Case: Sanergy’s circular economy model helps Kenyan farmers

Natural fertilizer and animal food with the help of larvae? Better yields and more money to save? Kenyan company Sanergy produces organic fertilizers and animal feed using black soldier fly larvae. The beneficiaries are farmers and animal breeders, as well as nature.

“The productivity has become greater since I started using (Evergrow) fertilizer, and I am able to sell the crops at a good price and get more income. Through this income, I manage to provide a livelihood for my family.” For example, this is what a 54-year-old female farmer says about her experiences.

The circular economy works

The production process of Sanergy, which has been operating since 2011, is a great example of the circular economy in practice. Regen Organics, which is part of the Sanergy Collaborative collects thousands of tonnes of Organic Waste annually from the Nairobi area and transports it to its production facility in Kinanie, to the south of the city. Here the waste is fed to black soldier fly larvae which grow and are harvested and dried to provide protein for animal feed.  They leave behind a pulp which is mixed with further organic wastes and composted to produce soil-improving organic fertilizer.

Organic waste that acts as a raw material can be obtained, for example, from farms, markets, restaurants, and hotels, as well as from a network of toilets in Nairobi’s informal settlements built and operated by Fresh Life Initiative, another member of the Sanergy Collaborative. All these wastes, if left untreated, would contribute to greenhouse gas emissions and other pollution, threatening the health of the local population.

For the time being, the collection of organic wastes and the sale of fertilisers and insect protein are still concentrated in Kenya. The goal is to expand operations to other African countries in the future. In March 2024, the Sanergy, now comprising over 500 people, counting both Regen Organics and Fresh Life Initiative, announced that Evergrow fertilizer had been approved for sale in Uganda.

“Patient capital from investors like Finnfund has been vital in giving us the time and resources to build out our operating model and overcome the many challenges of bringing the benefits of the circular economy to bear in an emerging market like Kenya,” says David Auerbach, President and Founder of Sanergy.

Bigger harvest and more income

Finnfund has financed the company’s growth and development since 2017. To support the development work, Finnfund proposed a customer survey to Sanergy, to survey the experiences of farmers who used Sanergy’s Evergrow Organic Fertilizers and the effects of use on their lives.

The survey was carried out in October 2023 by 60 Decibels, an international research company, and the results were very positive: almost all respondents said that their crop production had increased due to the use of Evergrow and that their families now also had more food to eat. The most important crops are corn, beans, and potatoes.  More than four out of five (85%) respondents sell the increased harvest on, but the majority also keep it for their family’s own use.

Nine out of ten (92%) respondents said that their quality of life had improved, and half (49%) answered that it had even improved very much. According to them, this meant, for example, more income to pay bills. Four out of five (84%) respondents said that their income had increased, and almost half (47%) said that their income had increased very significantly. Unsurprisingly, given the impact felt by farmers, their overall level of satisfaction with Evergrow was in the top quintile compared to the 60db benchmark for the agriculture sector, with the “Net Promoter Score” reaching 56%.

“Patient capital from investors like Finnfund has been vital in giving us the time and resources to build out our operating model and overcome the many challenges of bringing the benefits of the circular economy to bear in an emerging market like Kenya."

David Auerbach, President and Founder, Sanergy

The increased income is mostly used for education

Inflation, which has increased in recent years, has hit many Kenyans hard, especially smallholder farmers who have suffered from increased costs for farming inputs like fuel and fertiliser.  So increased income is very valuable in helping to improve livelihoods and cover the costs of life essentials.

According to the survey, farmers used the increased income from Evergrow mostly for education (74%) and the development of farming (72%). In addition, money is also used for bills (70%) and home improvement (48%). A third (33%) also save, and almost a quarter (23%) use the increased funds for healthcare.

Most respondents had reduced their use of chemical fertilisers since starting to use Evergrow, with 42% having stopped completely. The majority also said that pests and plant diseases have decreased.

In addition to the development of the circular economy and agriculture, improving food security and farmers’ living standards have also been key goals for Finnfund’s financing.

“It has been great to be involved in monitoring and supporting Sanergy’s growth and development. The company’s operating model is truly innovative, and the company has a desire to continuously develop its operations. As impact investors, it is important for us that the company also operates responsibly and generates excellent development effects”, says Finnfund’s senior investment manager Ari Nironen, who has been working with the company for several years.

“It has been great to be involved in monitoring and supporting Sanergy’s growth and development. The company’s operating model is truly innovative, and the company has a desire to continuously develop its operations. As impact investors, it is important for us that the company also operates responsibly and generates excellent development effects.”

Ari Nironen, Senior Investment Manager, Finnfund

Training on farming methods

In addition to products, Sanergy offers training aimed at improving farming methods for farmers. Three out of five respondents had already received training, and two out of three respondents said they had already used the lessons learned in farming. Many wanted more education.

“We held over 500 training events in 2023 and these were attended by over 25,000 farmers. Our trained agronomists hear from farmers about the problems they are experiencing with falling yields and climate change and explain the role of organic fertilisers and soil carbon in restoring soil health and increasing resilience to climate change,” says David Auerbeach.

Climate change can already be seen in the everyday lives of farmers

Nine out of ten respondents said that the community has already suffered from climate change. The most common impacts are drought or severe reduction of rainfall (63%), pests and plant diseases (62%), irregular rainfall, soil erosion (26%), and floods (15%). The same phenomena were said to affect the families’ own lives, as well.

“The training offered by Sanergy is important. For example, climate change already affects the everyday lives of many farmers, and education can be used to increase knowledge and help farmers improve their own ability to adapt to the effects of climate change. This is also very important to us as a financier”, says Marko Berglund, Finnfund’s development impact advisor (since August 2024: head of impact).

Three out of four (75%) respondents said that using Evergrow improved their ability to adapt to climate change. The most important issues have been discussions about storing water (28%), preventing soil erosion (19%), and the use of short-term crops (16%).

“Through surveys, we can ask the company’s customers about the effects directly. This is important in terms of both business development and verification and strengthening of development effects."

Marko Berglund, Head of Impact

Better understanding through surveys

The interviews were conducted by phone in Swahili in October 2023. There were 287 respondents in total. Almost half (47%) of the respondents were women, and the average age of the respondents was 46 years. The average family size was six people. Almost half (46%) live on less than USD 3.65 per day, which is the national poverty line. The size of the land cultivated by the respondents is two acres, on average.

“Finnfund’s support on this survey with 60db has been a game-changer for us.  Not only do we have a much better understanding of what is important to our farmers – we also now have the backing of results gathered by a world-respected company to help policy-makers and investors realise the impact value of our work,” says David Auerbach.

“Through surveys, we can ask the company’s customers about the effects directly. This is important in terms of both business development and verification and strengthening of development effects”, adds Marko Berglund.

In cooperation with Finnfund, Sanergy also carried out a survey in which employees were asked about the quality of work and the effects on their family’s wellbeing. More information on this survey coming soon.

Julkaistu 23.1.2024