Vidagas is currently the leading distributor of propane in northern Mozambique … the least developed and primarily rural portion of the country. It has recently become profitable and is raising additional capital to expand into additional provinces of Mozambique and beyond.
What’s most interesting about Vidagas is that it’s a social business. It was started in 2002 by two NGOs VillageReach and Foundation for Community Development. They raised the initial capital and started this business not because they were looking for a great new investment opportunity, but because VillageReach had a contract to improve delivery of medical supplies to the rural clinics. The rural clinics needed a reliable supply of propane to power their refrigerators (to keep their vaccines effective) and for lights so that they could operate the facilities for operations and at night time. And there was no propane supplier.
Rather than simply funding the delivery of propane with government subsidies (if these could even have been obtained), they saw an opportunity to bootstrap a sustainable commercial business with a strong multi-year client … the Mozambique government clinics. So, they created a separate commercial business and then went about operating it like a commercial business selling propane delivery to other local businesses and residential customers. Today, less than 20% of their revenue comes from the government clinics and their customer base continues to grow as they deliver a valued service.
Triple Bottom Line
Vidagas is delivering a triple bottom line:
- People. It powers equipment in local clinics greatly expanding their services and effectiveness. Households and restaurants which adopt propane for cooking eliminate exposure to smoke and particulates from burning wood or charcoal … a huge health issue.
- Planet. Every use of propane for cooking reduces the use of biomass fuels. This means less deforestation and destruction of fragile mangroves which are currently having a significant environmental impact.
- Profit. It generates surplus which creates sustainability and is reinvested into additional capacity to deliver propane (and, in the future alternative energy solutions like solar) in a socially, environmentally and economically enhancing positive cycle.
They created a business which delivers significant social value to people in an impoverished, unserved market. It’s no wonder the World Bank and UNDP have recognized Vidagas as a distinguished social business.
3 thoughts on “Delivering propane as a social business”
Great piece Dave, thanks.
Great piece, great idea, great company. Perhpas corporations in the Resourced World could learn a thing or two from companies like VidaGas. While financial services are being rescued by taxpayers around the world, the ‘financial crisis’ might cause civil society and governments to demand more from business. Less subprime exploitation and more pro-poor finance and services would create more jobs, greater stability and truly sustainable economies. Perhaps a triple bottom line is the best way out of the crisis for everyone? God bless Vida…ben