Rarely do you find a business that attacks two big problems–global poverty and climate change–at the same time.
This week, I came across two such ventures. As it happens, they have a lot in common: Both operate in East Africa, both work with the very poor, both were started by executives who came out of the fossil-fuel industry and both are made possible by 21st century cutting-edge technology.
One is called TIST, which stands for The International Small Group and Tree Planting Program. (You can tell it wasn’t started by a marketing guy.) TIST organize small groups of farmers to plant trees, generate income from global carbon markets and reverse the devastating effects of deforestation in Tanzania, Kenya, Uganda and India. It’s been operating for less than a decade but has signed up a remarkable 65,000 farmers.
“It’s growing on its own by 50 to 100% a year,” says Ben Henneke, a veteran energy executive who started TIST after visiting Tanzania on a church mission back in 1998.
The other is Dissigno. A San Francisco-based startup, Dissigno operates a power and lighting project in Tanzania that provides villagers with battery-powered LED lights that are recharged with solar power. The company, which also has solar businesses in the U.S. and the Czech Republic, has big plans, hoping to expand its power and lighting business to Ethiopia, Botswana and South Africa.
“There are 1.6 million people around the world who don’t have power,” says Gary Zieff, a founder of Dissigno. “That’s a business opportunity for us.”
I met Henneke and Zieff at an energy and climate conference organized by Center for Sustainable Enterprise at the Kenan-Flagler business school at the University of North Carolina. Next week I’ll tell you about another entrepreneur who spoke at UNC about his plans to bring high-altitude wind power to the global south. Since I spend most of my time writing about big companies and the government, it’s great to connect with entrepreneurial energy.
TIST traces its origins to a service at an Episcopal church in northern Virginia where parishioners including Ben Henneke and his wife, Vannesa, were encourage by the rector join in a service mission. As Henneke recalls, Vannesa whispered to him: “Maybe we’re supposed to go to Africa this summer.” He replied: “I hope you have a nice time, dear.” Six months later, they found themselves in Tanzania, and they were astounded by what they saw. People were poor even by the standards of Tanzania, where annual per capita income [PDF] is about $440 a year.
“Here were their intelligent, resourceful, hard-working people, and they had a cash income of under $25 a year,” Henneke says. “If you needed school fees, which were $10, that was 40% of their cash income. We had a friend whose child died of Malaria because they couldn’t afford the medicine. People had to be tremendously innovative just to stay alive.”
Henneke, who is 63, had graduated from Yale in 1968 (the same year as George W. Bush) and Harvard Business School, and like the former president, got involved in the energy business, doing coal deals, working in biofuels and during the 1990s getting deeply involved with developing emissions trading systems as part of both the 1990 Clean Air Act and what would become the Clinton administration’s cap-and-trade proposal that became part of the Kyoto Protocol. His experience led him to wonder: “How do we get money back to these really hardworking farmers who have half an acre to two acres of land from this complicated business called the carbon market?”
Ben and Vannesa began by working with farmers to create TIST as a project jointly implemented by the Institute for Environmental Innovation (I4EI), a U.S. charity, and the Clean Air Action Corporation (CAAC), his own company, which helps governments and businesses curb air pollution. Then he persuaded a Canadian utility to finance a pilot project in Tanzania for submission to UN regulators as part of a program called the Clean Development Mechanism, or CDM, which allows regulated emitters of greenhouse gases to offset their emissions by financing projects in the developing world. (For more on CDM, see my 2008 FORTUNE story, Carbon Finance Comes of Age.) It took nearly 10 years and $12 million of investment to get the methodology approved by the CDM board and the tree-planting program to its present size.
TIST has since been funded by CAAC and an array of companies, governments and nonprofits, including a big European hedge fund, the U.S. Agency for International Development, the Dow Chemical Foundation and private donors. (You can buy your own offsets from TIST on ebay.) Farmers are paid a small annual stipend per tree, and they then get 70% of profit from carbon sales; so far, TIST has generated about $2 million in revenues from sales of credits. Some farmers plant fruit or nut trees, while others plant trees for firewood which, once they are cut down, stop generating income.
Maybe the most creative thing about TIST is the way it employs local people and global information technology to track its progress, a requirement under the UN rules. Using GPS technology, digital cameras and Palm pilots, they visit project sites, count and photograph the trees and upload their data to the TIST website where progress is measured on maps from Google Earth. Check it out here. (For more on using Google Earth to track forestry projects, see Google, Jane Goodall, forestry and the cloud.)
The new technologies being deployed by Dissigno are solar panels and super-efficient LED lights. Like TIST, Dissigno works with lots of partners–local distributors who put up the arrays of solar panels, and then give the LED lights and 4-volt NiCad batteries to villagers who pay a monthly fee for them. “They can last two or three weeks, depending on use,” Zieff told me. Typically the LED lights replace kerosene, which creates unhealthy indoor air pollution.
Like Henneke, Zieff, who is 45, took a roundabout path to East Africa. He went to film school at NYU, made documentaries, commercials and corporate films in Silicon Valley, and then, after the Internet bubble burst, took on an assignment at a Shell Oil refinery where he met his partner in Dissigno, Dave Williams.
They did some renewable energy consulting and tried to launch an ice-making machine for the developing world before focusing on distributed solar last year.
Their work in Tanzania is now funded by a $200,000 grant from the World Bank and by the Tanzanian government. They import solar panels from the Czech Republic and China and buy the LED lights from a company called Barefoot Power. Right now, it’s a small operation–Dissigno Tanzania soon expects to have about 1,000 customers–but as it grows their costs should go down and rental fees from villagers will finance further expansion.
“I’m never going to get rich doing this,” Zieff says. But, he adds: “We can make margins that work for investors and sell power at prices that make sense for the communities.”
TIST and Dissigno are both serving customers at what’s called the Bottom of the Pyramid, an idea developed by academics C.K. Prahalad of the University of Michigan and Stuart Hart, who, as it happens, started UNC’s Center for Sustainable Enterprise. Just today, I heard the sad news that C.K. Prahalad died last week at age 68. I’d met C.K. a couple of times at FORTUNE events, and he was a gracious and inspiring man. One of his legacies will be the many ventures like TIST and Dissigno that trying to put his theories into practice and, if all goes well, helping thousands or even millions of people work their way out of poverty.
Here’s a video about TIST.