Building healthier communities with Khainza Energy
“Khainza” is a reference to a small person with high energy and ability. It is also Arthur Woniala, the founder's, mother’s maiden name. This SEED Low Carbon Award Winner from 2018 is an innovative circular economy business that obtains organic waste from smallholder farms and local households for processing and refinement into high-purity methane. It then distributes cooking appliances and affordable, recyclable biogas cylinders locally, incorporating local women, youth, and farmers along its value chain and distribution channels. We caught up with Arthur to hear how SEED Support has helped change his business & what Khainza is up to these days.
SEED: In a few words, what is Khainza & how does the business make money?
Arthur: At Khainza Energy, we believe that Ugandans can prepare meals more sustainably and affordably, through adopting the use of biogas as clean cooking fuel. We construct systems which transform organic waste into biogas for households, farms and schools. Our company is pioneering the packaging of processed biogas in recyclable cylinders for sale to smallholder farmers. We also carry out training for youth and women to become expert biogas masons.
SEED: How did you get into this and what continues to motivate you?
Arthur: I am a mechanical engineer by profession. In my final year at university (2016), my mother fell terribly sick. In all my life, I’d seen her sick only a handful of times. She had respiratory difficulties, and her blood pressure had peaked. She spent the greater part of her life (6 hours a day) exposed to smoke in our small kitchen. I was devastated.
By some coincidence, we were studying renewable energy, and I took particular interest in the production of biogas from waste. The intention was to help us understand that this fuel could be used to produce motive power, which could run generators and vehicles. I found that I was more interested in using the biogas for cooking than anything else.
As soon as we broke off for holidays, I constructed a small biogas system using leftover construction materials. Much to our surprise, it worked! With two friends, we started constructing biogas systems for our neighbours. We registered the company on 17th February 2017. “Khainza” is a reference to a small person with high energy and ability. It is also my mother’s maiden name.
SEED: How, would you say, does your enterprise affect the local community?
Arthur: Our enterprise is empowering the community to substitute the use of wood products with biogas. By offering an alternative fuel, Khainza Energy reduces the smoke emissions in households, preventing indoor pollution and all its associated dangers both to women and children. For every 8kg cylinder of biogas, we save 176kgs of wood.
Our business is intricately connected to smallholder livestock farmers. Without them, we would not have a sustainable supply of waste materials from livestock. We have come up with a model whereby they contribute waste in exchange for discounts on our cylinders. We facilitate the packaging of the gas in cylinders, while the farmers market the product to their neighbours. We work through farmers’ groups, who co-own the biogas systems and as such, we enable them to earn additional revenue.
Last year, we had only two biogas experts on the team. Through our training programmes, we now have six professional biogas masons. The company has also created two administrative roles.
SEED: What do you struggle with as a company in your (current) day to day work?
Arthur: When we started, we were using a biogas system owned by one of our clients. Its capacity was only 9m3, and therefore it could only partially fill one cylinder. We have acquired a 32m3 system which has improved our production, but it is still a drop in the ocean since we can only package about three cylinders in a day.
Another challenge is consistently finding organic waste in the quantities we need and at the right quality. We spend a considerable amount of time and money on a daily basis to sustain the functionality of our biogas system. We have not been able to secure the environmental licenses for handling vast amounts of waste so we can only take on so much at a time.
SEED: Can you tell us more about your struggle to scale?
Arthur: We have three main struggles that are hindering our ability to scale. The first is the small size of our biogas system, which limits how much gas is produced per day. We are currently working with a 32m3 system. For us to scale, we need to construct a system of at least 150m3. We believe that if we have several systems of this size in at least three regions, we shall be able to scale much faster.
The second challenge is the capacity and level of efficiency of our equipment. The equipment we are currently using has a low capacity, with a lot of downtimes. We hope that if we acquire a more efficient refilling system, we might be able to package the biogas much faster in the different locations we choose.
The final challenge is the acquisition of inventory. By using recyclable cylinders, we reduce the cost of adopting biogas from $400 to only $40. The cost of the cylinder is $30 with a refill cost of only $10 (40% cheaper than a bag of charcoal which lasts just as long). We have found it very difficult to get the cylinders because of the required minimum order quantity of 1,000 pieces. We are in discussion with regional manufacturers for a smaller batch.
SEED: Do you think the expectations from investors or other people in the eco-system on scaling are realistic?
Arthur: Yes, I believe the expectations of our investors are realistic. Our target is to produce 9,000 units of biogas by December 2020. Technically, if we have biogas systems of the right size for mass production, with the right equipment and stable inventory levels, then we shall be able to reach our target for scaling.
I strongly believe that if resources are directed towards building the eco-system through the incorporation of smallholder farmers in the business model, it will be easier to reach the level of scale expected by investors. Biogas is produced from waste, which can be found almost anywhere across the country. We can make it possible for communities to have access to biogas, just the same way they used to access firewood 20 years ago – in any location and amount.
Admittedly, it will require quite a substantial amount of investment to get it started. But with a model that centres on smallholder farmers, the investment can be spread across a number of key stakeholders.
SEED: What, in your opinion, would be needed to solve the challenges you mention (in your country)?
Arthur: The best way to scale this idea is to make it attractive to the people who have the potential to make it happen. We believe these are the smallholder livestock farmers. If we can get them to construct the large scale biogas systems, we shall use our equipment to enable them to earn revenues from the sale of biogas in recyclable cylinders. I firmly believe this model will work and will allow us to scale much faster.
SEED: You have received SEED Support before, how has that helped your enterprise?
Arthur: Yes, in July 2018, we were selected for the prestigious SEED Low Carbon Awards in recognition of our efforts to curb smoke emissions caused by cooking with wood products. The immediate benefit was, of course, the immense publicity that we received. We have been able to attract new clientele as a result.
SEED partnered Khainza Energy with Enterprise Uganda, the most reputable business incubator in the country. Together, we worked to develop a fully concise business plan, which we currently base on to guide our decision making. We were able to develop our brand based on core values and our value propositions which have given us an idea of how to position ourselves in the current market.
Through the SEED Awards, Khainza Energy received a cash prize of USD 5,000. From the business development sessions we had had at Enterprise Uganda, we knew that our immediate need was a bigger biogas system and equipment. We decided to use it for the construction of the current 32m3 biogas system that we use. This has enabled us to triple our daily biogas production.
We also hired a new Chief Executive Officer, Ms Diana Wodeya, who represented Khainza Energy at the SEED Symposium and Awards in South Africa. She has restructured the company and brought on three new employees. She also managed to leverage the SEED Award to secure partnerships with prominent organizations such as AVSI SKY and the United States African Development Foundation. We are truly grateful and humbled to have been recognized globally for our work.
SEED: What is your vision for Khainza, and what are your plans for the next few years?
Arthur: In three years, we want to be the biggest biogas company in Uganda. We want to produce and package 50,000 cylinders of biogas in 10 different locations for over 10,000 households. This will improve the livelihoods of over 100,000 people, most of them women and children. To do so, we will train 500 biogas masons to small scale biogas systems all over the country for households, farms, schools and institutions. Our company will directly generate revenues for over 7,500 people. We are working on product certification for our cylinders and biogas systems to portray a brand that inspires customer confidence.
SEED: What do you think the world can learn from Africa based enterprises?
Arthur: I believe the most important thing the world can learn from Africa based enterprises is the importance of community. We strongly value the social aspect of a business. Every transaction is done to nurture a relationship. There is a feeling of doing everything for the greater good. This is the reason why it sometimes appears as though there is not much competition (but there is, really). In other places around the world, business is done at a brisk pace, with only the most relevant words spoken. Here, people get to know each other, which builds a very high level of trust. This level of trust is what builds brands, that mutual understanding of the fact that we are all each other’s keepers.
SEED: What advice do you have for aspiring enterprises that are also starting out?
Arthur: I think it is important to trust what you are doing and the way you are doing it. That’s your unique purpose and assignment in the world. Look for people who have experience in what you are trying to accomplish (it does not hurt to volunteer). Add something to your enterprise, every single day, however little it may seem.