African Fuel Pioneer Uses Crisis to Innovate

Crisis, as the old saying goes, is also a window of opportunity. And there is one African entrepreneur who knows this better than most. Daniel Mugenga has been on a journey of innovation that has led him to become a pioneer in the emerging new field of algae technologies. The story of how he got there is a testament to the power of using business to both solve problems and make profits.

Kenyan entrepreneur Daniel Mugenga has found a solution to the problem of high fuel costs for the transport sector in his country. He has been making money from turning waste cooking oil and inedible vegetable oil into biodiesel (http://en.wikipedia.org/wiki/Biodiesel). He then discovered that he could boost his production of biodiesel by using marine algae as a source for oil.

According to the body that represents the algae fuel industry, Oilgae (oilgae.com), algae are “plant-like organisms that are usually photosynthetic and aquatic, but do not have true roots, stems, leaves, vascular tissue and have simple reproductive structures. They are distributed worldwide in the sea, in freshwater and in wastewater. Most are microscopic, but some are quite large, e.g. some marine seaweeds that can exceed 50 m in length.”

The U.S. Department of Energy has been investigating algae as a fuel source since 1978, and it is being investigated as a potentially transformative fuel source around the world. His business, Pure Fuels Ltd. (http://www.purefuels.co.ke/), is currently seeking venture capital funding for expansion and innovation. Pure Fuels is “a commercial producer of biodiesel and also manufactures biodiesel processors, which we sell to budding entrepreneurs,” says Mugenga.

The Pure Fuels website educates readers on biodiesel as well as offering opportunities for investors and news updates. Pure Fuels was registered as a business in Kenya in 2010.

The business was born out of crisis: in 2008 there were frequent fuel shortages in Kenya and prices were volatile. That was bad news for Daniel Mugenga’s job, working for a transport company with a fleet of trucks. Rising or volatile fuel prices can destroy businesses in areas like trucking, where the biggest expense is fuel.

Mugenga began to do research into fuel alternatives in the crisis and came upon biodiesel. He then set about training in how to produce biodiesel. A period of testing, trials and research ensued between 2008 and 2010, which enabled Pure Fuels to build confidence they had something that was high  quality. The company started producing 120,000 litres of biodiesel in 2010 and increased production to 360,000 litres in 2011 and 700,000 so far in 2012. In 2011, Pure Fuels had revenue of US $230,000 from selling biodiesel.

“We started off using jatropha oil, but when its price went up it was no longer profitable,” Mugenga told the VC4Africa website blog. “Having invested in the machinery, we switched to the next quickest alternative which is used cooking oil. We source it from several of the tourist hotels along the Kenyan coast.”

Turning to cooking oil for biodiesel at first was a good idea. The company was able to get enough waste cooking oil from Kenya hotels and tourist resorts to meet demand. But as demand rose, the thorny problem of Kenya’s tourism business being seasonal arose.

“For about five months of the year, many hotels in Mombasa temporarily shut down or operate at lower capacity. Of course this is affecting the amount of waste cooking oil,” Mugenga said. This is where algae (http://en.wikipedia.org/wiki/Algae) comes in.

Pure Fuels found a biotechnologist in Kenya to help develop a solution using algae as a source for fuel. While the company is keeping details of its innovation secret, it is currently hunting for investors to help increase the quantity of biodiesel it can make – and in turn, revenues.

Investor funds would be used to import non-edible vegetable oil and also to continue the company’s work on extracting oil from marine algae.

Pure Fuels make a bold statement on algae fuel development: it “may actually be Kenya’s next cash crop.”

Pure Fuels sells several products: there is the biodiesel itself, as well as a processing machine called the GXP-200, which can turn customers into biodiesel manufacturers themselves. The company also builds large, industrial-scale processors that can produce between 1,000 litres and 5,000 litres a day.

Pure Fuels currently sells fuel to truck, bus and tuk-tuk companies, and also operates biofuel stations.

The firm has patented its biodiesel and makes all its fuel go through seven quality checks for purity. An in-house laboratory ensures adherence to international standards, and the company is certified by the Kenya Bureau of Standards (http://www.kebs.org/).

Mugenga is a passionate advocate of biodiesel’s advantages: he believes it is cheaper, and better for engines and for the environment. He admits it does have a disadvantage: it gels below 13 degrees Celsius and must be mixed 50-50 with conventional diesel to stay fluid.

Pure Fuels encourages others to use biofuels for business, throwing in a home training kit with the biodiesel processors it manufactures and sells, complete with DVDs, manuals and a business plan. The GXP-200 biodiesel processor was developed after years of experience, and Pure Fuels hopes it will be bought by people who then set up businesses – especially youth, women and the disabled. As a further incentive, Pure Fuels promises to buy the biodiesel produced. The GXP-200 was recently awarded “Most Innovative Product 2012″ at a small and medium business entrepreneurs event in Nairobi.

In Israel, there are a number of pioneers working on further developing algae as a biofuel source too. Isaac Berzin of Seambiotic (seambiotic.com) sees algae as a good source for biofuel because it does not compete with food crops like other biofuel sources (sugar, potatoes, corn etc.). Algae is among a group of so-called second-generation biofuels that includes jatropha, wood and castor plants.

The disadvantage of plant-based fuel sources is they need arable land and water. This seriously holds back their ability to meet the world’s demand for fuel since they would just take up too much land and water. Algae takes up less space and produces a higher yield per acre than conventional crops.

Seambiotic makes marine microalgae using the CO2 from electric power plant flue gas. It pioneered making large quantities of fuel algae in the United States, creating the first gallons of bio-diesel and bio-ethanol from marine microalgae.

Seambiotic is also working on a US $10 million commercial microalgae farm in China, partnering with China Guodian (http://www.cgdc.com.cn/), one of the country’s largest power companies. Another Israeli company in this field is UniVerve (http://www.univervebiofuel.com/). Its CEO, Ohad Zuckerman, runs the10-person company in Tel Aviv, Israel. It is developing a new biofuel from a special strain of algae that can grow quickly in a wider range of temperatures.

By David South, Development Challenges, South-South Solutions

Published: July 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Bamboo Becomes Transport Option for the South

 

The sturdy bamboo plant (http://en.wikipedia.org/wiki/Bamboo) is enjoying a revival around the world as a building material. A strong, fast-growing and highly renewable woody plant, it is becoming increasingly popular as people seek out less environmentally wasteful alternatives to steel and other materials.

But who would have thought bamboo taxis would turn up on the scene?

A fleet of bamboo taxis is now plying the streets in Tabontabon, a municipality in The Philippines that is home to 10,000 people, most of them rice farmers.

Bamboo can sometimes grow more than 1 metre a day. While in Asia, it has long been a traditional construction material, people are now turning to it to make transportation vehicles. In The Philippines, there are 62 species of bamboo, up to 15 of which are suitable for industrial applications.

So-called habal-habal motorcycles, the most popular form of transportation in the town, are also the source of many accidents and are uncomfortable on sunny days or when it rains. A covered taxi service is both a safer and a more comfortable alternative.

The town’s mayor, Rustico Balderian, took the initiative to build a fleet of bamboo taxis. He set four criteria the new taxis had to meet: they should be low-cost, fuel efficient, safe and environmentally friendly. The bamboo has a higher tensile strength (http://en.wikipedia.org/wiki/Tensile_strength) than steel, which also requires vast quantities of energy to produce.

The taxis are 90 percent made of bamboo and are built by unemployed youth. They are divided into Eco 1 (a model that seats 20 people and runs for eight hours on one gallon of coco-biodiesel from coconuts) (http://cocobiodiesel.blogspot.com/), and Eco 2, which seats eight people, has a stereo and sound system, and also runs for eight hours on a gallon of coco-biodiesel.

Both are made by the Tabontabon Organic Transport Industry [TOTI] (http://totieco.multiply.com/).

Making vehicles out of bamboo is a serious endeavour that also has been under development in Japan. In 2008, Kyoto University’s Venture Business Laboratory (VBL) unveiled a unique single-seat electric vehicle equipped with a body made from bamboo. The vehicle was developed under the Kyoto Electric Car Development Project, which is one of the laboratory’s major initiatives. Nicknamed Bamgoo, this eco-car’s body is made of braided rods of bamboo, one of the local specialty products of the area.

Other bamboo modes of transport in the South include bamboo bicycles in Ghana. A partnership between an American bike designer and a Ghanaian government initiative is taking advantage of this local resource to manufacture bicycles for the local market – and as a source of export income.

Not only are the Ghanaian builders harvesting bamboo to make bikes for the domestic market, they are also offering a sophisticated online shopping service for the overseas market. People from around the world can now buy Ghanaian bikes using a website (http://www.bamboosero.com). Customers can choose frame builders by their specialty – cargo bike, mountain bike or road bike – and then order it online. The completed bikes are quality checked and then distributed by Calfee Design in California, USA. This approach keeps the middlemen out of the transaction, and means more money gets back to the bike builder.

Meanwhile in Cambodia, the legendary bamboo railway is a people’s solution to the poor service offered by the established railway system. In the northwest of the country near the second city of Battambang, an entire railway system has been built using bamboo.

The bamboo trains, called ‘noris’ or ‘lorries’ by the locals, are driven by a electric generator engine. Passengers sit on a bamboo platform placed on two sets of wheels. The bamboo train reaches speeds of over 40 km/h.

“We’re very careful,” 18-year-old Sok Kimhor, a 10-year veteran of the bamboo trains, told the BBC. “We look out for children and animals running across the lines, and we have to slow down when other trains come along.”

There is just one track, so when two trains meet, one has to be taken off the track to pass.

The regular rail service runs only once a week to the capital, Phnom Penh. This makes the bamboo train the only alternative for many people to get around. While the main railway station is deserted, the bamboo service is a hive of activity.

“They’re very safe – a motorbike taxi is too fast, and if I use one of those I sometimes get dizzy and fall off,” said Sao Nao as she sat on the rails with a small group of people. “On a bamboo train I can sit down and go to sleep. You can’t do that on a motorbike.”

Design for Development (http://designfordevelopment.org/) is also turning to bamboo for a transport solution. The Canadian NGO is working in Kenya on making five emergency medical transportation devices (EMTD), or ambulances, to move local people to health clinics or hospitals. Bamboo is locally available and they hope to set up a workshop and make the ambulances using local labour.

By David South, Development Challenges, South-South Solutions

Published: September 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=uXWUyfb4MacC&dq=development+challenges+september+2009&source=gbs_navlinks_s

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