Climate Finance | September 21, 2022

How The Good Roll and Wangara Green Ventures are saving trees and creating green jobs in Ghana

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, September 21 – A startup in the Netherlands is teaming up with a fund manager in Ghana to demonstrate the green, resilient, local economic impact of… toilet paper. 

The Good Roll, based outside of Amsterdam, secured an investment from Accra-based Wangara Green Ventures to move its bamboo toilet paper production to Ghana. The partnership will allow the startup to ramp up its factory, hire local workers, establish a network of local bamboo farmers, and make a product that otherwise consumes 27,000 trees daily.

“We want to disrupt the whole chain of a product that almost everyone uses and which hasn’t been innovated in probably 100 years,” The Good Roll’s founder Sander de Klerk tells ImpactAlpha. “Making toilet rolls with farmers—nobody does that.” 

The partnership also demonstrates the key role of local impact capital providers in steering economic development to be greener and more sustainable.

“Many people think climate ventures are not economically-viable,” says Wangara’s Ebenezer Arthur. “The companies we see are innovating in a way that is sustainable and profitable. They’re innovating not just with climate in mind, but to reduce costs, improve upside and address real job creation.” 

Green development

Ghana, like most emerging markets, is grappling with the challenges of adapting to climate change and spurring economic growth. Recent policies in the West African country are laying a foundation for sustainable economic development. 

This year, Ghana released a “Climate Infrastructure Roadmap,” which includes nearly three dozen climate-resilient infrastructure projects. High on the list is repairs to the Akosombo dam, a hydroelectric power plant, which provides electricity for nearly nine million people in Ghana, Benin and Togo.

Ghana’s government in 2017 launched an industrialization policy called One District, One Factory to incentivize companies like The Good Roll to build local manufacturing facilities, create rural jobs and reduce Ghana’s dependence on imports. The policy has enabled the development of 125 facilities, including agri-processing, pharmaceuticals production and vehicle manufacturing, providing more than 150,000 direct jobs.

Ghana’s green policies and its industrialization ambitions could easily find themselves at odds with one another. 

“Capital-intensive industries with no clean technologies tend to pollute more,” write the authors of an academic study looking at the climate impacts of One District, One Factory. “Should Ghana attract cleaner firms and industries, the negative environmental impact would be controlled and the nation would move into a low-carbon habitable economy.”

Stricter enforcement of existing environmental policies and new measures, such as tax incentives for clean industries and fines on high-polluting sectors, could steer Ghana’s industrialization efforts to greener industries. So could local providers of private capital, like Wangara. 

The four-year-old firm invests in small businesses and startups advancing Ghana’s climate-resilient economic transformation. With the $4.5 million it has raised, Wangara has backed four companies, including an insect-based agri-feed producer, a farm-inputs supplier and a water treatment venture. 

“We identified a capital gap for smaller, and especially climate-focused businesses. What we aim to do is bridge that gap by providing early-stage capital” to companies with products and services that are addressing environmental challenges, says Wangara’s co-founder, Yvonne Ofosu-Appiah.

Wangara is excited about The Good Roll’s potential to add value in agriculture, an economically critical sector, with a green product, while improving the livelihoods of nearly everyone in the local production chain. 

“Ghana is historically an agri-economy, and there is a government effort—through One District, One Factory, for example—to encourage more value addition in agri products,” explains Arthur. “The initiative and related incentives will help reduce the set-up, operational, and financial costs of factories and manufacturing companies aligned to the green transition.”

The policies are indeed encouraging entrepreneurs and startups, like The Good Roll, to build climate-minded social enterprises, he adds. He would like to see more targeted incentives for green enterprise and finance. “Policies and initiatives for attracting the requisite climate finance are, however, inadequate.”

Reinventing TP

De Klerk co-founded The Good Roll with Melle Schellekens in 2017. They aimed to tackle two problems: the extractive and environmentally-destructive toilet paper supply chain and the lack of clean sanitation for nearly 2.5 billion people worldwide. The company makes sustainable, chemical-free toilet paper from recycled paper and bamboo and directs 50% of profits to build clean toilet facilities in Africa.

Demand for the TP is booming, says de Klerk. The company sells 40 million rolls of toilet paper in Europe each year, and is doubling sales annually. It has contracts on the table for tens of millions of euros, including one with a large buyer in the U.S. 

The Good Roll’s supply chain has been a challenge, however. The available stock of recycled paper from Germany is dropping along with the demand for paper more generally. The company also has little control over its bamboo supply, which comes from China. 

The idea to shift its bamboo sourcing to Ghana originated with the local sanitation work of the startup’s philanthropic arm, The Good Roll Foundation. 

“A lot of farmers already have bamboo on 10% or 20% of their land, but they don’t use it,” says de Klerk. The type of bamboo native to Ghana is one of a handful of the plant’s roughly 1,700 varieties that is suitable for making paper. It also grows quickly, being ripe for harvest after about 18 months. “For us, it’s good because we can buy it for them, and for them it’s new income.”

De Klerk saw such potential in sourcing Ghanian bamboo that the company set up an entity in Ghana and recruited a new co-founder, serial entrepreneur Faisal Ahmed, to head up The Good Roll’s Africa operations.

Capital challenge

Having a vision is easier than fundraising for it. The Good Roll hit a wall with most investors. Mainstream investors didn’t like that the company donated 50% of its profits to its foundation. Local impact investors wanted smaller, more incremental impact goals. Both kinds of investors were looking for tech companies, not a product-based company – even one making such an ubiquitous and high-demand product. 

“Getting money for a toilet paper business is not easy,” laments de Klerk. “If I had a tech company, I think I would have already raised $100 million, but people are less interested in toilet rolls.”

The Good Roll turned to crowdfunding and to local investors in Ghana. It raised 780,000 euros on the Dutch crowdfunding platform CrowdAboutNow alongside Wangara’s $200,000 convertible note, which enabled the company to complete its first factory.

The factory, located in Akwamufie, Akosombo in eastern Ghana, today employs 100 people and can produce 10 tons of toilet rolls per day at full capacity (it is running at about 60% capacity). The facility will enable The Good Roll to completely phase Chinese bamboo out of its supply chain. 

Another project: The Good Roll is building a bamboo nursery that will provide seedlings to farmers, helping bolster and grow its local bamboo supply. The company works with about 800 smallholder farmers and wants to grow its network to 100,000 farmers to support 15 more factories across the country, each with a production capacity of at least five-times its current facility. That scale would enable the company to get to $1 billion in revenues, says de Klerk.

It is looking into carbon-credit verification for its bamboo supply; proceeds from carbon credit sales would fund pension plans for the farmers in its network. 

Such ambitions will require more investment capital, acknowledges de Klerk. The Good Roll wants to stick with crowdfunding to raise about $5 million. But the company will need to raise between $75 to $100 million in total, which it cannot do through the crowd alone. 

“We’d like the combination of crowdfunding with a really good impact investor who knows Africa, because that makes a big difference. If you don’t know how Africa works, it makes it much more difficult,” says de Klerk. “We think it’s good also to have local investors involved.” 

Green West Africa

Wangara’s support for The Good Roll goes beyond capital. The impact fund manager has been supporting the company in finding working capital and navigating local processes and regulations for getting the factory up and running. 

“They needed a local investor to help them push it along,” says Ofosu-Appiah. 

Wangara says there’s a pipeline of promising green, local companies that can have substantial impact with similar resources and support. The firm works with local accelerators and incubators such as the Ghana Climate Innovation Center to identify post-revenue, investment-ready businesses, then cuts equity checks and convertible notes of up to $500,000. It then works with them to build out “climate action plans.”

“We look at how to help each company take the best approach to climate issues that they can,” explains Arthur. An agro-processing company, for example, could improve water usage or reduce or reuse waste streams. 

Wangara has several other deals in the pipeline, which it expects to close by the end of this year. The firm wants to bump up its current fund to $10 million before launching a larger vehicle. 

“Our bigger vision is to make these kinds of investments beyond Ghana,” says Arthur, “to help green small and growing businesses across West Africa.”