make pro?t on stoves that remain in the system for multiple years. The products
come with a warranty for two free repairs as long as the warranty card is ?lled out at the point
6 All exchange rates based on UGX2450 to $US1.
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Market Analysis for Fuel Ef?cient Cook Stoves
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of purchase. Gathering customer details in this fashion is vital to the monitoring of sales for the
carbon project and must be tightly controlled to maximize revenue.
Ugastove: Much like ILF, Ugastove essentially acts as its own distributor with no wholesalers
or distribution agents in the supply chain. Stoves are sold directly to vendors in Kampala and
an increasing number of districts throughout Uganda. The stoves offer a set retail price of UGX
17,000 (US$6.94), 21,000 (US$8.57), and 25,000 (US$10.20). The wholesale price provides
a mark-up of 19-25% for the retailer, with all transport costs covered. Ugastove hires sales
agents directly to travel to new locations to recruit new retailers, to sell directly to consumers
and to advertise the Ugastove product.
The company has been investigating ways to expand further into northern Uganda and recently
opened stores in Gulu and Lira. Currently, the stores act as a distribution base for retailers
in Gulu and Lira as well as a factory outlet for customers. The company plans to open an
assembly plant in Gulu in the near future which will enable the company to cut transport costs
by carrying only the clay liners – which need to be consistent for the carbon project – with metal
casings made either at the new site or transported in for assembly only. From Gulu, assembled
products can be transported onto retailers across the north more ef?ciently. At present, a truck
carrying around 500 stoves travels to Gulu every two months; the truck capacity will increase
to 800 where implements are ?at-packed and to 2,000 where just clay liners are transported.
Ugastove currently does not presently supply further into the Acholi sub-region. However, a
base in Gulu makes Acholi market penetration signi?cantly more feasible and cost-effective.
Revenue from the carbon credit generation is split between Impact Carbon and Ugastove.
Ugastove receives around UGX 10,000 (US$4.08) per stove per year, this allows the company
to subsidize the cost of the product in the ?rst year, and represents pro?t in subsequent years
with which to fund marketing and increasing distribution.
Ugandan Mass-Produced
FES Value Chain:
Metal Sheet
Suppliers:
Kampala
Local
Clay & Raw Material
Suppliers
Carbon Finance
Entity -
Monitoring
Retailers
Ugandan
Mass FES
Production Units
(ILF/Ugastove)
Customers
Costs Revenue
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Market Analysis for Fuel Ef?cient Cook Stoves
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Key Bottlenecks and Challenges
• Transportation costs are exceptionally high and represent a major challenge to reaching
a wider market. Poor road quality makes journeys long, slow and heavy on fuel while also
resulting in high vehicle repair costs and frequent down time. Additionally, both the current
ILF and Ugastove distribution model is ineffcient with special trips being made to individual
retailers with only a small number of stoves. This adds cost to each unit and keeps the price
relatively high despite the subsidies and carbon credit revenue. Ugastove’s current Kampala-
based production facility is notably farther from the four study districts than ILF’s Lira-based
production center. Transport to Acholi will be a greater burden for Ugastove relative to its
major competitor.
• The data collection requirements to comply with the carbon fnance rules – in this case
accurate completion of warranty cards – encourages participants to keep tight control over
distribution and work directly with retailers. This creates a barrier to the introduction of a
more ef?cient supply chain with streamlined transport and distribution. It also inhibits risk-
taking to open new channels utilizing new business models and sales schemes.
• Building networks of vendors with the fnancial capacity to purchase stock upfront and the
diligence to ensure warranty cards are completed correctly is a major challenge. Problems
with reclaiming payment in the past means that credit is given on a limited basis and only
once a relationship has been developed over time. This limits the number of potential retailers
considerably.
• Vendors are rarely able to access outside fnancing to support the buildup of stock on
any scale. This further inhibits access to bulk purchasing discounts for nearly all vendors.
Purchases are therefore fragmented; additional inef?ciencies result with regard to distribution
here as well.
• Once sourced, vendors often require extensive training on technical product specs plus a
range of business skills that are important for increasing product sales. Though ILF does
offer some skills development for its vendors, neither ILF nor Ugastove have the capacity or
resources to deliver skills training on a broad scale. However, creative business models that
embedded business management and sales and technical training could be effective.
Cost and revenue pro?le for a single small unit
ILF Ugastove
Production Costs 25,000 24,000
Transport Costs Additional Included
Wholesale Price 15,000 14,000
Retail Price 18,500 17,000
Current Carbon Revenue / yr None 10 – 12,000
Anticipated Carbon Revenue /yr 15 -18,000 + 10 – 12,000
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Market Analysis for Fuel Ef?cient Cook Stoves
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• The free repair service that both offer involves both shipping stoves back to the factory and
then returning the stove back to the consumer. Depending on location this may take well
over a month, leaving the consumer to return to traditional cooking methods.
• Awareness levels of the benefts of fuel effciency and cleaner cooking is generally low
among the target market. The cost of advertising to raise awareness and to pull demand
is high and diffcult to manage given the current proft margin gleaned from FES. Limited
awareness of the fuel-ef?ciency problem as well as poor product recognition is an impediment
to accelerating demand for the product. Greater investment is requisite.
Household Wealth
The main sources of household income are
dominated by farming across the four districts.
The combined results from both surveys found
that 87% of respondents derive most of their
income from farming. Commercial activity plays
a larger role as a main income source for those
living in larger trading centers. The proportion of
shop owners and casual laborers increases in
urban areas. There is also a signi?cant increase
in the ‘other’ category, with the majority of
responses here indicating service industry
income derived from restaurants, carpentry
and motorcycle taxis. However, even in the
TCs farming remains the dominant source with
three quarters of the population directly reliant
on seasonal crop sales for income. This in turn
impacts traders and all other small businesses in
the region, which rely on increased purchasing
around agricultural income in?uxes as well.
Since seasonal farming is the overwhelmingly
dominant source of income, monthly income is a very dif?cult concept for people to measure.
The average reported income is UGX 67,000 (US$27.35), with the average around 20% higher
among the urban market segment than the peri-urban or rural 2 group
7
. The rural 1 sample group
of responders for the income question was very small and the result was skewed by a single
Consumer Energy Use Analysis
7 Median is more commonly used when looking at income ?gures, however the large number of households reporting
zero or very little income at this point of the year made the median ?gure very low (UGX30,000). Because of this the
mean is considered to be a better re?ection of likely household income in this case.
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Market Analysis for Fuel Ef?cient Cook Stoves
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AVERAGE INCOME (UGX)
Per Month Per Year Per Year (seasonally adjusted)
Overall 67,449 809,388 337,245
Urban 72,991 875,890 364,955
Peri-urban 60,000 720,000 300,000
Rural 1 88,300 1,059,600 441,500
Rural 2 60,684 728,213 303,420
(Ave HH expenditure) 136,850 1,642,200 -
large outlier. The income ?gure found by this survey is very low compared to other studies of rural
regions of similar make-up, which may in part be due to the survey being conducted in April which
is the planting season and therefore a period of little income for farmers.
According to the Ugandan Bureau of Statistics household study in 2010, the average monthly
expenditure for rural households in the northern regions is UGX 136,850 (US$55.86), around
twice the income reported in this survey. A recent examination of seasonal variations in cash in?ux
for rural households by Grameen Foundation AppLab concluded that households typically brought
in income 5 months out of the year, which makes annual income much lower once adjusted for
seasons as shown in the table
8
. Since true income measures were not possible through the survey,
this combination of estimates provides a useful frame of reference.
Cooking Methods
In line with the low and seasonal income, and
the lack of grid access that characterizes the
Acholi region, almost all households rely on
biomass for cooking and heating water. Of the
489 respondents across both surveys, 98%
identi?ed a biomass-based cooking method as
the primary method in their household. An open,
or “three stone”, ?re is the traditional cooking
method which is still practiced by 76% of the
sample. Wood stoves and charcoal stoves are
the other prominent cooking methods, combined
accounting for 22% of households. Only the
face to face interviews asked if respondents
specifcally owned a FES and 23% claimed they
did own either a wood or charcoal burning FES. However, the primary cooking data indicates not
all of them are used as the primary cooking method.
8 Grameen Foundation AppLab: Annual Presentation to Partners, presented to Mercy Corps in May 2012.
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Market Analysis for Fuel Ef?cient Cook Stoves
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It was hypothesized by the Mercy Corps team that primary cooking methods would vary with
market segment. The graphs below show the results of the market segment analysis for fuel
use. As can be seen, the proportion of people cooking on a three stone ?re does not change
signifcantly across each segment; however, a clear pattern can be seen among 20-25% of stove
users. Charcoal stoves are more widely used in the urban segment and charcoal use declines
steadily as households become more rural, with an inverse relationship in evidence for wood
stove use.
Satisfaction with open ?re cooking is a key measurement
as it can help estimate the willingness of the market to
pay for an improved cooking method. Satisfaction levels
among residents in the region suggest a willingness to
adopt new techniques does exist. In total, 39% stated they
are very or somewhat satis?ed with open ?re use, leaving
24% of those that use an open fre dissatisfed. This
population segment is also likely to be willing to invest in a
change to adopt new, improved techniques. A further 22%
demonstrate no commitment to open ?re cooking and
represent the second potential target group. Satisfaction
levels were analyzed by market segment but the results
remained consistent across each group.
16%
75%
8%
5%
83%
9%
6%
77%
15%
3%
74%
18%
URBAN PERI-URBAN RURAL 1 RURAL 2
Open ?re Charcoal stove Wood stove
Households: 93% collect ?rewood 11% purchase ?rewood 18% purchase charcoal
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Market Analysis for Fuel Ef?cient Cook Stoves
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Consistent with the primary cooking methods, ?rewood is the dominant fuel used in the region, and
the bulk of this wood is collected by members of the household itself– not purchased. Proximity to
a TC has a clear impact on fuel collection decisions. Charcoal and ?rewood is much more widely
purchased by households in or close to TCs; 34% of households in TCs purchase charcoal and
between 18% and 19% of households located in or within 2km of TCs purchase frewood. The
number of households buying charcoal is double that of households using charcoal stoves as the
primary cooking method, indicating many TC households vary their cooking methods.
The average time taken to collect ?rewood among respondents for both survey tools is 2 hours
and 14 minutes. Dividing by segment, it takes people in the urban segment over an hour longer to
collect ?rewood (2 hours 46 minutes) than it does for those living in more remote rural areas (1 hour
43 minutes) -- a difference of 64%. Time investment needed to collect wood and the likelihood of
purchasing fuel (either wood or charcoal) appears correlated, as illustrated in the graph. As can be
seen, the proportion of households purchasing fuel increases as time to collect ?rewood increases
(the graph assumes straight line progression between data points). This does not prove a causal
relationship and, the rapid decline in fuel purchasing against time taken suggests other factors
are involved. However, a correlation between effort needed to collect ?rewood and willingness to
purchase fuel is in line with the expected results when considering opportunity costs.
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Market Analysis for Fuel Ef?cient Cook Stoves
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Results from Mercy Corps’ Pader energy assessment
9
demonstrated that the time needed to
collect ?rewood has increased dramatically in recent years due to diminishing wood supplies.
Although adequate data on this point was not achieved in this survey to quantify this point, the
increasing dif?culty in collecting wood around urban centers is a common issue faced by countries
throughout Sub-Saharan Africa. Rising populations place growing pressure on forestry resources
for use as fuel, timber and agricultural land. As populations continue to rise across Acholi and
urban settings grow, the time and effort required for households to collect ?rewood will only
increase. Ultimately, alternative fuel sources as well as technologies that reduce fuel consumption
will continue to grow in importance.
Of the households claiming to purchase frewood, 88% also collect frewood. At the same time,
66% of households that purchase charcoal also collect frewood. These facts, combined with
the fact that a large number of households purchase charcoal as a secondary fuel, indicate that
sourcing fuel is a dynamic picture at the household level, with households supplementing their
regular fuel with alternatives as either costs or available resources vary from day to day.
Across the four study districts, charcoal is made in rural zones and sold wholesale to small retailers
in large sacks. Charcoal is also a supplementary source of income for many small farmers who
sell multiple bags to travelling traders. For consumption, charcoal is typically sold to individuals in
“basins” around TCs. The average cost of a basin is UGX 3,063 (US$1.25), with a mode of UGX
• Average time to collect frewood per year: 263.5 hours (11 days)
• Average cost of frewood per year: $55.86
• Average cost of charcoal per year: $77.73
9 Mercy Corps Uganda, Catalyzing the Solar Market, Pader Pilot Assessment, 2011
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Market Analysis for Fuel Ef?cient Cook Stoves
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Who Collects Firewood
Adult female 87.3%
Adult male 7.8%
Female child 26.2%
Male Child 6.8%
3,000 and the highest price reported at UGX 5,000 (US$2.04). Firewood is sold in bundles, that
appear to vary somewhat is size and weight, at an average cost of UGX 2,265 (US$0.92) and a
mode of UGX 2,000.
At an annualized rate based on the average number of units purchased per month, the average
cost for the households purchasing charcoal is US$77.73, and US$55.86 for those purchasing
?rewood. The exact proportion of annual income this investment represents is dif?cult to calculate
due to the challenges with measuring income as discussed earlier. However, it is clear that costs
associated with fuel purchase are signi?cant for households.
Most households collect wood and therefore perceive it to be free. However, investment in fuel
is not only measured in direct monetary terms, but by the opportunity cost of time invested in
fuel collection. Since 92.8% of households stated that they collected frewood, this opportunity
cost is a major impediment to overall local economic productivity and growth. Sample wide, the
average time needed to collect ?rewood was 134 minutes (2 hours 14 minutes), with an average
of 2.72 collections per week making it 364 minutes (6 hours 4 minutes) invested every week
per household in ?rewood collection. As shown in the table, the collection responsibilities fall
heavily on the female members of the household, limiting their opportunity to engage in alternative
income generating activities.
Quantifying this opportunity cost in terms of its monetary value in a region
such as Acholi is dif?cult. A practice found in some recent literature on
this topic, including fuel wood use studies in Ethiopia
10
and Nepal
11
, is to
determine the average daily rate for manual labor in the area, and to apply
this value to the time dedicated to ?rewood collection. This is referred to as
the ‘shadow price’ of collected ?rewood. According to informal data collected
by the Mercy Corps team in the Kitgum region, the prevailing day rate for
agricultural labor is UGX 6,500 (US$2.65), including food costs. The rate
for construction work is higher, however since the vast majority of wood
collection is done by women, and women are far more likely to engage in agricultural labor than
construction, the agricultural ?gure is applied as a more conservative estimate of the shadow
price. The following table shows the calculations for the shadow price of collected fuel by market
segment.
Fuel % Purchasing Ave units /mth Cost /unit (UGX) Cost /yr (UGX) Cost /yr (US$)
Firewood
(Bundle)
11.0% 5.2 2265 141,336 $55.86
Charcoal
(Basin)
18.4% 5.35 3063 196,645 $77.73
10 Damte, Abebe, et al. “Coping with Fuel wood Scarcity: Household Responses in Rural Ethiopia”. 2012, Environment for
Development
11 Nepal, Mani, et al. “Unbelievable but improved cookstoves are not helpful in reducing ?rewood demand in Nepal”. 2010,
Environment and Development Economics
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Market Analysis for Fuel Ef?cient Cook Stoves
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Hours Spent Collecting Shadow Price Potential “Savings”
from using a wood FES
Per Trip Per week Per month UGX / month UGX / month
Urban 2.77 7.53 30.10 24,457 12,229
Per-urban 2.07 5.62 22.49 18,269 9,135
Rural 1 1.88 5.12 20.49 16,649 8,324
Rural 2 1.72 4.67 18.68 15,175 7,588
Average 2.23 6.07 24.30 19,743 9,871
According to the shadow price calculation displayed in the table above (based on an average
of 8 hours’ work a day), the average household spends the equivalent of almost UGX 20,000
(US$8.16) on collected frewood each month, which is US$93.64 per year. Due to the difference
in time requirements for fuel wood collection for different segments, this cost is UGX 24,500
(US$10) for urban households and UGX 15,000 (US$6.12) for the most rural households. The
potential savings of adopting a FES are based on a fuel wood reduction of 50%
12
and show the
income that could be made during the time saved on wood collection. Although this is a generalized
picture, it demonstrates that the opportunity cost of using an open ?re to burn ?rewood rather
than a FES is signi?cant compared with average household income. Additionally, the savings
available per month are less than the cost of a Lorena or equivalent mud or clay FES.
Current FES Use
The consumer pro?le survey contained
an extra set of questions speci?cally for
households that currently own a FES.
Of the 252 respondents, 23% claimed
to own a FES, with 17% identifying it as
the primary cooking method. As the pie
chart shows, the majority of stoves were
either made by the owner themselves or a
community member was paid to help them,
suggesting they are the simpler-to-make
mud or clay brick models. Close to a quarter
were bought from a retailer; more likely to
be the metal based charcoal stoves, with
only a small number built by an NGO. Most NGO stove activity was during the IDP camps, with
people bringing the skills to build but not the actual stoves with them as they left the camps. The
12 This is based on a HH that previously used an open ?re switching to using the FES for every meal and no longer using
an open ?re.
Retailer
22.9%
Local
manufacturer
6.3%
Made it
43.8%
NGO built
4.2%
Paid someone
to build it
6.3%
N/A
14.6%
Sources of FES
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Market Analysis for Fuel Ef?cient Cook Stoves
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proportion of FES users whose primary source of income comes from farming is 63%, lower than
the overall average for households in TCs of 79%, indicating FES owners are more likely to have
regularly paying income sources.
The main drivers of the decisions to adopt a FES are spread across the range of options
provided. When asked to select all that applied, 40% of respondents identifed fuel saving and
30% identifed reduced time collecting fuel as their motivation for adopting fuel effcient cooking
technology. However, only 12% of
respondents made the link from
reduced fuel use to saving money
as a motivation for purchasing.
The fact that reduced wood
collection time is a signi?cant
factor supports the relationship
uncovered above between
purchasing fuels and time taken to
collect ?rewood by demonstrating
that reducing the time investment
in ?rewood collection is a desirable
outcome and one that a signi?cant
proportion of households are
willing to invest money into.
Those able to recall fuel use under
their previous cooking method
largely con?rmed reductions in fuel use. The average estimated reduction of fuel use among the
24 FES charcoal stove owners that were able to quantify change in fuel use was 19%. For FES
wood stove owners, the change in fuel use was quantifed as 27%. The reduction of smoke was
highlighted as a reason for purchase by 21% of respondents, however 85% of FES owners stated
that their FES stove produces either “less” or “much less” smoke than their previous cooking
method.
While the sample size of FES owners is small, it was possible to run some basic statistical analysis
to help identify several determinants of the likelihood of households purchase and satisfaction
with FESs. Most relationships cannot be measured with the data available, but the conclusions
that can be drawn from this analysis are:
• The factors that make a difference to the likelihood that a household will purchase a FES
are close proximity to an urban center and a higher level of dissatisfaction with open ?re
cooking.
• People who report less smoke emissions from FESs are not more likely to be satisfed with
their FES than people who do not report less smoke emissions.
The second of these results is particularly signi?cant as it supports the previous suggestion that
despite reduced smoke being a recognized bene?t of stoves, health considerations do not appear
to be a major factor in the decision to purchase a FES. This is in line with studies and research in
various parts of the world indicating that the negative health impacts of indoor air pollution are not
well understood in most communities that cook on open ?res. Without this understanding, smoke
is not seen as a major problem for those accustomed to it, and therefore its presence is not a
driver of change.
Saves time
collecting
30%
Saves money
12%
Uses less fuel
40%
Friends
have one
5%
Cooks faster
16%
Produces
less smoke
21%
Reasons for Adopting a FES
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Market Analysis for Fuel Ef?cient Cook Stoves
in the Acholi Sub-Region, Uganda mercycorps.org
Based on the analysis of both the supply and demand side of the FES market, this section presents
general observations on the market for FES as well as recommendations for stove manufacturers,
distributors and retailers planning to enter the market across the study area. It also looks at the
major challenges and provides recommendations for how Mercy Corps could intervene to help
facilitate the development of the FES market across Kitgum, Lamwo, Pader and Agago Districts.
General Observations
Gleaned from the study, the following observations are relevant to FES adoption within the Acholi
sub-region:
Awareness
Conditions for market stimulation are good thanks to a high general level of awareness about
FES in the market, increasing dif?culty sourcing ?rewood, increasing fuel costs, and signi?cant
dissatisfaction with cooking on an open ?re.
There have been no broad public messaging around the concepts of FES since the IDP camps. Up
to date information on the economic advantages is required to help build the market.
Financing
Access to capital for retailers and distributors is a major challenge that needs to be addressed.
The inability of vendors to purchase large stocks and act as distributors to sub-vendors is a major
bottleneck in the supply chain.
Conservative payback period calculations show a return on investment that is likely to be attractive
to customers if the information is well presented. Creative sales and customer ?nancing models
are required to give access to higher quality FESs to a greater proportion of the population.
Flexibility in fuel use suggests high fuel price sensitivity. Households are aware of the relative
costs of both types of fuel (charcoal and wood) and they are willing to substitute usage depending
on changes in cost or their own access to cash.
Distribution/Transport
Supply chain ef?ciency can be increased signi?cantly for imported FES through the development
of distribution hubs. These could minimize the cost of transporting products from Lira, Gulu and
Kampala into the area. Lowering these costs in turn will bring down the total production costs and
support price reductions or greater pro?tability.
Observations and Recommendations
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Market Analysis for Fuel Ef?cient Cook Stoves
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Competition
Entry of carbon ?nance-subsidized stoves into nearby markets will make it harder for local artisan
manufacturers to compete. However, local manufacturers will have an opportunity to create a
niche for custom stoves as awareness of FES increases.
Commercialization of mud stoves has not been attempted in the region. An opportunity exists to
exploit some value added mud stove models, focused initially at areas within 2 km of TCs where
?rewood purchasing is more common. Rural households do have access to cash at least some of
the year and this suggests a commercial model can be attempted. It was not possible, though, to
get an accurate picture of rural incomes and access to cash.
Recommendations for Stove Actors
The information presented proves that a genuine market for FES exists within the region. However,
demand is currently suppressed and a targeted approach is required in order to unlock it. The
consumer market segmentation table below shows that cooking habits can be delineated by
geography and that geographic segmentation is relevant for any FES manufacturers or suppliers
who intend to enter the study area market:
MARKET SEGMENT COMPARISON
Urban Peri-Urban Rural 1 Rural 2
Income (month) 72,991 60,000 - 60,684
% Farmers 78 90 94 94
Primary Cooking Method
- Open Fire 75% 77% 83% 74%
- Wood Stove 8% 15% 9% 18%
- Charcoal Stove 16% 6% 5% 3%
Satis?ed with Open Fire 33% 11% 47% 31%
Fuel Sources
- Collect Firewood 87% 95% 98% 100%
- Purchase Firewood 18% 19% 6% 0%
- Purchase Charcoal 34% 15% 7% 5%
Ave Time to Collect Firewood (minutes) 166 124 113 103
Shadow Cost of Collected Firewood (UGX per month) 24,457 18,269 16,649 15,175
Heard of FES 71% 73% 69% 63%
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Market Analysis for Fuel Ef?cient Cook Stoves
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Although many patterns are consistent across the market segments, this analysis highlights two
distinct target markets:
TARGET MARKET 1: Fuel Purchasing Households
This target market group is comprised of largely urban and peri-urban households which regularly
purchase fuel, face a higher shadow cost for collected ?rewood, have a slightly higher income
level, and are less satis?ed with open ?re cooking.
Economic bene?ts and ?nancial returns create a relatively straight forward and potentially
compelling argument for the adoption of a FES. This makes this ?rst identi?ed group the key
market segment for actors looking to access FES demand. There is an estimated 50,000 urban
and peri-urban households in the region, at least half of which are regularly purchasing fuel;
two thirds are unsatis?ed with open ?re cooking; and all face high shadow costs for ?rewood
collection.
A clear opportunity exists within this segment as market penetration is currently very low for both
charcoal and wood burning stoves among this target group. Only 16% of the urban market owns
a charcoal stove, with most of these being the traditional, non-ef?cient model. Penetration of
charcoal FES is estimated to be only 4% of this market, although the proportion using charcoal
burning mud stoves is unknown. The penetration of wood burning FES is less.
If the reductions in fuel cost are to be a convincing argument for FES adoption then an important
?gure to calculate is the estimated payback period. The high household fuel expenditure
demonstrated in this assessment creates an opportunity for FES suppliers through low payback
periods for the investment in a FES. The average household monthly expenditure on charcoal
of US$6 –US$7 produces a payback period for a metal cased FES of between two and three
months, assuming a 40% - 50% reduction in charcoal consumption. At the same time, the average
monthly expenditure on frewood of US$4.50 means that the payback period for a Lorena stove
would be just one month, and around four to ?ve months for a rocket stove. These ?gures present
a solid marketing case and should form the center of marketing messages for this ?rst target
group.
It is important for suppliers to understand the dif?culty in drawing overarching generalizations about
the cooking behavior for households in the urban and peri-urban target group. Many households
use fuels inter-changeably depending on access and around half of all these households still use
open ?res and do not purchase any fuel. This is a re?ection of the fact that “urban” areas in Acholi
are small and with rural-based economies (78% of income derives from farming). Therefore,
households in the study area do not follow patterns of larger urban areas in Uganda where FES
suppliers like Ugastove and ILF currently operate.
• Average payback period for a charcoal burning FES = 2-3 Months
• Average payback period for a wood burning rocket FES = 4-5 Months
• Average payback period for a Lorena mud FES = 1 Month
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Market Analysis for Fuel Ef?cient Cook Stoves
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Even among this market segment, which has a slightly higher income level, the issue of price and
access to ?nance comes through strongly. Awareness of FES is quite high but they are widely
perceived as being too expensive, creating a major obstacle. The average price paid by current
FES owners indicates that at the current time people are only willing to pay roughly the cost of
2 weeks’ worth of charcoal or ?rewood for a FES. The higher likelihood of current FES users to
derive income from non-farming sources suggests a more regular income is a factor. This means
suppliers and retailers need to investigate methods for consumer ?nancing in order to stimulate
the suppressed demand. The fact that no respondent owns a FES purchased on credit or in
installments indicates that at this point there is no consumer ?nancing available, con?rming the
?ndings from discussions with retailers.
Recommendations
• Flexible fnancing schemes:
Income, regardless of geographic dispersion, ?uctuates according to the agricultural
seasonal calendar. Spending is also rigid. Accordingly, market penetration is reliant
on ?exible ?nancing mechanisms that most closely re?ect current cooking and fuel
expenditures. Companies that are able to experiment with incremental payment plans,
credit mechanisms, partnerships with local fnancial institutions or VSLA channels and even
with barter mechanisms (produce for stoves, for example) will sell the most products.
• Targeted marketing:
The opportunity to recoup fuel costs quickly by adopting FES is the likely entry point for FES
sales. Designing marketing and sales strategies based on payback periods with respect to
fuel cost savings is a potent strategy for targeting FES sales to charcoal users.
TARGET MARKET 2: Firewood Collecting Households
The rural population is a more congruous market segment, with the vast majority cooking on three
stone ?res and almost all collecting ?rewood themselves. This population is largely comprised of
farmers who derive some cash income from crop sales. This segment also includes around half of
all urban and peri-urban households which do not currently purchase fuel, making it a larger but
more challenging market segment to reach.
The major challenge in targeting this segment lies in the incentive structure. The collection rather
than purchasing of fuel means the ?nancial incentive is not as clear to consumers. Placing a
monetary value on time or presenting the shadow price of collected wood is not easily or well
understood. In addition, the pressure on forestry resources is lower the further away from TCs
you travel. This lowers the time burden felt by more rural communities. The reduction in time
collecting wood is a signi?cant factor behind the purchasing decisions of the current FES owners;
however, all FES owners identi?ed are urban based for whom the shadow cost of collected wood
is substantially greater.
Since economic arguments are less potent for this group actors need to promote other incentives
in order to promote FESs, and an alternative is the health bene?ts. Current awareness of health
34
Market Analysis for Fuel Ef?cient Cook Stoves
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problems from indoor smoke pollution is low and the survey fails to identify health factors as major
determinant factor for cooking behavior.
The second major barrier to building a commercial market for FES among communities that
collect ?rewood and cook on open ?re is the limited commercial value of the wood-burning mud
stoves, such as the Lorena stove. Many people are familiar with how to make basic wood burning
FESs with mud and local materials, and the simplicity of the model and access to materials makes
commercialization dif?cult.
Recommendations
• Targeted Messaging:
As monetary bene?ts of FES are much less tangible for rural wood users, alternative
messaging for boosting FES appreciation are required to penetrate the market. Recent
efforts to test health messaging have been effective toward increasing FES adoption.
Research in Uganda under the USAID-funded Traction Project has shown that once
knowledge of health impacts is spread, health concerns become a major driver of decisions
to purchase FES.
• Product Innovation:
The simplicity of FES mud stoves has inhibited its value as a commercial product, resulting in
less ef?cient models and limited propagation. Commercialization of simple FES is possible,
however. Adding value to a product such as utilizing bricks that add ef?ciency or applying a
metal top to boost ease of use could stimulate commercial demand while maintaining a low
enough cost.
• Business Model Innovation:
To commercialize low-cost mud stoves, experimentation with effective business models
along with product innovations is required. Propagation of high quality stoves has not
resulted from Training of Trainer models implemented in the region. However, the opportunity
exists to test innovative commercial models, including the following: group training classes;
experienced and skilled stove technicians that offer stove-building services, shops that offer
a range of FES products targeted to speci?c market segments. Commercial efforts should
be focused initially within 2 km of TCs where ?rewood purchasing is more common and
alternative, fuel-saving stoves have more tangible value for potential customers.
Facilitation Role for Mercy Corps
Following the assessment, Mercy Corps believes that there is tremendous merit in FES adoption
as well as a potent FES market opportunity within Acholi. Across the sub-region, Mercy Corps
can play a valuable role in helping to accelerate access by reducing barriers to product availability
while concurrently catalyzing consumer demand for FES.
Mercy Corps is dedicated to a market-based approach to facilitate energy poverty reduction.
Rather than serving as a direct actor, Mercy Corps works to target key leverage points. We place
our resources both where the market is failing to function effectively and, at the same time, where
35
Market Analysis for Fuel Ef?cient Cook Stoves
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the resources will result in the greatest possible and lasting impact. Mercy Corps may lead the
following interventions within Acholi:
Improve distribution strategy
There are ineffciencies within the current distribution models employed by ILF and Ugastove.
Such inef?ciencies will limit FES market penetration in Acholi where poor infrastructure adds
signi?cant costs to transportation and coordination. Mercy Corps may work with these partners,
as well as other competing partners, to identify and to model improved distribution strategies.
One strategy will be to partner with the companies to help them to identify viable and active
distribution partners; entering markets through active distributors with large networks of sub-
venders rather than entering markets through dispersed and individual retailers will likely reduce
costs and improve ef?ciency.
Stringent monitoring requirements for carbon ?nancing impinge on increasingly decentralizing
distribution strategies to reach an ever-growing market. However, distribution channels do offer
opportunities to embed information within the channel. It will be important to maintain monitoring
requirements while concurrently expanding distribution ef?ciently. One way to do this will be to
enhance the capacity of actors in the supply chain and particularly retailers who are responsible
for the data collection. Mercy Corps could play an effective role in helping to design new models
for embedding training for retailers within distribution channels. Mercy Corps could also partner
with other organizations that already provide effective training services to retailers to transfer this
training.
Identify commercial models for mud FES
Distribution schemes are also important when considering mud stoves for the rural market.
Commercial models for these stoves are not currently in existence in the region and commercial
actors do not now few this product as a viable commercial opportunity. With this said, the study
proves that the opportunity is there with appropriate product and business model adaptation.
Mercy Corps could play a valuable role to identify and to innovate on mud FES products. Further,
Mercy Corps could develop and test competing commercial business models, identifying which
components lead to highest access and adoption. In this role, Mercy Corps could bring together
community members that are involved in making these FES and help to design potential business
models that can be tested for commercial feasibility. This would include looking at the product
design itself and identifying ways to add value to facilitate commercialization.
Build awareness through social marketing
Though a potent market for FES does exist within Acholi, consumers not only lack access to the
product but are unaware of the many bene?ts of adoption. Working to crowd-in FES supply is
only one part of the equation; it will also be important to stimulate demand for FES as well. One
role that Mercy Corps could play to help to catalyze demand would be to disseminate information
about the bene?ts of adopting this technology as well as advertising new, local FES availability.
A nuanced approach to demand-pull is required. Some market segments will respond to messaging
that targets the monetary bene?ts of fuel-saving as quanti?ed within the study. Other market
segments, however, will require messaging targeted to the health bene?ts of FES adoption. This
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Market Analysis for Fuel Ef?cient Cook Stoves
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type of marketing should be pursued by stove makers and suppliers themselves. However, the
actors relevant to this market do not have the resources or capacity to reach suf?cient proportions
of the market. Mercy Corps can play a valuable role in producing and disseminating general social
messaging as well as pulling together private actors and facilitating coordinated action in order to
maximize the impact of the limited marketing each actor is capable of investing in.
Facilitate access to ?nance
Limited fnancial resources inhibit access to FES for all actors within the value chain. Though
credit does exist within the value chain itself, it is only available for a small minority of actors.
Manufacturers are unable to access the capital they need to grow their businesses to scale.
Distributors and retailers are unable to access the capital required to build inventory and to expand
their consumer base. Consumers are unable to pay for products in a single purchase. Limited
access to ?nance within the FES value chain creates signi?cant inef?ciencies that severely inhibit
market growth and product access.
Mercy Corps may be able to facilitate access to ?nance along the value chain. Mercy Corps could
leverage existing relationships with banks and SACCOs to generate ?exible ?nancial products for
businesses. Mercy Corps could also work to design and to facilitate alternative business ?nancing
schemes such as micro-consignment models. With respect to consumer ?nance, Mercy Corps
could help to design loan products in partnership with ?nancial institutions for FES themselves.
Institutions could connect with distributors or suppliers and provide loans speci?cally for cook
stoves, loans that are bundled with other products such as solar lighting, or even loans that are
folded into other offerings.
Mercy Corps could also help to identify micro-lenders with the capacity to take on the distributor
role and connect them with product suppliers – both local and from elsewhere in Uganda – to
help to promote the product among members. Mercy Corps could also work with suppliers and
distributors to help them to design and to experiment with ?exible ?nancing options.
Strengthen business acumen
Developing retailer, distributor and supplier capacity to design innovative models and to manage
successful businesses will improve access and adoption of FES. Rather than working with each
group directly, Mercy Corps would be more effective by working with business support services
in the region. Several private sector entities already exist that provide business planning and
management consulting services. By working to strengthen these groups and the quality of their
product as well as to connect them to retailers, distributors and suppliers, Mercy Corps can have
a wide and longer-lasting impact on business skills within the region.
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