The non-profit Soros Economic Development Fund, supported by controversial billionaire George Soros, has announced that it will invest some USD 6 million in an ethanol cooking project in Mozambique. The project will seek to reduce the negative environmental and human impacts of charcoal cooking in African nations while also building a large and sustainable industry that should provide decent paying jobs and income across the continent.
Unlike most traditional charities and aid organizations, the Soros Economic Development Fund seeks both financial and social benefits by making investments in self-sustaining businesses, instead of providing grants. SEDF often takes a stake in the project it invests in. This investment will be in exchange for a 19% stake in Cleanstar Mozambique, which is running the Ethanol project.
The project will aim to increase food security and reduce the reliance on indoor charcoal cooking, which has dangerous environmental and human effects. Cleanstar will sell special stoves and cooking oil across Mozambique and eventually Africa, which will allow for safer and less environmentally harmful cooking.
Cleanstar is based out of both New York and the Mozambique capital of Maputo and started the project about 1 year ago. The company is an integrated food, energy, and forest protection business that works with local farmers to grow a variety of crops and to produce crop surpluses which are then purchased by Cleanstar and processed into various products.
This project should create a variety of income streams and benefits. Farmers will receive money for producing crops that will then be converted into Ethanol. Workers will be employed to produce and distribute the stoves. Cooking oil will have to be processed and distributed across the country. And families will benefit from a safer cooking method that produces far fewer harmful fumes.
At the same time Cleanstar pushes “conservation” farming techniques that will help farmers reduce their impact on the environment. And the cooking oil stoves themselves should produce, on average, 8 tons less carbon emissions versus a traditional charcoal stove.
While Africa is the world’s poorest region, economic development is accelerating. Africa recorded a respectable growth rate of 3.9% in 2010. Meanwhile FDI from both foreign governments and companies is beginning to increase as investors are hoping to tap into Africa’s large reserve of natural resources. FDI in Africa grew by an astonishing 27% in 2011, totaling some USD 80 billion and is projected to grow to USD 150 billion in 2015. Cleanstar’s product could be well-positioned in an increasingly affluent and high-growth market.
Cleanstar hopes to have their stoves in 20% of Mozambique households by 2015 and plans to roll out the stoves across at least 45 African cities in the near future. If Cleanstar succeeds, the Soros Economic Development Fund should achieve its positive impact goals while also turning a tidy profit that can then be reinvested in other social projects.