BEHAVIORAL INTERVENTION NOTE CLEAN TECHNOLOGY TO FUEL IMPROVED LIVING STANDARDS: DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA1 April 2024 Over 75% of the refugee I. Motivation population does not have access to any form Grid connectivity in Uganda stands at 45%, falling below the Sub-Saharan Af- of renewable energy rica average of 51%.2 This forces house- and relies heavily on holds to resort to highly polluting or in- firewood and kerosene. efficient fuel sources such as kerosene, torches, or phones to light their homes, severely impacting their respiratory health and productivity. This energy poverty is especially prominent among the 1.5 million refugees in Uganda despite the country’s relatively inclusive refugee policies.3 Without grid connectivity, off-grid solar devices can offer a clean, safe, and reliable alternative energy source. Over 75% of the refugee population does not have access to any form of renewable energy and relies heavily on firewood and kerosene.4 Additionally, financing options offered by several solar companies have been withdrawn from refugee and poor communities due to the high risk associated with low loan repayment capacity. However, affordability, awareness, and trust barriers constrain the adoption of solar products, particularly for disad- vantaged refugee groups. The World Bank teams have been designing and testing interventions in- formed by behavioral insights to increase knowledge about off-grid solar devices and skills for saving, to incentivize solar product adoption in Ugan- da, focusing on refugee communities. This will help increase energy security, particularly in poor grid connectivity areas where reliance on polluting fuels for energy is high. DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA 2 II. Diagnostics In 2020, the World Bank team conducted a diagnostic study5 to understand the obstacles to adopting and continuing the use of solar energy devic- es. The research included thorough interviews with refugees from the Kyang- wali and Rhino camps, data analysis of the 2018 Refugee and Host Communities Household Survey (RHCH)6, and a review of relevant literature. The study exposed the low availability of certified and reliable solar sys- tems and the lack of financial instruments to purchase them as significant challenges for people to own solar home systems. It also showed that many barriers centered around the knowledge and perceptions of the products, includ- ing their cost. Many believed the products were of poor quality and mistrusted them, drawing from negative experiences from the few peers who owned coun- terfeited devices. Furthermore, the message that solar power can save time and money did not resonate with refugee households with competing economic pri- orities and limited mental bandwidth to make relatively complicated financial and product assessments. DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA 3 III. Solution design Our diagnostics identified an untapped potential for social learning among peers, specifically regarding informal saving groups, such as the Village Savings and Lending Associations (VSLAs)7 in refugee settlements. These groups offered more manageable alternatives to microfinance loans, which tend to have high-interest rates and short repayment periods if they were available to the refugee population at all. Although the VSLAs did not yet recognize the pro- ductive use of solar home systems, they could be a potential starting point for ad- dressing the identified constraints around the lack of awareness of the products and purchasing options and the difficulty of following through on a savings plan. The team introduced a behaviorally informed solution to address the fi- nancing, knowledge, and trust barriers to adopting solar products by refu- gee communities in Uganda. The solution involved delivering training sessions during VSLA meetings in refugee settlements. The participants were provided engaging materials containing brief information on solar products, their bene- fits, and saving strategies for accessing them. The three Key Design Elements are presented on the next page. IV. Implementation Between March and June 2023, trained community members delivered the sessions during meetings with VSLA members in two refugee settlements. The selected settlements included Kiryandongo in the namesake district and Na- kivale settlement in the southern district of Isingiro. 157 VSLAs were randomly chosen to receive the sessions and materials, while 155 VSLAs were followed as a control group for a total of 1,223 participants. A survey was collected five months before and two months after the ses- sions to assess the impact of the intervention on knowledge about and atti- tudes towards solar products, planning and goal-setting skills for saving, social support from fellow VSLA members, and savings towards a solar goal. Additional demographic and socio-economic information on the participants was collected. DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA 4 KEY DESIGN ELEMENTS BOTTLENECK: LIMITED AWARENESS 01 OF SOLAR PRODUCTS AND THEIR BENEFITS MAKE MONEY with solar I borrowed money from my Behavioral Science Lever: Salient in- VSLA to invest in a solar home system for my tavern formation about solar benefits tailored to the specific interests of the target audience. Now I use solar to play music at my tavern and stay open until later MORE WAYS TO Solution Element: Messaging and dis- MAKE MONEY WITH SOLAR cussions with relatable examples for Mobile Sell cold Barbershop charging drinks or saloon households and businesses, delivered through attractive and simple flyers. Earn up to 10,000 Earn up to 9,000 Earn up to 13,000 UGX per day ! UGX per day! UGX per day! BOTTLENECK: 2. MISTRUST AND PERCEPTION 02 OF POOR QUALITY OF SOLAR PRODUCTS SAVE MONEY with solar Product Description Light: 1 light Phone charging: No Panel: Mini, built in Warranty: 2 years I spent 3,000 UGX each week on Brand: Sun King Price: UGX 39,000 SMALL mobile charging and lighting fuel like Light: 1 light kerosene and candles Phone charging: No Panel: Mini, built in Warranty: 1 year Brand: d.light Price: UGX 20,000 I used my VSLA savings to buy a solar lantern that charges phones Light: 1 light Phone charging: Yes Panel: Small sized Warranty: 2 years Brand: Sun King Price: UGX 163,000 MEDIUM With solar, I turned my mobile and lighting expenses into Light: 1 light Phone charging: Yes savings of money and time! Panel: Small sized Warranty: 2 years Brand: d.light Price: UGX 65,000 Now I save 12,000 UGX each month For more information, please call: with my solar lantern and I made my Sun King: Engie: 0800-203-070 (toll free) 0800-202-933 (toll free from 7am-6pm, excluding public holidays) money back in 5 months! D.Light: 078-602-31-36 Solar Today: 078-660-42-35 (Nakivale-Mbarara) Fres Uganda: 078-757-45-94 (Nakivale-Mbarara) Power Trust: 075-283-78-48 (Kiryandongo-Bweyale) Behavioral Science Lever: Social-based information provided by a relat- able and trusted source, such as a community role model. Solution Element: Information presented as quotes from a community peer as a satisfied solar user and including a catalog of trusted products, contact infor- mation of certified sellers, and financing options FOSTERING ENERGY-EFFICIENT COOKING PRACTICES IN PERI-URBAN COMMUNITIES IN RWANDA 5 BOTTLENECK: 3. INTENTION-TO-ACTION OF SAVING 03 AND COGNITIVE COST OF SETTING AND TRACKING SAVINGS I will save money My savings! in this VSLA for: Follow these steps to save for solar Meeting 1 ___________ shillings Meeting 2 ___________ shillings Meeting 3 ___________ shillings I will save in every meeting: Meeting 4 ___________ shillings Meeting 5 ___________ shillings shillings Meeting 6 ___________ shillings Meeting 7 ___________ shillings I will reach my goal in: Meeting 8 ___________ shillings Meeting 9 ___________ shillings months Meeting 10 ___________ shillings Behavioral Science Lever: Goal-setting skills and tools to reduce the required effort to save, prepare for possible obstacles, and commit to a savings goal Solution Element: Training on goal-setting and planning for solar savings with easy-to-follow resources and a public commitment activity. FOSTERING ENERGY-EFFICIENT COOKING PRACTICES IN PERI-URBAN COMMUNITIES IN RWANDA 6 V. Results The intervention increased the pursuit of solar products in terms of saving goals, although there was no improvement in the ownership of solar devices. Partici- pants were 31 percentage points more likely to have a solar saving goal after the interven- tion and were more likely to save for certified solar devices, such as solar home systems, rather than panel and battery systems. Those assigned to the sessions saved 2,100 Ugan- dan shillings for solar products, equivalent to 0.57 USD,8 more per week than their peers from the control group. The intervention successfully improved knowledge and attitudes towards solar products among participants. Knowledge of targeted solar benefits increased by 17 percentage points and that of certified prod- ucts by 33 percentage points. Trust in solar providers among intervention recipients was 5 percent higher, and aspirations to purchase solar increased by eight percentage points.9 The intervention also increased partici- pants’ belief that they could overcome obstacles while saving for solar products. Session participants were 28% more likely to feel more able to overcome challenges faced while saving for their solar goal. Moreover, in- tervention recipients reported a 38% increase in feeling supported to save by their VLSA. Additionally, there was a seven percentage point increase in respondents who had con- tacted solar companies after the treatment.10 DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA 7 VI. Policy applications This study is a valuable example of how a behavioral approach can inform the design, implementation, monitoring, and evaluation of programs and policies promoting clean energy access by addressing behavioral constraints while con- sidering the underlying structural factors. COMPLEMENTING TRADITIONAL ENERGY ACCESS SOLUTIONS FOR THE VULNERABLE REFUGEE POPULATION. The interven- tion is a valuable example of how a behavioral science approach to policy design and implementation can address psychological and social constraints (awareness, mistrust, and ability to commit to savings) while still considering the underlying systemic factors (financial access). Given the context of refugee settlements and lack of access to electricity, the findings are especially relevant for program activities and policy interventions improving vulner- able populations’ access to and adoption of clean and conven- tional energy sources, as well as initiatives incentivizing income generation activities. IMPROVING PROGRAM DESIGN WITH VALUABLE AND CON- CRETE INSIGHTS FROM THE TARGET BENEFICIARY POPU- LATION. Relying on qualitative diagnostics to identify potential solutions and prototyping to zero in on program design and imple- mentation details is a significant learning from this research. This process also allows for integrating nuanced, behaviorally informed aspects, enhancing the target population’s appeal for and under- standing of materials. For example, intervention materials stressed solar businesses’ economic benefits and income-generating po- tential to align with entrepreneurial members’ aspirational and fi- nancial goals within the refugee community. DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA 8 LEVERAGING BOTTOM-UP, COMMUNITY-BASED SOLUTIONS TO ENERGY ACCESS AND BROADER CLIMATE AND ENVIRON- MENTAL CHALLENGES. The study showed that VSLAs are a mech- anism to overcome financial or risk-associated challenges and psychological and climate-risk-related constraints. As a de-risking strategy for communities and a venue for complementary train- ing, VSLAs can provide members with the soft skills needed to ef- fectively implement the desired saving and investment actions. This can further help ensure participants can continue to sustain a livelihood even in the face of events that force families to sacrifice immediate consumption for future needs, such as climate and en- vironmental disasters. Lastly, the demonstrated success of leverag- ing trustworthy and supportive program implementation channels already integrated within the community (i.e., VSLA groups) opens the doors for other group-based strategies like social demonstra- tions, commitments, and edutainment activities. PROMOTING TRANSPARENCY AND TRUST AS AN ADOPTION BOOSTER. The results suggest that when consumers place more trust in companies that have invested in getting quality certificates, the demand for those products increases with an adequate under- standing of the companies’ signaling. Therefore, regulators should reinforce energy access programs by paying attention to controls related to certification and labeling, including processes, enforce- ment, and advertising. Policymakers can identify ways to popular- ize and strengthen such certifications at a community level with low-cost, crowd-sourced monitoring solutions. These can improve consumer awareness and education and increase energy access. DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA 9 ENDNOTES 1 The present research, including the field data 6 Data and documentation of the Refugee and collection activities, has been financed by the Host Communities Household Survey 2018 can be Carbon Initiative for Development (Ci-Dev), a trust accessed at: fund administered by the World Bank, under the https://doi.org/10.48529/gvwc-vx89 grant TF0B5183. 7 In Village Savings and Lending Associations (VSLAs), 2 World Bank Data (2021). Available at: members pool their individual savings to create https://data.worldbank.org/indicator/ a common credit source. The VSLA program in EG.ELC.ACCS.ZS?locations=ZG-UG Uganda aimed to increase financing options for rural communities that lacked access to formal 3 UNHCR (2018). Uganda Country Refugee Response credit institutions. Plan. Available at: https://data.unhcr.org/en/documents/details/67314 8 Official exchange rate for August 24, 2023. 4 Ibid. 9 These results were statistically tested through econometric analysis and were significant at a 1% 5 De Martino, S., Sousa, J., Yagman, E., and Coony, J level. (2021). Clean Technology to Fuel Improved Living Standards: Uganda Energy Access Scale-up Project. 10 These results were statistically tested through Behavioral Diagnostics Note. Washington, D.C.: econometric analysis and were significant at a 1% World Bank Group. Available at: level. http://documents.worldbank.org/curated/ en/366291614075119578/Uganda-Energy-Access- Scale-up-Project-Behavioral-Diagnostics-Note DE-RISKING SOLAR INVESTMENTS THROUGH REFUGEES’ SAVINGS GROUPS IN UGANDA 10