SNV Cambodia localises trading platform for clean cookstoves

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Cambodia 2016/10/03

3 October 2016

SNV for EnDev and C-Quest Capital Cambodia sign agreement for the administration of The Stove Auction trading platform

thestoveauction.org

News_RBF_stove_auction.jpg thestoveauction.org

On 3 October 2016, SNV Netherlands Development Organisation and C-Quest Capital Cambodia Co. Ltd. (a subsidiary of US based company C-Quest Capital LLC), signed an agreement for the administration of The Stove Auction trading platform in Cambodia. “CQC is very pleased to be managing The Stove Auction trading platform. The concept is a first of its kind in the clean cookstove sector and is an extremely innovative way to accelerate market penetration for the cleanest burning most efficient biomass stoves using results based financing. The business model is highly replicable and scalable in other developing country markets stuck in a rut of unhealthy, environmentally destructive cooking practices”, said Ken Newcombe, CEO of CQC LLC. According to the WHO almost 12,000 people die each year in Cambodia as a consequence of inhaling smoke from cooking, which is almost as much as diarrhea, malaria, HIV AIDS and tuberculosis combined. This health-hazard can be drastically reduced by advanced biomass stoves that are cleaner, more energy efficient and safer than traditional biomass stove currently used by the majority of Cambodian households. Funded by GIZ/Energising Development (EnDev) Results-based Financing (RBF) Programme, The Stove Auction focuses on facilitating the vital connection between international suppliers of these high performance stoves, and local distributors and retailers through the establishment of a trading platform. The trading platform aggregates a number of distributors and retailers to buy stoves, replacing the initial need and costs for stove suppliers to make these relationships with local partners themselves, thereby reducing their market entry risk. The Stove Auction stimulates interest from local distributors and retailers by giving them opportunity to bid on small volumes of stoves at competitive prices in an auction format, and providing them a results based cash incentive for each stove they sell to a consumer that can be verified. Without such a scheme, the majority of local distributors and retailers would not be able to afford purchasing directly from international stove producers due to their lack of working capital as well as perceived high risk to invest large sums of money when the market for advanced biomass cookstoves is still quite new and uncertain to them. For The Stove Auction, the market hypothesis is that local demand for these new products will increase over time leading to increased willingness of local distributors to pay higher prices at the auctions. Less and less results based financing incentives will be then be required to eventually reach a situation where the market is operating at full commercial prices. Since March 2016, SNV has piloted The Stove Auction in Cambodia. Early indications are that market factors will lead to significant volumes of stoves to be distributed also after the results based financing incentive scheme is phased out towards the end of the project period. The goal of the project is that the structure for market aggregation and transparent marketplaces as provided by The Stove Auction remain after the project period.

Further information Dennis Barbian, Regional Programme Manager, dbarbian@snvworld.org