Zambia is a landlocked country in southern Africa, where the majority of people rely on 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. Additionally, burning wood or charcoal generates harmful emissions and smoke, which, according to the World Health Organization, led to 2.9 million premature deaths in 2021 due to inhalation.

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 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. The pellets are made from waste from pine and eucalyptus plantations at ECS’s production facility in Ndola, Zambia.

Emerging Cooking Solutions will use the loan to purchase materials for the production and distribution of 1,500 biomass cookstoves. Funds will support the procurement of key stove components and electronics. In addition, part of the loan will be used for operational costs, such as rent and office costs.

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 BETTERVEST INVESTMENT LTD 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 BETTERVEST INVESTMENT LTD are independent of Emerging Cooking Solutions (Zambia) Ltd. (ECS). The Kenya-based SPV may act as borrower for multiple projects. However, this does not affect the contracts or risk assessment compared to a German SPV.

b) Liquidity Buffer of 2.5%:
Additionally, BETTERVEST INVESTMENT LTD will be equipped with a liquidity buffer of 2.5% 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) Pledging of assets:

1) Carbon certificates owned by the borrower, and generated prior to 2026, will be assigned to BETTERVEST INVESTMENT LTD as security for the lender’s claims. In the event that the borrower fails to meet its repayment obligations, the lender is entitled to seize and realise these certificates.

2) As additional security for the investment, a material pledge in the amount of EUR 50,000 has been provided. This includes, in particular, plant and machinery as well as motor vehicles, and thus serves as additional security for the loan.

Investment Requirement

The loan amount for the project of Emerging Cooking Solutions (ECS) Zambia Limited is €99,950.00 (including fees). This will fund the production, distribution, and sale of cookstoves to 1,500 new customers. Funds will specifically support the procurement of key stove components. In addition, part of the loan will be used to cover operational costs, such as rent and office costs.

The term of the loan is 2 years, with an annual interest rate of up to 8.4% (incl. Early-Bird-Bonus until XX.XX.2026) for crowd investors. 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.

ECS generates carbon certificates from the Klik Foundation, supported through international carbon finance mechanisms. The project applies a state-of-the-art digital monitoring, reporting and verification (dMRV) system, ensuring high transparency and integrity of the emission reductions. Hence, as one of the few clean cooking initiatives progressing under the Article 6.2 framework, the programme meets particularly stringent international standards, underlining the quality and credibility of the underlying carbon assets. 

For more details, refer to the article here.

All carbon certificates owned by the borrower, and generated prior to 2026, will be assigned to BETTERVEST INVESTMENT LTD as security for the lender’s claims. In the event that the borrower fails to meet its repayment obligations, the lender is entitled to seize and realise these certificates.