UC Berkeley researchers have launched an initiative to improve the welfare of Ugandan villagers by encouraging entrepreneurship and economic growth in local communities.
The researchers aim to use economics to discover why the widespread adoption of safe and affordable solar-powered lamps has been so slow in developing countries like Uganda.
“The question we have to answer is, ‘Why wouldn’t households choose these lamps over traditional kerosene lanterns?’” said Brett Green, an assistant professor in the Haas School of Business and a researcher for the study.
The research will be partly financed through crowd funding, a system that allows interested people to contribute financially to the project online.
Rural families who use kerosene lanterns face ongoing fuel costs as well as significant health risks, Green said. Although better alternatives exist, families are distrustful of other light sources.
“I was showing one of our lamps to a mother and child and they were afraid of it,” Green said. “I had to show them that I could touch it without being burned. He added that the availability of cheap imitation products has made rural families distrustful of anything labeled “Made in China.”
However, one of the most significant barriers to the widespread adoption of solar lights is the fact that individuals and prospective retailers are unable to pay costs upfront and have no access to credit.
“For these people to purchase inventory, they need access to free credit,” Green said.
As part of the study, the researchers will offer a risk-free trial to build trust and confidence in the product, followed by the extension of a free line of credit. Strong incentives will be given to encourage sellers to return their profits to distributors.
Green added that a co-researcher, professor David Levine in the Haas School of Business, has had success with a similar experiment in the past while researching ways to encourage Ugandans to switch from open-flame cooking stoves to safer, more efficient models.
“David’s past research suggests that a free trial and rental-payment system will have considerable success,” he said.
Through a strategic partnership with BRAC, the world’s largest nongovernmental development organization, the research initiative will have access to a network of 640 women across rural Uganda.
The women in each test group will be provided with four $20 lamps, which they can then sell at a 20 percent markup. By spending their profits on purchasing more inventory, the women are equipped to grow and sustain their own business.
“There will be variable credit and contract options in the initial distribution effort, which will allow us to better understand the economics of how best to approach the introduction of solar lamps into these areas,” said William Fuchs, an assistant professor in Haas and co-researcher for the study.
Assisting the group in the field is Ugandan economist Vastinah Kemigisha, who will serve as a liaison with BRAC on the new lamps’ distribution.
“I look forward to meeting all of the women involved in distributing the lamps and seeing the change it will bring to communities,” Kemigisha said.
She added that the potential change for families and communities is huge. Brighter lights from LED-based solar lamps allow children to study in the evening and give adults more time to work. Many solar lamps can also charge cellphones, which help rural families connect to the world.
If successful, the researchers hope the project will serve as an incremental step in bringing safe, affordable light to the 1.3 billion people worldwide who lack access to electricity.
Contact Natasha Osborne at [email protected].