Zambia is a landlocked country in southern Africa, where the majority of people rely on firewood or charcoal for cooking. These energy sources have several disadvantages for both the environment and the users: According to the German Federal Ministry for Economic Cooperation and Development, Zambia has one of the highest deforestation rates in the world, as forests are cleared for firewood, charcoal, agriculture, and housing. Additionally, burning wood or charcoal generates harmful emissions and smoke, which, according to the World Health Organization, leads to 3.8 million premature deaths each year due to inhalation.

The transition to modern, clean cooking solutions is therefore essential. However, there are still major hurdles to overcome, as only 40% of Zambia’s population has access to electricity. Moreover, this shift requires an adjustment in cooking habits, as different appliances must be used. One alternative are biomass-powered microgas stoves and the accompanying biomass pellets, which are distributed by Emerging Cooking Solutions. The business model of Emerging Cooking Solutions has gained visibility and investment in recent years. It is highly digitized, as many of the stoves are connected through an Internet of Things (IoT) platform. This platform has already recorded 30 million cooking and charging operations and offers the ability to remotely disable the stoves if payments are not made.

Cooking with sustainable stoves powered by biomass pellets represents a cost-effective, sustainable, and health-friendly alternative for traditional cooking, significantly improving people’s quality of life. Additionally, the pellets are made from waste from pine and eucalyptus plantations at ECS’s production facility in Ndola, Zambia, making them a fully renewable resource in a circular economy.

With the loan, Emerging Cooking Solutions aims to finance the purchase of components to assemble 7,500 specially developed microgasification stoves and the market launch of a new IoT stove, which will reduce fuel procurement costs by 30% and is considered the biggest innovation in clean cooking in the past 15 years. The company will also purchase 3,500 tons of waste from pine and eucalyptus plantations for the production of its SupaMoto-branded pellets. Additionally, capacity building will be initiated, consisting of expanding sales and distribution capacities, as well as purchasing a new shredder to process biomass waste into biomass pellets.

The business model of Emerging Cooking Solutions actively contributes to 6 of the United Nations’ Sustainable Development Goals (SDGs):

The energy-efficient cookstoves powered by biomass pellets reduce the consumption of fuels such as firewood and charcoal, thereby increasing energy efficiency (Goal 7.3) and leading to less deforestation (Goal 15.2). Biomass pellets and energy-efficient cooking solutions provide an affordable alternative to LPG and charcoal stoves. As a result, households can reduce their cooking expenses and save 50% on fuel costs (Goal 8.4).

Additionally, the use of efficient cookstoves reduces health risks such as indoor air pollution, which can lead to respiratory diseases. Charcoal-free cooking solutions are considered the most effective single measure at the household level to reduce indoor air pollution and carbon dioxide emissions while improving health and living standards (Goal 3.9). Furthermore, fewer CO2 emissions are produced (Goal 13), contributing to the fight against climate change.

ECS´s products support women and girls by reducing the time spent on cooking and improving their health by providing a clean cooking environment. They allow them to avoid adverse weather conditions by enabling indoor cooking and modernizing their kitchens. Emerging Cooking Solutions is committed to increasing the number of women in the company and supports women in taking on positions traditionally reserved for men. They pay equal wages regardless of gender and have a management team that is 50% female (Goal 5.1).

On average, each household saves 3-5 tons of CO2 per year by cooking with biomass-powered microgas stoves and the accompanying biomass pellets. This calculation is based on actual consumption, i.e., the kilograms of pellets sold by Emerging Cooking Solutions.

Through the crowdfunding project, a total of 7,500 cookstoves will be sold, resulting in a total reduction of 22,500 to 37,500 tons of CO2 per year once the cookstoves are in use.

The investment risks associated with the subordinated loan are described in detail in the risk disclosures. In terms of assessing and mitigating risks for investors, the issuer points out the following special features of the project design:

a) Use of a Special Purpose Vehicle (SPV):
A special purpose vehicle named Afrika Emissions 4 UG has been established in Germany for the crowdfunding campaign on bettervest, which acts as the borrower for this project. It directs the capital raised as a secured loan to the project owner in Zambia, Emerging Cooking Solutions (Zambia) Ltd. (ECS). The shareholders and managing directors of Afrika Emissions 4 UG are independent of Emerging Cooking Solutions (Zambia) Ltd. (ECS).

b) Liquidity Buffer of 2.22%:
Additionally, Afrika Emissions 4 UG will be equipped with a liquidity buffer of 2.22% of the raised emission volume (which will also be collected through crowdfunding) to intervene in case of any repayment issues from the local project owner or even to initiate legal actions.

c) Financially Strong Main Shareholder:
Emerging Cooking Solutions (Zambia) Ltd (ECS) is 100% owned by the parent company Emerging Cooking Solutions (Sweden) AB, whose main shareholder is Danir AB. The Danir Group has confirmed its strong commitment to supporting the development of Emerging Cooking Solutions (Zambia) Ltd (ECS).

d) Corporate Guarantee:
In the event of a payment default by ECS, the main shareholder of the parent company, Danir AB, guarantees the repayment of the loan up to a maximum amount of €250,000.00.

This financing plan contains the total projected cash flows for Emerging Cooking Solutions (ECS) Zambia Limited, covering the receipt, initial utilisation and repayment of the loans.

Investment Requirement

The maximum financing amount for the project of Emerging Cooking Solutions (ECS) Zambia Limited is €1,124,950. This will fund the production, distribution, and sale of cookstoves to 7,500 new customers, as well as the market launch of their new IoT (Internet of Things) cookstove.

The second loan is offered in a tranche of €100,000.00 (including fees). In the first tranche, which concluded in June 2024, €199,200.00 has already been raised through the bettervest crowd.

The term of the loan is 5 years, with an annual interest rate of up to 8.0% for crowd investors. Investors who invest in the project within the first two weeks will receive an additional early-bird bonus of 1.0% per annum (resulting in a total of up to 9.0% per annum). The funding threshold for this project is set at €50,000. If the funding goal is not met but at least the funding threshold is reached, the project owner will still use the investor funds to acquire materials and invest to a lesser extent in the aforementioned investment objects.

Repayment

The repayment of the loan will be made from the liquid assets generated by Emerging Cooking Solutions (ECS) Zambia Limited through its business operations, specifically from the revenues obtained from the sale of the cookstoves.