No-aid, why and how

Running an aid-free biogas company is considered by some as an entrepreneurial suicide. For us and our partners is what makes it all worth it. Let us tell you why.

Biogas is probably the cleanest and most sustainable alternative cooking fuel used, but its acceptance and dissemination are progressing only very slowly in Africa. How can that possibly be?

One strategy that has been pursued in several countries is to distribute free or subsidized biogas systems among the population. In Ethiopia alone, over 25.000 household biogas plants have been built in the past 10 years with over 50 million Euros from European taxpayers. A program that originally had one major aim: private sector development. Until today the private sector is basically non-existent. No company, including (B)energy, has competed with the heavily subsidized biogas digesters promoted by the Program.

Consequently, biogas technology is not freely available on the market but only for households that qualify for the subsidy. This is one example of many on the continent. In some countries, donors and international organizations compete for participants and beneficiaries while by-passing local governments; there are no activities around biogas at all in other countries. In general, the few companies in the sector use every chance to take donations or external funding to extend and survive their “businesses” because the markets are unregulated, there are no rules, no coordination and entrepreneurs are completely unprotected. The consequence of this: there is literally no biogas system on the market that is not somehow subsidized. The amount of subsidy determines the price for the user, and the competitors’ success is thus determined by the most successful fundraiser – not an innovator. In the end, the market is so heavily distorted that nobody will exist in the long term – at the cost of the local population.

When aid organizations or aid money gets involved in biogas dissemination, then the whole biogas sector is put at risk in 3 significant ways:

  1. The reputation of biogas technology is damaged. We often meet people who know biogas as something that is “very expensive and does not work” because of a lack of ownership for free products and missing service.
  2. It reduces the willingness of customers to pay for a biogas system and increases jealousy – if some people get a free or subsidized system, everybody else expects the same or feels mistreated.
  3. Private sector development is not possible when entrepreneurs have to compete with aid-funded projects or companies. This risk is simply too big for entrepreneurs as there are no competition laws in place that could protect them.

(B)energy gives its partners three promises:

No use of “aid money"

We do not allow the use of donations, funds, grants, development-aid money, or charity from industrialized nations to reduce the price of our technology. It is also not permitted to give away (B)energy technology for free. Both practices are very common and lead to market distortion and unfair competition in the biogas sector.

No sale below market price

The price of the technology is not to be reduced to a price lower than the market price. However, alternative financing practices that ease product accessibility - such as micro-credits - are welcomed and encouraged.

Direct sale to end-users

(B)energy technology can only be sold to end-users. We do not sell to organizations involved in development aid that would use the technology in aid-funded projects or would provide the technology to end-users at reduced or no cost. In case of sale to aid organizations the “No Market Distortion Agreement” must be signed by both parties, making the sale of the product at a market price a legal requirement.

Guarantee after-sale service

Crucial for the success of any technology is access to service. To prevent failure of our technology, we commit to only selling products where there is an infrastructure in place and trained personnel to provide maintenance and repair services. If not in place, (B)energy provides the tools and training to establish such infrastructure.

More and more people know about these adverse effects of foreign responsibility-taking for local issues. All partners of (B)energy work on setting a tangible example of how it can be done differently. By following a fundamentally different approach where the social business rules of Muhammad Yunus are taken very seriously and especially the rule of “economic and financial independence” are implemented strictly: 100% exclusion of Western funding, this means no aid money, no donations, no investment incentives. This leads to mainly local (African) investments that are not interfered with by aid organizations that provide the same product. The aim is to protect the market and those entrepreneurs who take responsibility in their own countries for their people and a better life.

Our actions

Despite many eminent voices - from all continents and sectors - are speaking against the classic development aid model, this multi-billion dollar industry is still in its golden years. As a consequence, more markets are being held back, more entrepreneurs have to renounce their vision, more dependency is created.

Despite all, (B)energy persists in raising awareness about this topic and takes active action to bring the biogas sector together.  While the practices of market distortion persist, (B)energy keeps providing protection to its partners. This is done in different ways, for example, by not selling products to organizations that may, to some extent, be engaged in development aid work. If Western money is involved, the organization must fill in a matrix that makes market distortion – and its negative impact – easier to acknowledge and tackle. The organization will then be advised towards a not damaging approach, and a special agreement is signed. Additionally, (B)energy works to nudge and educate organizations who plan biogas projects to explore new models and embrace more sensible and considerate approaches. One example of (B)energy’s engagement was the biogas project which is currently taking place in Northern Uganda, where a considerable European Aid Organization is giving away 200 biogas systems for free. This destroys the livelihood of any existing or future biogas entrepreneur in the region – possibly in the whole country and (B)energy brought this project to the attention of the former development minister fo Germany. More recently, as a new Western-fuelled Program was being lanuched in Uganda, (B)energy communicated with the responsible people. The social enterprise called several international private biogas companies to unite and pin down their demands for entering the Ugandan market in a manifesto. The document wanted to show the Western development aid industry that the private sector refuses to contribute to the destabilization of the Ugandan biogas market, for the ethical implications as well as for the lack of business opportunities presented by a highly distorted market while neglecting the structural problems that urgently need to be addressed by those responsible. These are only examples of the daily actions that (B)energy takes to protect its business partners from the threat, warn them, and influence organizations to stop or change their projects.

Until the West acknowledges the damage it is causing, (B)energy will keep fighting back with its social entrepreneurship approach, leading to a sustainable biogas market. This mode can change the cooking reality of many and protect the climate and create an example of a sector that recognizes its responsibility and possible impact. Having a code of ethics is the next step on the list. Watch "Don't donate" by Katrin Puetz for additional insight here.

Biogas Unite

Biogas Unite is the reaction to the situation described above. It is an initiative driven by a number of biogas entrepreneurs and companies who work to make biogas accessible in Africa and struggle to compete with foreign aid projects. Together with all private entities in the biogas sector, we want to raise awareness of the need for clear and fair rules - including a limitation and strict regulation of foreign aid. African biogas entrepreneurs and international stakeholders are interested in working in reliable and protected environments, solid and competitive markets with equal conditions for all players and they want to see all biogas systems functioning. A large scale common effort is under way!

If you want to find out more about this growing movement and its upcoming actions, please visit the webpage here and join!

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