CASE  3:  GERES  Cambodia     IcoProDac/  New  Lao  Stove  Program  

Sandra  Romero  Ruiz    May  27th,  2014  -­‐  Phnom  Penh  

•  Development  of  quesAonnaires  (Value  Chain  Analysis)  ✓  

•  Individual  interviews  (program  managers,  business  units  of  the  value  chain)  ✓  

•  Visits  to  the  field  ✓  •  Focus  group  discussions  ✓  •  Desk  review  ✓  

•  Preliminary  findings  presentaAon  ✓  

How  we  adapted  the  Methodology  

Where?    

GERES  Cambodia  main  office  in  Phnom  Penh  &  stove  producAon  sites  in  Kampong  Chhnang  province    When?    

Throughout  the  month  of  April  2014    What  kind  of  interviewees?    

Program  managers  Stove  producers  and  distributers  

INTERVIEWS  &  FIELD  VISITS    

What  is  IcoProDac?    The  Improved  Cookstove  Producer  and  Distributor  AssociaGon  in  Cambodia  (IcoProDac)    is  a  business  associaAon  established  in  2004  by  GERES  Cambodia.      It  was  developed  through  GERES  Cambodia’s  New  Lao  Stove  (NLS)  Program.    

INTRODUCTION  &  HISTORY    

1.  OrganizaAonal  CharacterisAcs  2.   Business  Strategies  Employed  

a)   EssenAal  elements  of  the  NLS    Value  Chain  

b)   NLS  Value  Chain  modaliAes  

3.       Financial  Model  

4.       Market  access  and  trends  

5.       DistribuAon  Channel  Strategy  

STUDY  FINDINGS  

ORGANIZATIONAL  CHARACTERISTICS  

•  Type   of   organizaGon:   Business   AssociaAon,   registered   in  2004  by  GERES    

 •  270  members  

•  Subsidiary  of  GERES  (100%)  

•  Specialized  in  Improved  Cookstove  sector  

•  Social   purpose   (social   return   to   the  members  –  who  are   for  profit)  

OWNERSHIP  OF  THE  MEMBERS  –  Business  Units    

 

At  the  output/ac,vity  level:    

•  Few  of  them  report  100%  revenue  from  ICS,  some  side  acAviAes,  poeery,  tradiAonal  stoves,  farming  etc.  

•  Micro  –  small  enterprises  (non  registered  businesses,  home-­‐based  in  high  percentage)  

•  Limited  Financial  capital  registered  

•  Limited  access  to  finance  

ORGANIZATIONAL  CHARACTERISTICS  

COORDINATION  AND  GOVERNANCE  

ORGANIZATIONAL  CHARACTERISTICS  

DISTRIBUTORS

EXECUTIVE BOARD ICOPRODAC

PRODUCERS PRODUCERS WHOLESALER PRODUCERS DISTRIBUTORS

•   Formal  AssociaGon  –  network  (270  associates)  

ORGANIZATIONAL  CHARACTERISTICS  

Appendix XXXX Organigram ICoProDAC

Chief of Executive Committee

Deputy Chief of Executive Committee

Secretary Treasurer Members

Steering Committee

ORGANIZATIONAL  CHARACTERISTICS  

• Specialized  in  Improved  Cookstove  Sector  • Business  AssociaGon  

IcoProDac  

WHERE  THEY  WORK    

•  Centralized   producAon   in  Kampong  Chhnang  Province  

•  41%  of  the  HHs  naAon  wide  •  Distributed  all  over  the  

country  –  main  urban  areas  

ESSENTIAL  ELEMENTS  OF  NLS  VALUE  CHAIN  

BUSINESS  STRATEGIES  EMPLOYED  

Production Distribution &  Commercialization Inputs     End User

PRODUCTION FLOW

FINANCIAL FLOW

INFORMATION FLOW

GOVERNANCE MEASURES

NLS  VALUE  CHAIN  MODALITIES  

   Suppliers

   Micro/small Producers

   Wholesalers

 

 Distributors

 

Retailers

 

  End Users

   Suppliers

   Micro/small Producers

 

Distributors

 

Retailers

 

End Users

BUSINESS  STRATEGIES  EMPLOYED  

    Suppliers

   Micro/small Producers

 

  End Users

NLS  VALUE  CHAIN  MODALITIES  (Cont…)  

    Suppliers

   Micro/small Producers

    Retailers

    End Users

BUSINESS  STRATEGIES  EMPLOYED  

FINANCIAL  MODEL  

ACCESS  TO  FINANCIAL  CAPITAL  

•  Carbon  Finance  –  VCS  Fund    (May  2003  –  June  2013  under  GERES)  •  ODA  –  EU  &  AFD    (under  GERES)  •  Stove  pricing  strategy  –  Fixed  at  producAon  IcoProDac  –  Price  for  

the  end  user  Market  price  •  Limited  access  to  Working  capital:  

•  Economic  pillar  under  GERES  –  build  in  house  mechanism  -­‐  (producers  and  distributors)  Microcredit  max.  1,000  USD  (savings/credit)  

•  Local  MFIs  &  commercial  loans  •  End  user  finance  –  No  system  in  place,  some  informal  ways  along  

the  value  chain  business  units  

GERES  •  Quality  control  and  Assurance  systems  (VCS)  •  Monitoring  and  EvaluaAon  systems  (VCS)  •  Training  for  ProducAon  units  (VCS  &  ODA)  •  Equipment  and  tools  (VCS  &  ODA)  •  MarkeAng  and  awareness  raising  campaigns  (ODA)  

Business  UNITS  –  SMEs  •  Profit   from   sales:   Re-­‐invested   in   the   VC   (payment   of   salaries,  

supplies  and  equipment,  upgrade  in  transport)  •  Credit:    

•  Economic  Pillar    •  Commercial  credits  &  Local  MFIs    

FINANCIAL  MODEL  

INVESTMENTS  

FINANCIAL  MODEL  

RETURN  ON  INVESTMENTS  •  Margins  are  made  along  the  Value  Chain  (higher  sales  margins  at  

distribuAon  and  wholesaler  level)  •  Turnover   revenues   mainly   spent   for   social   and   family   needs  

(more  than  business  scaling)  •  Lot   of   room   for   improvement   at   the   distribuAon   level  

“tradi,onal  system”  •  “Lost  of  investment  at  the  ProducAon  Level  -­‐  Very  high  Drop-­‐out  

(>40%)”  •  “IcoProDac  &  members   -­‐  biggest  market  player   in  Cambodia”  –  

they  absorb  >40%  of  the  naAonal  market  

•  Same   distribuAon   channel   –   selling   points   as   the   tradiAonal  cookstove  

•  Low  level  of  partnerships  with  private  sector,  NGOs,  CBOs,  etc.  

•  IcoProDac  does  not  parAcipate  in  naAonal  mechanisms    •  Low   level   of   investment   in   adverAsing   –   only   related   to   donor  

demand  (EU)  •  Some   cooking   demonstraAons,   billboards,   word-­‐of-­‐mouth,  

TV/radio  ads,  etc.  

MARKET  ACCESS  &  TRENDS  

MARKET  ACCESS  &  TRENDS  

Stove  type   Number  of  Households  (HHs)  –  rounded  up  to  the  nearest  thousand  

%  of  the  Total  Cambodian  HHs  

NLS   763,000   25%  NKS   397,000   13%  NLS  +  NKS   114,000   4%  Total   1,274,000   41%  

MARKET  SHARE  

•  “No   incenAves   for   the  distribuAon  network”.  “Same  system  as  tradiAonal  cookstove  (piggy  backing)”  

•  “TradiAonal  distribuAon  network  –  low  cost,  low  efficiency  –  when   there   is   an   upgrade   at   the   distribuAon   unit   the  operaAonal  cost  increases  

•  Decentralized  channel  

•  No  aper-­‐sales  support  strategy  (no  maintenance,  no  repairs,  no  warranty,  etc…)  

CHANNEL  STRATEGY  

SWOT  ANALYSIS  

STRENGHTS   WEAKNESSES  

OPPORTUNITIES   THREATS  

NLS  GERES  

EMERGING  ISSUES  

GENDER Not  present  in  design  of  the  program,  but  it  is  a  reality  of  the  Business  Model  

INTERVENTION  LOGIC    

•   Centralized  understanding  of  purpose  (GERES  management  level)  

•   Lacking  clear  informaAon  on  model  of  intervenAon    

•   Theory  of  change  of  IcoProDac  is  different  from  members’  one  

•   “Deeper  private  sector  understanding  and  market  perspecAve  needed”  

 RECOMMENDATIONS  

 

RECOMMENDATIONS  

“Review   areas   of   investment   &  intervenAon   (more   efficiency   in  producAon,   increase   number   of  producers,   widen   geographical  areas,   distribuAon   mechanism,  etc…)”  

“Bring  addiAonal  financial  support  to  the  Value  Chain”  

RECOMMENDATIONS  

•  “Invest   in   organizaAonal   development   providing  IcoProDac’s   governing   body   with   more   insAtuAonal  support”  

•  “Strengthen  markeAng  and  awareness  (explore    outsourcing  services…)”

•  “Improve   networking   at   local,  naAonal,  regional  levels”  

•  “Private   sector   and   business    analysis  &  perspecAve  needed”  

RECOMMENDATIONS  

•  “  Access  to  financial  capital  (improve  access  to  working  capital   for   Business   Units,   strategic   partnerships   with  MFIs)  ”  

•  “   Improve   technology   and   experAse  t ransfer   f rom   GERES   -­‐   more  experienced  staff  ”  

 •  “  Access   to   financial   services   for   end  

users   (partnerships   with   MFIs   and  savings  and  credits  groups)  ”  

May  27th,  2014  -­‐  Phnom  Penh