Khainza Energy Limited is committed to improving access to sustainable energy among low income populations by transforming organic materials into high quality, affordable and long lasting cooking gas packaged in cylinders.
The firm transforms livestock and household waste into biogas through a biochemical process called anaerobic digestion. The gas is then cleaned to a purity of 98% to make it suitable for packaging in cylinders. We are the first company in Uganda that is attempting to do this.
When scaled, its product will be over 30% cheaper than conventional gas (LPG) and will reduce reliance on solid fuels (firewood, charcoal etc.) especially among low income populations. TechMoran caught up with Arthur Woniala Khainza Energy’s founder and here is what we learnt.
How did you come up with this idea? What inspired the birth of your company?
This idea was inspired my mother (called Khainza Rose), who has spent the greater part of her life cooking with firewood and charcoal. It grieved me to see her every morning at 4:00am fumbling with charcoal or firewood to fix us breakfast before sending us to school.
While pursuing my BSc. Mechanical Engineering, I learnt about Bio Energy. It was quite exciting to know that we could make biogas from virtually anything organic! So I spoke to some friends and we constructed a small biogas plant using left over bricks from a construction project. It worked seamlessly and suddenly, everyone wanted one!
We decided to start Khainza Energy Limited, a company that constructs biogas digesters. The challenge, however, was that the initial installation was quite high ($500) for most people. So we embarked on a research to package the gas in cylinders in partnership with Uganda Industrial Research Institute.
It has been a huge success and everyone is really excited about its potential.
Outline the services or products that your company offers to the consumers. Who is your target market?
Khainza Energy’s core mission is to enable access to clean, affordable and sustainable cooking solutions.
Our company’s flagship product is high quality gas packaged in cylinders weighing 8kgs and 15kgs. However, it has not completely taken off due to limited capacity and a lot of down time in terms of production.
Much of our company’s revenues still come from construction of biogas digesters for households, farms and schools. We also manufacture briquettes and lorena rocket stoves. This year, we started training youth and women in biogas technology, briquette making and lorena stoves to enable them earn a sustainable revenue.
What market gap did you spot that motivated your venturing into this business? How did the market receive you?
In Uganda, 94% of the population relies on firewood and charcoal as their primary cooking fuel. We find that 85% of these reside in rural areas. The cleanest option is LPG offered by petroleum companies. The challenge is that LPG is too expensive for most people in rural areas. In addition, market penetration of LPG stands at less than 4% countrywide because it is mainly sold in areas with fuel refilling stations. Therefore, the people in rural areas who need it most are not able to access it.
We decided to build the product targeted at this market segment. Our business model involves selling the product through women and youth savings groups (saccos). They have responded very positively to our product.
We illustrated it to leaders of Gudie Leisure Farm’s group of small holder farmers (37,800 women in 315 parishes) and they were really impressed. We have now signed an MOU to supply our products to their members once we start mass production. We are seeking more partnerships such as these to bring our product to market.
If somebody wants to venture into this market, what are they looking at in terms of capital, growth rate and stability?
This market is capital intensive and it is the primary reason why we are still struggling. We have developed equipment worth just over $15,000 but it has a lot of down time. With this little funding, it is difficult to make a significant impact.
In order to establish an efficient biogas production, purification and packaging facility, one needs to have at least $180,000. The most expensive part of the project is equipment to purify the gas such that it is suitable for packaging.
Cylinders are also quite expensive considering that most suppliers need a minimum order quantity of 500 (about $12,500). However by demonstrating that we have a ready market, suppliers can be swayed to offer the inventory on credit and we pay on a rolling basis.
Once you have the facility set up, growth will be quite stable at a rate between 13 – 18% per year. It is quite a competitive sector, especially considering that there more than 9 LPG companies in Uganda. However, the main competitive advantage is added value in terms of cost and quantity.
How did you guys start in relation to funding, with investors or savings?
We started the company with no capital. It was until we begun making some savings from construction of biogas digesters that we were able to start. Then we submitted a proposal to TOTAL Uganda Ltd through their TOTAL Start Upper of the Year project. They were impressed with our idea and we emerged 1st Runners Up. They gave us a grant of just over $10,000 and business mentorship.
These are the funds that have made it possible for us to pilot the project. Gudie Leisure Farm is also one of the investors because the proprietors are passionate about access to clean fuel especially for women in rural areas. They have invested about $2000 in us. Our friends and family have been a huge support as well.
What are some of the barriers that you faced since launching your business?
The main challenge has been access to finance even for day-to-day running of the business. For our first biogas plant, we were arrested for stealing bricks! It took us about 4 hours to convince the police that we were making biogas. They eventually became our clients.
Most of our employees do not earn a salary. We are merely passionate about the project and its potential when scaled. Some nights I stay awake thinking about what will happen if they decide to jump ship before we “get there”. Getting a team together is one of the hardest things for a start up.
We have not fully perfected our production process so we are spending a lot of money per unit of production. There is little assistance in terms of research. We face issues of safety because we built the equipment ourselves using makeshift materials. Our first compressor was actually extracted from malfunctioned fridge! It took us over 4 days just to fill one cylinder.
What keeps you going, entrepreneurship is challenging. Nowadays, everyone is venturing there.
The main thing the reason why. Every time we are faced by challenges and burn out is imminent, it is always important to go back to asking, “why did we start this?” It is important to understand why you are venturing into something. That reason should not be money because it is possible that you might not make any for a long time after venturing in. Every year, 50,000 women and 500,000 children below the age of five pass away due to prolonged exposure to smoke caused by using firewood.
I believe we have been placed at this particular moment in time, equipped with the various skill sets that we have, to change this. Why should mothers die because they trying to cook for their babies?
I have clear vision for the business and I know exactly where it should be in 3, 5 or 10 years. Without that, it is challenging even to just get out of bed some times, especially in times of hardships. Each time I remind myself of these two aspects, I am motivated to keep moving.
We will be the largest company enabling access to clean cooking solutions in 5 years.
What do you want to do for the society as a business when it comes to giving back?
We are already giving back to the society! Khainza Energy cares deeply about people, access to affordable energy and the environment. Our business wants everyone to have access to clean cooking energy. This is the reason why we started the training programs for youth and women in biogas technology, briquette and stove manufacturing. We also empower a sanitary community by collecting household wastes.
How do you market your company? Any marketing advice to those who want to venture into the same?
Currently, our marketing is quite low. Our most powerful tool is word of mouth and recommendations. We often approach peer groups through their meetings and pitch our products and services. Sometimes, it is as simple as going into a religious gathering such as a church and explaining what we do! We have got quite many customers in this way. Featuring radio talk shows and news paper articles is also quite effective. We attend agricultural and trade exhibitions to tell people about our product. Of course there’s social media marketing where we post our services on Facebook and Twitter, although we have not had many conversions this way.
Someone looking to do entrepreneurship, what’s your advice?
If you believe in something, pursue it! Think about it all the time, everyday. Add something to your idea, little by little, even if you have no funds. Find people who are interested in what you do. Build partnerships and network. Most importantly, put all your plans before God. It is Him who endorses everything!