How KCB’s green lending plan saved Ravine Dairies

When Ravine Dairies entered the competitive dairy market a year ago, the excitement was palpable.

With a strong commitment to quality and innovation, the company aimed to set itself apart to meet the high demand for fresh milk not only in Nakuru but beyond.

The company's vision was clear: to provide a superior product that is nutritious and satisfies consumer demand.

Initially, the enthusiasm was contagious.

During the first few months of trials at the facility, where machines were tested, power use was minimal.

“We could not feel the impact of our electricity costs during the early months,” the company’s Head of processing, Kelvin Kilonzo, says.

But, as the business went commercial six months later, the challenges became apparent.

Skyrocketing operational costs, particularly an electricity bill that soared to Sh1.2 million monthly, cast a shadow over the company's profitability prospects.

Faced with this daunting reality, the management had to rethink its strategy to try and address the challenge.

Initially, the power system at the factory was such that it uses power supplied from the Kenya Power and Lighting Company interchangeably, with generators serving as a backup.

In June, an energy audit aimed at streamlining the operations was conducted, indicating that they were spending a lot in terms of operations, including power.

The company was forced to adopt far-reaching measures, among them  making a crucial decision to invest in solar energy, a move that would ultimately reshape its operations.

MONEY SAVER

A month later, they embraced the technology through the support of Kenya Commercial Bank's green lending programme.

This transition not only promised to cut electricity costs significantly but also aligned with a broader commitment to sustainability.

In an interview at the factory, Kilonzo told us that the fruits began to yield the following month, with power expenses being dramatically cut.

“When we began commercial operations, we realised the costs we are incurring on settling bills was very huge, prompting us to do an audit,” he said.

“After the necessary cost-cutting interventions, we have been receiving a power bill from KPLC of Sh600,000, down from what we used to pay,” he said.

Having solar energy, he said, has substantially saved the company money, allowing it to reinvest in product quality and expansion of its revenue base.

With the newfound financial stability, Kilonzo says they are now better positioned to serve the community and compete with established players in the market.

“We are now planning to expand our market to all other major towns across the country,” he said.

Currently, the company does value addition on milk, including maziwa lala (fermented milk) with a shelf life of 30 days and yoghurt, which can last for 90 days.

Milk received at the factory undergoes highest standards of quality control, Dan Kiprotich, a receptionist says.

This is to ensure it contains the required fat content, PH value and that it has no harmful pathogens, contaminants, or adulterants.

"Authorised personnel receives milk and take a sample for testing at the laboratory which usually take up to 10 minutes before the results are given," he says.

To ensure this is always adhered to, the company offers training to farmers who are their key supplies through its outreach programmes.

"We have identified them. We train on the best feeding practices and also provide necessary support to ensure the animals produce the highest quality milk," Martha Muthoni from the Quality control tells us.

They are currently doing trials on cheese, butter, fresh milk and ghee to meet the growing demand.

GOING GREEN

The plant is located some 18km from west of Nakuru Town. The hum of machinery, intertwined with the soft glow of solar panels, signals a shift towards greener practices.

The loud sounds of generators that typically fill the air in most processing factories are unusual here.

Processing is done between 9am and 4pm daily using solar power, with generators, electricity from KPLC, including a UPS, only being reserved as back up.

All combined, they generate power of more than 1,000 kilowatts, of which solar alone produces 85 per cent.

“We collect our milk at in the evening and by 6am, we do deliveries to the factory before we begin the processing," he says.

As we explore further, it became clear that this plant is setting a new benchmark for industrial operations in the country regarding environmental conservation.

The first striking feature that greets you as you enter the factory gate is the well-manicured lawns and the trees and fruit seedlings dotting the landscape.

Even under the intense afternoon sun, the compound remains lush and green, a testament to the company's commitment to sustainability.

Curious about the secret behind this thriving environment, we learned that the facility harnesses solar power, which has enabled the establishment of an Effluent Treatment Plant (ETP) in collaboration with KCB.

The water treated here is not wasted. It is recycled for irrigation and nurturing the gardens and supporting a potato farm owned by the company.

During processing, Kilonzo said the decision to set up the recycling plant was also informed by the need to ensure they emit clean water to the environment.

“We are very passionate about environmental conservation,” said Kilonzo, adding that they use a lot of recycled material.

Steven Koech, who is in charge of the Reverse Osmosis (RO) plant that works in conjunction with the ETP took us on a journey on how it works and its importance saying "the absence of this may lead to the factory being closed."

He says it enhances water quality and manage wastewater effectively.

ETP treats wastewater discharged from the factory to remove pollutants before it is sent to the RO plant.

"After the ETP processes the wastewater, RO can be used as a final step to further purify the effluent, producing high-quality water suitable for reuse or discharge," he states.

Treated water from the ETP, he added, can be fed into the RO system for applications like cooling systems and irrigation among others.

SUSTAINABLE FINANCE

KCB’s green lending programme is aimed is aimed at supporting the transition to green energy in line with the government’s plan.

It gained accreditation from The Green Climate Fund in November 2020, making it the first lender in the country to support climate mitigation and adaptation projects through green financing.

The institution seeks targets to grow its green lending portfolio by at least 15 per cent over the next three years.

In its latest report, it revealed that loans worth Sh615 billion for environmental and social risks in 2023 were screened.

This constitutes half the Group’s loan book as at the end of last year, cementing its commitment to sustainable finance.

Additionally, KCB approved green loans worth Sh21.4 billion, representing 15.5 per cent of the total loan portfolio in 2023 and highlights its commitment to community-focused initiatives to create sustainable value for all its stakeholders.

The green loans disbursed were directed towards projects in e-mobility, climate change adaptation and mitigation, energy efficiency and renewable energy.

The details are contained in the 2023 KCB Group Environmental, Social and Governance (ESG) and Sustainability Report launched on August 20, highlighting the Group’s progress towards its sustainability commitment.