Business: Liquefied petroleum gas (LPG) Dealer.
Location: Molo Town.
Years in Operation: 4 Years.
Amount needed: $400.
More Kenyans have in recent years embraced the use of the cleaner and more convenient liquefied petroleum gas, commonly referred to as cooking gas. Hence cooking gas is gradually replacing kerosene and charcoal even in low-income homes, pushing up its demand in both rural, peri-urban, and urban areas. This aspect is what drove Raphael Adede into making not only a timely but also an environmentally conscious decision of opening a Cooking gas outlet in Molo town. Since starting out in 2019, Raphael has won quite the market share and has had his business scaling albeit gradually.
The uncertainties brought about by the COVID-19 pandemic almost drove him out of business. He experienced critical cash flow problems. At some point, he couldn’t meet the demand of his customers. His biggest challenge was satisfying those who demanded the refill of their 13kgs gas cylinders. Moto Hope Capital loaned him $150 at the time. This was all the boost he needed to bounce back to a profitable business. This time, he only refilled 6kg cylinders. His customers are loyal because, in the tough economic times, he allows them to bargain and even purchase on credit. Additionally, he is not very strict on the brand of cylinders that his customers bring in. He convinces them to purchase whatever brand he has in stock on the promise of getting their preferred brand on their next refill visit.
Cooking Gas prices however rose drastically towards the last quarter of 2021 and especially in the first quarter of 2022. The Covid-19 pandemic, added to the introduction of Value Added Tax (VAT) on liquefied petroleum gas (LPG) and recently the Russian – Ukraine crisis have contributed to sending gas prices to an all-time high in Kenya. When Raphael opened his business, his buying price for a 6kg gas refill was $6. That has now changed from $6 to $13.50 while the buying price of refilling the 13kg cylinders rose from $11 to $30. This high cost of doing business is what brought him back to Moto Hope Capital.
He is seeking a $400 working capital boost from MHC. Raphael will be able to stay in business even in the face of its high costs and lower profit margins. Despite the fact that his profits per 6kg gas have dropped from $2 to $1.5 and from $3 to $2 for the 13kg cylinder, Raphael is happy to be in business. He is still able to support his family and educate his children and he is optimistic for a change for the better.