• Dan Seals

Up In (Slightly Less) Smoke

The closure of Inyenyeri this month is a gut punch to the clean cooking sector, but not without lessons learned

The announcement that Inyenyeri, the Rwandan based social benefit company, featured in the New York Times, is shuttering operations is disappointing and frustrating, but not unexpected.

I had the chance to visit with Eric Reynolds, the founder of Inyenyeri, in April 2019. I invited myself to Rwanda because I wanted to better understand why Eric and his team were being hailed as the answer to the world’s dirty cooking problem. Having spent the past six years working in the sector, I was curious, I was envious. I wanted to see for myself how one man had galvanized the cooking sector, along with international press and funders, around his pellet-burning stove and fuel. I wanted to learn. Over the three days in Rwanda, Eric was gracious and his staff wonderful. I received full access to his operation.

I learned five lessons in Rwanda which I hope, as a sector, we can carry forward to ensure we can deliver affordable energy access for all.

In Customer Service, Inyenyeri excelled:

Inyenyeri built its operations around customer service- this was both by design and necessity (more on this later). Eric understood that cooking businesses exist to serve clients and that the sector was lacking in delivering exceptional service before, during and after the sale. The team at Inyenyeri provided excellent customer service with the hope that sustained engagement would ensure that both the stove and fuel would be used.

Carbon finance remains important as an early-stage financing mechanism:

Access to capital through result-based financing tied to emission reduction credits is a powerful tool for unlocking much-needed capital for new or early-stage businesses. Inyenyeri was very successful in attracting funding to deliver its solution through the pre-sale of carbon offsets. Without this access to capital, operations would not have commenced or would have fallen short of delivering a quality solution.

Rural areas have unique challenges:

Inyenyeri’s ability to provide targeted rural areas with a clean cooking option was Eric at his best. The showpiece of Inyenyeri’s operations was their rural outposts where clients could trade biomass for pellets. This scheme required investment in local infrastructure and staff that mostly likely exceeded the return on investment (ROI) but was visionary in its approach and philosophy of going directly to the client in hard-to-reach areas.

Stove durability is important to the bottom line:

An issue that Inyenyeri battled to address was the durability of their stoves. For Inyenyeri to keep operations going and scale, they needed to make money on pellet sales. Their stove+fuel model was utterly dependent on customers buying and using their fuel. But when the stove is not functioning properly, you have a problem. Hence the staff and customer service I mentioned earlier. Inyenyeri needed all those employees to ensure not only great customer service but also that nonfunctioning stoves were collected and fixed regularly. In my short time in Rwanda, I calculated that of the nearly 2,000 stoves in use, 20-30 stoves a day needed repair. At scale, the enormity of that requirement and the cost to staff adequate service personnel to fix stoves daily would cripple any business.

Beware of low-cost fuels with no value to share:

Building and running pellet plants can be expensive. The stove+fuel model that Inyenyeri promised was reliant on pellets not only being affordable but also delivering needed revenue to operate. The costs to build and run pellet plants never justified the return. To provide what Inyenyeri described as the “lowest cost to cook on a daily basis”, they sacrificed margin and, in turn, had no value to share with the business or the extended value chain (e.g. staff, sellers or retail partners). They might have been the lowest cost fuel, but without cash flow from fuel sales, the business relied on external funding to keep operations alive and their numerous staff paid.

Funding for clean cooking around the world is woefully underfunded. The Clean Cooking Alliance cites $4 billion is needed annually to reach universal access by 2030 but currently, the sector receives $40-million in investment. The failure of Inyenyeri to deliver a lasting solution unfortunately further hinders the sector’s ability to attract needed capital. I hope that funders and project developers see the positives from the experiment that was Inyenyeri, particularly their dedication to customer service, and emulate the best of their vision. Moving forward, stove + fuel solutions that not only provide affordable cooking options but also unlock the value in the fuel still need our full attention, energy, and investment.

Garner Advisors LLC 2020