Results-based Financing for Clean Cookstoves in Uganda
2014
IMC Worldwide
This report was prepared by IMC Worldwide for the Africa Clean Cooking Energy Solutions (ACCES) initiative of the World Bank. The report sets out the opportunity for implementing results-based financing (RBF) to support the clean cookstoves sector in Uganda. The fundamental idea behind RBF is that payments to a service provider are made contingent on the delivery of a pre-agreed result, with achievement of the result being subject to independent verification. An RBF approach is feasible as part of a broad package of measures to scale up the efficient and clean cooking sector in Uganda, the larger goal being to achieve a range of benefits, including health, in coordination with the government and key stakeholders. Results-based incentives should be combined with robust monitoring and verification arrangements, institutional strengthening, and awareness-raising campaigns to support progress in the sector over time. The World Bank is exploring RBF as a means of sustaining impact through market-level development. This study focuses on cookstoves rather than the full value chain (including cooking fuels) because the disconnect between cookstove suppliers and final customers is a key bottleneck in the supply chain. Financing is one of many tools available to support development of the sector. The main body of the report is structured as follows. Chapter 2 examines the innovation ecosystem for cookstoves in Uganda. This includes the main actors and activities, the market segments for improved cookstoves and the current penetration of ICS into different geographical zones of the country. It also looks at the different products and business models as well as the barriers to scaling up. Chapter 3 identifies various policy objectives and grades various RBF options against a set of screening criteria. The result is a shortlist of RBF options that could usefully be incorporated into future program design. Chapter 4 explores initial design considerations for RBF in this context including eligibility, trigger, payment structure, size of payment and exit strategy, as based on the ESMAP report. It covers the possible market responses to the shortlisted RBF approaches and makes a preliminary assessment of value for money. Finally, it considers ways in which RBF approaches might best be implemented on a practical level. Chapter 5 outlines the recommendations, summarizing key constraints to scale-up and noting the complementary measures needed to ensure successful RBF implementation.
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