SimGas Kenya Ltd. 4

With a loan of EUR 202,400 SimGas will provide biogas digesters to 300 farmers in Muranga county for clean energy.

  • CountryKeKenya
  • TypeDirect investment
  • IssuerSimGas
  • Amount€202,400
  • Annual interest6.50%
  • Maturity36 Months
  • CurrencyEUR
  • 10 new jobs
  • 300 biogas digester systems installed
  • 1500 people reached
  • 2400 tons of CO2 reduced
100%

Fully funded in 22 days.

IMPORTANT NOTE: high risk product - direct loan to biogas company. No local partner in between to cover risks.

Basic info

Issuer: SimGas Kenya Ltd.
Currency: EUR
Amount: EUR 202,400 (senior debt)
Maturity: 36 months, semi-annually and linearly amortizing
Collateral: None
Interest rate: 6.5% p.a.

SimGas has the right to do an early repayment with a penalty fee of 1%. No early repayment is possible during the first 12 months of the loan.

Direct loan

This is a direct loan to a company (rather than lending to a financial institution) and therefore it is recommendable that you are careful with the amount you will invest. 

Available documents:

Basic compliance checks performed by CreditSafe.

Impact so far

SimGas is proud to announce that, with the support of the Lendahand crowd in the previous 3 rounds, we achieved the following results:  

  • We have sold 505 biogas digesters and counting! Helping these families to save 26.765 USD every month and reduce greenhouse gas emissions with 4.146 tonne CO2-eq. per year.  
  • We are scaling up operations in Kenya. We have hired 10 new sales people and 18 new technicians. 
  • We have opened 9 new hubs Muranga, Kangema and Meru counties. A hub is a small shop, with stock, operated by a team of sales reps and technicians. 
  • We have closed contracts with 10 dairy cooperatives, connecting us with 12,000 farmers. 
  • We are endorsed by Muranga County Creamers Cooperative Union to sign even more contracts with their dairy cooperatives, and jointly open 30 SimGas Biogas & Dairy Shops in the area.  

We are hoping for your support to provide loans for another 300 farmers, living in Muranga county, Kenya!

Summary SimGas

SimGas is a triple bottom line company that designs, produces and installs biogas systems for smallholder farmers in East-Africa. SimGas has facilities in Kenya (est. 2013, 60 employees), Tanzania (est. 2011, 20 employees) and The Netherlands (est. 2009, 12 employees). The biogas systems enable rural households with livestock to use the manure from their livestock to generate clean fuel for cooking and organic fertiliser: two valuable assets to increase income whilst saving life, nature, money and time. The high quality, modular, domestic biogas systems can be installed in 2 days. To date, SimGas has provided 1,500 farmers with their biogas systems.

What does SimGas drive to design, produce and install biogas systems? More than 3 billion people worldwide are being exposed to toxic fumes, fuels and dangerous open fires while cooking their meals (FAO, 2008). In East-Africa, 95% of households use wood or charcoal (FAO, 2009). Inhaling acrid smoke and fine particulates causes risks of skin, eye and lung diseases. The direct consequences cause 4 million people worldwide to die each year (WHO, 2011). ). Lower respiratory disease is the number 2 cause of death in Kenya, after HIV/AIDS and Malaria ranking at number 3 (WHO, 2013). Biogas is a clean cooking fuel and thereby eliminates indoor air pollution, putting an end to one of Kenya’s top cause of death and disease.

SimGas desires to enable their customers to become more productive, independent, cost-efficient, and healthier farmers. Next to that they want to make biogas accessible not just for the lucky few, but for the worthy many. That’s precisely what the biogas systems do. By doing so, SimGas helps create healthy and safe environments for rural households while contributing to the reduction of indoor air pollution, deforestation, and carbon emissions.

SimGas’s business model is as follows: to the clients, an interest rate is charged for the loans which enable them to buy a SimGas system. The company also takes a small margin on the biogas systems itself. 

Next to that, SimGas has a deal with the World Bank (Ci-Dev) that buys carbon credits, which allows SimGas to provide a discount on the systems of EUR 200 each. Thanks to selling these credits, SimGas can provide a guarantee and full service for 5 years. On average, the systems will remain functional for approx. 20 years.

View http://simgas.org/about-simgas/

The project

With a loan of EUR 202,400, SimGas will provide a loan to another 300 farmers living in Muranga county, Kenya, to enable them to each acquire a SimGas biogas system. These systems allow farmers to produce clean gas by digesting the manure of their cows. This provides huge benefits as they are no longer required to cook on open fires and breath in toxic fumes. The biogas systems also produce organic fertiliser, which can be used on their land or sold to other farmers. 

SimGas has been endorsed by the Muranga Creamers Union - the umbrella organisation of 35 dairy cooperatives with a member base of 45,000 farmers in the area - to sign contracts with these dairy cooperatives to set up SimGas shops on their premises. Out of the 45,000 members an estimated 15,000 sell more than enough milk to the dairy cooperatives on a daily basis to be able to afford a biogas digester. SimGas plans to open up 30 SimGas shops at 30 dairy cooperatives to sell biogas digesters to the dairy’s member farmers. In this way the farmers can pay with milk to pay off their biogas digesters, using the existing financial systems of their trusted dairy cooperative. In turn, the dairy cooperative pays SimGas. The payment agreements with the dairy cooperatives will be monitored by SimGas Kenya head office. 

The 300 biogas digesters will be sold, installed and serviced by the SimGas Muranga hub team. 

Watch how a biogas digester is being installed

Impact 4th loan

With this loan 300 families and thus approx. 1,500 Kenyans living in Muranga county are impacted. They will enjoy the benefits of cooking on clean gas and on having access to organic fertiliser. The impact is quite significant and is as follows:

  • Health benefits as people do not have to cook on fossil fuels such as charcoal or wood, and thus eliminate the consumption of toxic fumes (the equivalent of 20 cigarettes per day)
  • On average, people save 35-45% of their household budget, which they do not have to spend on wood fuel (Kenya Bureau of Statistics, 2015)
  • Additional income of EUR 270 on average as a result of using the organic fertiliser on their land (a 25-200% increase of crops) and/or selling it to other farmers nearby
  • Preventing the cut down of approx. 7.42 tonnes of wood per year (Kenya’s forest declined from 10% to 1.7% of its total territory between 1963 and 2016)(UNESCO, 2006)
  • Preventing an average of more than 8 tonnes of CO2-eq emission per year per household
  • Saving approx. 2-4 hours per day for a family as it takes much longer to cook on firewood and clean all the pots and the kitchen as compared to using biogas. Furthermore it is no longer required to gather wood or going to the market to buy firewood or charcoal.

SimGas’s business model is as follows; to the clients, an interest rate is charged for the loans which enable them to buy a SimGas system. The company also takes a small margin on the biogas systems itself.

Next to that, SimGas has a deal with the World Bank (Ci-Dev) that buys carbon credits, which allows SimGas to provide a discount on the systems of EUR 200 each. Thanks to selling these credits, SimGas can provide a guarantee and full service for 5 years. On average, the systems will remain functional for approx. 20 years.

More information on SimGas:

Vision & Mission

SimGas believes in empowering people by offering them graceful, reliable and sustainable tools that help to improve their lives and income positions.

SimGas takes social and environmental impact just as seriously as economic impact. We are creating impact through mass production, modularity and standardisation, combined with highly scalable business models. Our secret is the combination of local presence, great partnerships and smart investments in research and development. We measure what we do, learn from the results, and adjust our strategy accordingly. This is what makes SimGas a true trailblazer and helps us create immediate impact that lasts.

SimGas aims to be a game changer and is already the largest supplier of biogas systems in Africa. We have the ambition to improve the lives of 1 million people by 2022. In order to accomplish this goal, we are scaling up in our home markets and in close collaboration with local partners we will ramp up sales in neighbouring countries Rwanda, Ethiopia, and Uganda.


Management team

Mirik Castro – CEO SimGas East Africa

Mirik (MSc., TU Delft) is a systems engineer in Policy Analysis and Management. He is a serial entrepreneur, having established Holland Turnaround, John’s Phone and other companies in the Netherlands, and has previously worked at Boston Consulting Group and Stork NV. As CEO of SimGas East Africa, he manages a growing team of 80 employees, including admin, sales, production, and installation crew in Tanzania and Kenya. Mirik lives with his family in Tanzania since 2011.

Oliver Kynaston – COO SimGas East Africa

Oliver (MSc., Bristol University, UK) is a physicist, researcher, patent holder, brewer, and hang glider pilot. With the belief that developing products for the off-grid market in East Africa can teach the world how to live sustainably, Oliver moved to Tanzania in 2010 to start a business in renewable energy products for households. SimGas persuaded him in 2015 to lead our operations in Tanzania and Kenya. Under his wings, a team of more than 80 is making households in East Africa (including his own) happy with biogas.

Arne Kühl – Financial Manager SimGas East Africa 

Arne (MSc., Business Administration, University of Passau) recently joined the SimGas East Africa team with the motivation to support SimGas’ purpose in providing rural households with the opportunity to become more independent and to improve their living standards by offering an innovative and affordable product. With his impressive skill set and past experience as Assistant Head of Finance at HCI Capital AG, Senior Consultant in auditing and transaction services, and Head of Finance at e.ventures in Hamburg, we feel more confident than ever in realizing our mission having Arne on board!

Christina Mng'ong'o - Factory & Supply Chain Manager

Christina (Msc, Dar es Salaam Institute of Technology) joined SimGas in October 2013 as Quality officer, Hub Manager of the Tanga branch, Deputy factory Supervisor for Gesishamba Production Ltd factory. She worked her way up to become Factory- and Supply Chain manager. Christina is the youngest SimGas employee and is an expert in injection moulding- and biogas technology.

Moses Gekara – Country Manager SimGas Kenya

Moses Ogeto is a trained engineer in Computer Science and HSSE planner. He has worked for 3N International as Database/Data Entry before Joining National Bank of Kenya in the same capacity. He has worked for 14 years as Operations manager for Pressure Vessels Ltd. He joined SimGas Kenya as Country Manager in October 2013 and has since then been of tremendous value in operations and sales. Moses knows all our customers in Kenya!

Track record:

http://simgas.org/trackrecord/

2016 highlights:

  • World Bank’s Ci-Dev buys 500,000 carbon credits generated by our biogas systems
  • Winner IDEO.org Amplify Challenge with our Biogas Milk Chiller
  • USAID’s Powering Agriculture grantee

2015 highlights:

  • Biogas Milk Chiller prototypes in Tanzania
  • Pilot for bio-sanitationsystems at schools in Kenya and Tanzania
  • Winner Lettinga Award

2014 highlights:

  • Dutch Minister for Foreign Trade & Development Cooperation Ms. Lilianne Ploumen opens our new production line in Tanzania
  • Inclusion in the Africa Biogas Partnership Programme
  • Global Alliance for Clean Cookstoves Spark fund grantee
  • Ashden Awards Finalist

2013 highlights:

  • Founded SimGas Kenya Ltd., sales start in Kenya
  • Start product development of Biogas Milk Chiller and Biogas Stove 
  • Siemens Empowering People Award Finalist

2012 highlights:

  • Mirik Castro moves to Tanzania to start local production and sales
  • Founded SimGas Tanzania Ltd.
  • UNFCCC registered Biogas Program of Activities (PoA) for the trade of carbon credits

(Picture of Moses with one of the assembly teams in Kenya)

Previously realized

http://simgas.org/projects/

  • Company nameSimGas Kenya Ltd. 4
  • OwnerMirik Castro
  • Founded2013
  • LocationMuranga
  • SectorSustainable energy projects
  • Turnover€200,000
  • Employees108

Impact of this project

  • With this investment 10 jobs are created
  • With this investment 300 biogas digester systems are installed
  • With this investment 1500 people are reached
  • With this investment 2400 tons of CO2 are reduced

About the investment

  • TypeDirect investment
  • IssuerSimGas
  • Funding target€202,400
  • Annual interest6.50%
  • Maturity36 Months
  • Repayment periodSemiannually
  • CurrencyEUR

About the risks

What are the risks of investing money?

Our local partners cover the risk of currency exchange rates and loan defaults. They do this by maintaining financial reserves for this purpose . In addition, there is an option to claim their equity if needed. While these measures are intended to minimize the risk to funders, our local partners face risks of their own that could effect their ability to secure a loan. These include: - bankruptcy - currency exchange rates - fraud - operational risks - political and regulatory changes - natural disasters or epidemics.

If you invest direct in a company, hence not via a local partner, risks of default are not covered. As the risk that comes with direct lendings is generally higher than an investment through a local partner, the interest rate is also higher.

There is also some operational risk at Lendahand. An example might be that Lendahand is unable to find shareholders to finance their activities. In such a case, Lendahand will handle outstanding loans at the best of its ability. At the same time, our ability to legally address non-payment from local partners becomes understandably difficult.

How does Lendahand minimize the risks?

Local partners must adhere to our mission and work with us to provide loans that are affordable. This insures that local entrepreneurs have access to financing that allows them to grow their business. A local partner must also have a track record. In other words, they must have proven themselves as a meso-credit provider for SMEs. This means (for instance) that the partner must have a solid credit portfolio, along with enough buffers and equity to compensate for unexpected downturns. We also check the organizational structure of the partner and how robust their (internal) procedures are. Finally, the loans that a local partner receives via Lendahand must be in proportion to the partner's total balance sheet. A healthy balance between effectuating influence and independence is crucial. If you would like to receive more information on the financial indicators we employ, please contact us via info@lendahand.com.

When currency exchange risks become too high for a local partner, Lendahand will urge the local partner to cover these risks. In some scenario's the local partner is contractually obliged to comply with these demands.

Lendahand will always conduct due diligence when a Company requests for a direct loan. To provide more insights on risks, an independent partie comes in to perform brief analysis on direct loans. The results can be downloaded on the project detail page of the direct loan. However, this analysis serves primarily as a tool for your own opinion and conclusion. Pay attention to the fact this analysis is not an investing advice.

Does Lendahand provide guarantee on the loans?

No. Local partners take care of the repayment, even if (some) entrepreneurs are unable to do so themselves. If the local partner is for some reason unable to repay then there is a chance of partial or full loss of your money. For this reason Lendahand only selects financially solid partners based on strict criteria.

Also, for direct loans no guarantee is provided.

Does Lendahand have a license or exemption?

Yes. The Dutch Authority Financial Markets (AFM) has provided Hands-on B.V. (with trade name 'Lendahand') in September 2016 with an investment firm license in accordance with article 2:96 of the Financial Markets Supervision Act (Wft). Placing orders on Lendahand's website is therefore an AFM regulated activity. Lendahand also meets its minimum capital requirements of EUR 125,000 following its license as required by De Nederlandsche Bank (DNB).

Lendahand uses an exemption from an approved prospectus that is available up to EUR 5 Million per year. 

How safe are my personal details?

We adhere to strict safety requirements with regards to private and payment details. All sensitive data is sent through an encrypted connection (https). Also, data is stored (encrypted) in a secured facility provided by AWS: the world largest hosting service. Customer documents can only be retrieved by a secured connection and multi-factor authentication.

What happens if the local currency devaluates?

Our local partners and Companies bear the exchange rate risks. We settle the loan, redemptions, and interest payments in euro.

Does Lendahand use a third foundation fund?

Lendahand works with Intersolve EGI: a Dutch financial institution that specialises in offering services in the field of payment settlement and electronic money. To be able to offer these financial services Intersolve EGI must comply with the applicable financial legislation. Intersolve EGI is therefore supervised by De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) and is in possession of a license to act as an Electronic Money Institution (and therefore also has a license as a Payment Institution). Your money will be deposited on a protected and secure bank account until the project you have invested in has been fully funded. Intersolve in no way has access to these funds. Once the project is fully funded, the money is transferred to the local partner or company in question.

What happens with my money if Lendahand goes bankrupt?

If Hands-On BV (containing the brand name Lendahand) would go bankrupt trades between Lendahand and payment service provider Intersolve EGI would cease immediately. Intersolve will then transfer the funds in your personal wallet to your bank account (Note: if at this time the project you have invested in has been fully funded and the money has thus been transferred to the local partner, these funds will not be transferred back to your bank account). Intersolve will then in consultation with a trustee handle all repayments between the investors and investees up until the final repayment of the last project has taken place.

Additionally, Lendahand is part of the investor compensation scheme (ICS). This scheme aims to compensate individuals and small businesses who have trusted money and or financial instruments (such as notes or options) to a licensed bank, investment firm or a financial institution in case the financial firm is unable to meet its obligations arising from claims related to the investment service. The ICS guarantees an amount of up to EUR 20,000 per individual. For more information, go to www.toezicht.dnb.nl/en/2/50-202210

Why is my money going via Intersolve EGI?

As part of the AFM license for investment firms it is required that operational activities carried out by Lendahand (maintaining the website, contracting of local partners, legal issues, etc.) are strictly separated from financial transactions (payments made through the website). Intersolve takes care of the payments. This collaboration offers you more security, since your money is placed on a protected bank account immediately after you have made your payment.

What happens when a local partner goes bankrupt?

When a local partner goes bankrupt, there will be a chance that you lose (part of) the amount you lend. Obviously Lendahand will try to recover outstanding payments, but the success rate will be limited in such situations. For the investor there is no possibility to take action against the financial institution. From a legal point of view the local partners are separated, therefore it is recommendable to spread loans across different local partners.

About SimGas

Total assets€709,799
Revenue€224,842
Leverage ratio10.20%
Solvability11.00%
Liquidity249.00%

We have already contributed for SimGas Kenya Ltd. 4

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