In an attempt to reposition developing economies “towards low carbon, green growth paths,” the World Bank has opened its first Climate Innovation Center in Nairobi, Kenya.
The center, which will act as the heart of green economic and technological activity in Kenya, aspires to support over 70 climate-based technology ventures in the first five years. But what constitutes a "climate technology venture"? And how does the center plan to support them?
Based on reports from infoDev, the World Bank program handling the project, "climate technology ventures" encompass a wide range of potential projects: off-grid technologies, water management and purification, micro-hydro, technologies for handling flood and drought, agriculture and bio-energies. The work would include anything from solar panel stoves to better waste management. The bottom line is the center hopes to support green practices as well as increased innovation in the field.
As for how it would work, the center has proposed a wide range of services available to anyone seeking to become part of the green technology movement. Among their proposed services are the following:
- Finance: Provide risk capital through a flexible fund of $25,000 to $100,000. Lure investment beyond its initial funds by syndicating investors, building partnerships with banks for working capital and facilitating consumer finance.
- Advocacy: Work closely with local government to support clean technology adoption and raise the visibility of the center, the innovators it supports and the investors who fund them.
- Advice: Offer business and technical training including the use of equipment and greener manufacturing practices.
- Market information: Improving market visibility by developing and providing databases containing current pricing for various technologies for entrepreneurs, funders and consumers.
Despite the fact that the goals seem lofty, they were made with careful consideration in conjunction with Kenyan stakeholders. The investment pool represents a diverse range of groups including R&D facilities (2 percent), universities (6 percent), Government (14 percent), international institutions (12 percent), NGOs (23 percent), private investors (12 percent) and small-to-medium businesses (29 percent) all operating within Kenya. InfoDev spent eight months consulting these groups and identifying market gaps to understand how best to fill them.
So how does the program propose to help Kenya specifically? The center has identified several core issues facing Kenya overall that intersect with the center's goals:
- Only 14-16 percent of Kenyan households are connected to the grid.
- Traditional biomass-based fuels for cooking and heating are currently the most important source of primary energy, meaning wood fuel accounts for 68.3 percent of total consumption.
- Availability of clean water and sanitation facilities remains limited. Access to safe water is around 60 percent in urban areas and 40 percent in rural ones, while only 14 percent of the country has proper sewer systems.
- 80 percent of Kenya’s land is classified as arid or semi-arid and overall rainfall is less than 1000 mm a year . However agriculture continues to be the main source of employment with over 80 percent of people employed by the farming industry.
As reiterated in infoDev reports, these issues underline the critical need for an organization such as the CIC that can foster climate innovation to help alleviate such problems.
The initial investment in CIC Kenya numbered at $15.2 million to be spread over the course of five years. The center aims to be 70-100 percent financially sustainable after a 10-year period pending “investment returns and other potential revenue.” Upon its opening, CIC Kenya directly created over 4,000 new jobs with the hopes of indirectly creating another 24,000 over the next five years through supported entrepreneurship.
The project is not without risks and challenges, and infoDev has not been inclined to ignore them. In its business report on Kenya the organization identified several key market risks, from financing to market demand. However, given the fact that CIC Kenya will be the acting model for several other planned centers around the globe, it is obvious the World Bank has faith in the this project’s potential for return.