Billionaire investor and philanthropist George Soros's nonprofit group has invested $6 million USD in an ethanol project in Mozambique that will offer families in the Southern African country an alternative to charcoal.
The Soros Economic Development Fund released information today that its investment will give it a 19% stake in the $20 million USD project, started by food-and-energy company CleanStar Mozambique. Executives say the investment is in line with the fund's aim of backing businesses that provide a return on capital and spur broader economic development.
CleanStar launched its Mozambique project a year ago to introduce a new cooking model for households in the country. Like much of Africa, Mozambican households tend to cook with charcoal, which produces smoke that when inhaled carries health risks. The company, based out of New York and Mozambican capital Maputo, has designed a low-cost stove that runs on cleaner ethanol, produced from cassava grown by farmers that the company has signed up. Since its launch, CleanStar has sold 3,000 stoves and plans to sell thousands more from November.
The project has also received a $3 million USD investment from the Denmark-backed Industrialization Fund for Developing Countries, while Danish industrial enzymes company Novozymes A/S has provided $1 million USD and a number of loans. Bank of America Merrill Lynch is also assisting with the selling of carbon credits.
With the new funding, the company plans to ramp up its production of both cassava and stoves and have its model in 20% of Maputo's households by 2015, said Novozymes executive vice president Thomas Nagy.
The investors want to roll the project out in another 45 cities across Africa, in what they say is a unique business model. The goal is to sell 100,000 stoves in the next two to three years in Mozambique, according to the Soros fund's Africa director, Cedric de Beer. "If that can happen, then the opportunity to sell in large cities across the continent is dramatic," Mr. de Beer said.
The fund also has investments in Liberia, Sierra Leone, Kenya, Zimbabwe and South Africa. Profits derived from its investments are redeployed to new projects. Stewart Paperin, president of the fund, said most of its investments in Africa are still in the early stages.
Source: The Wall Street Journal
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