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3.3 Financing Strategy Financing strategy is a critical part of the business model Shrimali G, Slaski X, Thurber MC,
Zerriffi H. 2011. Unlike fully subsidized programs, a commercially viable venture selling to low-income populations must find a way to make its products financially accessible to its
customers. ‘‘Consumer’’ finance – to help customers that might otherwise struggle to front the cash to purchase an improved fish smoking stoves – may be provided in many forms,
including through commercial banks, the stove company itself, retail outlets, etc.
Financing could also play a major role by supporting local entrepreneurs who wish to become IFSS distributors. Such ‘‘enterprise’’ financing can help reduce the cost structure of the stove
enterprise and enable it to generate positive returns at a lower price point for the stoves. End- User financing is critical for ensuring affordability in the acquisition of improved cookstoves
and reducing the entry barrier of acquisition.
3.3.1 End-User Financing Model Options
An “end-user” is defined as any individual, household, business, or other consumer of an improved cookstoves or service. “End-user finance” is money borrowed by these consumers
to pay for the improved cookstoves or services. Fish Processors in this case are referred to as the end-users of the improved fish smoking stoves. As compared to traditional fish smoke
stoves, the improved fish smoking stoves are often viewed by the fish processors as more costly due to the high up-front payment that may be required by the stove builders.
Without end-user finance options available for the fish processors, it will be difficult for improved stove buildersenterprises to achieve significant scale in Ghana. The potential
market for improved stoves can be transformed into actual customers if end-users can access finance for the purchase of the improved stoves and its related services. This has benefits for
the end-users [Fish Processors], stove buildersenterprises, and Financial Institutions [lenders].
For example, buying and installing an improved fish smoking stove could cost approximately US400 depending on the size, but will continue to provide high quality and healthy fish for
many years without additional cost, apart from occasional maintenance of the stoves. On the other hand, traditional stoves though relatively cheap to acquire, has related cost such as; uses
more fuel wood and produces lots of smoke which is harmful to the health of the Processors as well as reduces profit margins.
The benefit of end-user financing is enormous as the principles and dynamics that governs its application within any market ensures access and builds the purchasing power of the end-user
Table 4. There are multiple benefits from an effective end-user finance strategy and these are:
• By offering end-user finance, the stove builders enterprises will be able to expand the
target market to include lower income fish processors that are able to pay for products over time but may not have the ability to make a lump sum cash payment.
• By working with an end-user finance partner, the stove buildersenterprise will be
able to market products to fish processors that are receiving loan facilities from financial institutions.
• End-user finance partnerships contribute to increase promotion of the improved
stoves.
36 •
Table 4: Direct Benefits of End- User Financing
Benefits of End-User Financing
Financial Institution Stove BuilderEnterprise
End-User
Financial Institutions can; Increase client retention,
Diversify product offerings,
Increase competitiveness and
Ultimately expand their client base while having
increased social and environmental impact.
End-user finance can; Increase sales and
revenue, Improve technology and
design, Increase market share,
Reach clients with lower incomes or irregular
income streams. Fish Processors, Households and
small business have the ability to purchase improved stoves and
services that can;
Bring well-being and health benefits,
Increase economic productivity,
Reduce energy expenditures, and
Improve livelihoods.
3.3.2 End-User Finance Business Models
