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FEATURE STORY November 1, 2018

Despite Booming Green Market, Financing Remains a Challenge for Kenyan Entrepreneurs

Allan Marega, founder and CEO of Global Supply Solutions, discuss green tech, climate change, and start-up funding

This feature is an outcome of infoDev, a multi-donor program administered by the World Bank Group, with a focus on entrepreneurs in developing economies. This piece was originally published on May 11, 2017. 

Global Supply Solutions’ new plant has the capacity to produce 50 metric tons of biomass briquettes in a year. This alternative energy source, based on pineapple plant waste, is mainly used in cook stoves and as industrial fuel.

“The large volumes of timber used by industries greatly impact the remaining forest, climate change, and rain patterns, which affects our environment. Our fuel conserves the environment, as people don’t have to cut down trees,” says Allan Marega, founder and CEO of Global Supply Solutions. “We hope to set up plants similar to this in other countries where pineapple grows.”

This sort of company growth, however, is difficult to achieve. “In Kenya, banks generally don’t lend easily to start-up businesses or projects,” Marega explained in a previous interview with infoDev. Through the Kenya Climate Innovation Center (KCIC), Marega has received training in alternative funding models. “Crowdfunding is the answer to fundraising for new businesses in Africa,” Marega continues, “and not only in the clean technology sector.”

Marega points out that the KCIC is in a position to become a hub also for investors. “It would be great if the Kenya Climate Innovation Center were able to offer the kind of capital that’s required to grow a clean technology company.” The center already provides several other incubation services, Marega explains. “They have a lot of the technical support in place already. Whether you need legal services, marketing services, or general information about setting up a business, they got you covered. And from what I hear, they’re setting up a seed fund that would help entrepreneurs move to the next level.”

Marega is right — the World Bank Group’s infoDev program is building out the Kenya Climate Ventures (KCV), an early stage investment company set up by the KCIC to invest in start-ups and early stage climate-technology firms with high growth potential. KCV provides patient risk capital coupled with high-touch management assistance to the companies it invests in, enabling them to scale. Investments range between $100,000 to $500,000. Focusing on early stage firms that are considered too risky by later stage investors, KCV complements Kenya’s venture finance eco-system. infoDev’s funding and support is helping KCV establish a strong base of operations and initial investing, with a goal to “crowd-in” investors and strategic funders to accelerate its long-term objectives and scaling. 

Marega’s business started in 2003 as a supply company offering procurement services to large corporations and multinationals. “We found that a bulk of the work we got was fuel-related. Some of our industrial customers were using several tons of eucalyptus timber to run their furnaces daily,” Marega told infoDev in a previous interview. “As the order volumes grew and the available plantations dwindled, I realized that I had to find a solution that could solve this need and preserve the environment at the same time.”

Global Supply Solutions is one of the green companies supported by infoDev's Climate Technology Program, an initiative sponsored by the U.K.’s Department for International Development, Australia’s Department of Foreign Affairs and Trade (Australian Aid), Denmark’s Ministry of Foreign Affairs (DANIDA), Norway’s Ministry of Foreign Affairs, and the Netherlands’ Ministry of Foreign Affairs.