Kampala — Eco Group Limited, a manufacturer of an innovative cookstove that uses volcanic stones for fuel instead of charcoal or firewood recently gained the notice of some financiers writes SAM OKWAKOL.
In an effort to improve access to loans for off-grid enterprises, Energy 4 Impact runs a loan guarantee scheme for local financing institutions and provides advisory services to both borrowers and lenders.
Rose Twine, the brains behind the Eco Stove and CEO of Eco Group Limited, estimates that the stove can reduce cooking costs up to 75% and is marketing her product in Uganda, where the deforestation rate for biomass production is stark.
“The Loan Guarantee Fund has enabled us to increase the supply of capital to eligible businesses by covering some of banks’ default risk on loans to the same businesses,” Tibbs Orikiriza, the Capital Access Officer of Energy 4 Impact in Uganda said in a statement.
To capitalise the business, Eco Group needed a loan so it could extend the credit instalment system to more customers. This is how Eco Stove came to work with Energy 4 Impact. It supported Eco Group on their loan application and provided advice to them on managing the loan. “The loan is going to build our capacity to reach many customers, such as schools, who are willing and able to purchase our stoves in instalments,” Twine said.
In the case of default by borrowers, Energy 4 Impact typically compensates the lender for 50% of the outstanding principal on the loan. Energy 4 Impact is now designing new programmes to increase lending to off-grid enterprises in East Africa.
CREDIT SOURCE via Allafrica