UNIDO

Today we met with Alexander Varghese, Kenya Country Director of the United Nations Industrial Development Organization (UNIDO) at the UN Headquarters in Nairobi. Interestingly, two UN organizations are headquartered in Nairobi: UNEP and UNHABITAT.

UNIDO has a new program called Lighting Up Kenya, whose mission is threefold: clean energy generation and provision, productive use of that energy, and resulting social empowerment. Kenya is enduring a huge energy crisis, with its tree cover diminishing from 12% at independence to just 1% today. UNIDO wants to develop small kilowatt-level plants to supply power locally using alternative energy sources like solar, wind, and biomass. It will use the power to supply new Community Development Centers (CDC), which will promote small enterprises by employing small-scale equipment like welding machines and the assembly facilities for LED lamps with very simple, yet imported, designs. They have signed a huge deal with Equity Bank to offer microfinance opportunities.

Varghese is a straight shooter. He says that for every dollar he invests, he wants a dolar twenty back. He is a rare and refreshing personality in the industry. He is very interested in partnering with ACESS, which would be able to create income generating facilities and activities at UNIDO’s CDCs. In return, Varghese will both fundraise for us and ensure that the villages we are already working in be some of the pilot locations to receive power and CDCs! He has hired us to perform research in these villages and write feasibility reports based on the potential in the surrounding areas.

Some interesting points that came up in discussion with Varghese:

• 90% of Kenyan homes have no electric lighting, creating a 700m USD market for kerosene lighting.
• By manufacturing LED lamps locally, the cost can be reduced from 30 USD to 15 USD. The fact that these very simple LED lamps, which comprise an LED, a simple printed circuit board, and a battery, are revolutionary for Kenya says a lot about its current manufacturing capacity.
• Power lines from traditional megawatt-level plants run straight through the villages to the cities, mostly Nairobi. The villagers can’t access the power because they can’t afford transformers to step down the voltage (we’ve heard this before). This is where decentralized kilowatt-level plants come into play.
• In one of the pilot CDCs, a jua kali was brought in to use the welding machine. He only used the machine a few hours a week when he received orders for doors and windows, confirming my hypothesis on competitive disadvantage.
• These small entrepreneurs don’t just need the technology, but they need ideas to develop new products and markets. That’s why Varghese is so excited about ACESS starting small enterprises to manufacture farming tools—it’s something besides doors and windows.