Beneficial Returns Provides loan to Sistema Bio

Seventy percent of the world’s poor are farmers.  An average cow produces 100 pounds of manure a day.  Globally, arable land per person has been halved in the past forty years.  2.5 billion people still rely on wood and other biomass for cooking leading to deforestation and poor health from smoke inhalation.  These grim statistics are also business opportunities and Sistema Bio has incorporated all of them into their business model.

Sistema Bio is a seven-year old social enterprise headquartered in Mexico.  The Company designs, manufactures and sells affordable, modular, patented biodigesters to smallholder farmers in Mexico, Colombia, Nicaragua, India and Kenya.  These biodigesters use naturally-occurring microorganisms to break down manure and generate biogas and digestate.  The biogas can be used as a cooking fuel and to generate electricity or to power machinery.  The digestate is rich in nutrients and is used as a fertilizer to restore soil fertility and to increase crop productivity.

The company’s ability to deploy market-based solutions to alleviate poverty has been recognized by Ashoka, the Global Social Business Incubator (GSBI) at Santa Clara University, Shell Foundation and others.

 For as little as $600, payable over a two year period, farmers can create value from waste.  The savings in store-bought fertilizer and energy plus the increased income from higher crop yields means farmers can experience a positive return on their investment in as little as 11 months.  Since launching in 2010 Sistema has installed 5,000 biodigesters.  In 2018 alone they expect to install another 5,000 as the business ramps up to serve their target market of 80 million small-scale farmers.

Sistema Bio’s biodigesters are manufactured in Mexico and then shipped to regional offices where they are sold, installed and serviced by trained field staff.  As the business grows and serves ever more remote farmers, so too does the need for working capital.  CEO and co-founder Alex Eaton said, “It can take us as long as six months between paying for our raw materials and getting paid from the proceeds of a microfinance loan.  Our success is being constrained by our ability to access working capital.”

Beneficial Returns provided a $75,000 loan to Sistema to refinance four trucks that the business had bought with cash in 2017.  By leveraging their fixed assets, the social enterprise was able to free up more money for working capital, keeping the business on pace with their ambitious plans for biodigester installations.

Beneficial Returns’ investors are family foundation and donor advisors who expect a financial return and deep impact as well.  To that end, Beneficial Returns adds an unusual feature to its loans.  The impact debt fund will waive the final monthly loan payment if the borrower surpasses 50,000 biodigester installations by the end of the fifth year (a goal that Sistema Bio set for themselves.)  Ted Levinson, founder of Beneficial Returns said, “We’ll gladly forego the income if we know that tens of thousands of farmers have benefited from Sistema Bio’s products.”

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