Results-Based Financing for Clean Cookstoves in Uganda, 2014. IMC Worldwide for the Africa Clean Cooking Energy Solutions (ACCES).
The fundamental idea behind results-based financing (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.
What are the main considerations for RBF design and implementation? The potential market size for a commercial market at scale is approximately 2.5 million households. This is based on 100 per cent of urban and 29 per cent of rural population being in the commercial segment for cookstoves and assumes an ICS penetration rate of 80 per cent. This translates into a yearly demand of 1.2 million ICS.5 The high-level estimate of the cost of implementing a full RBF scheme to achieve this market scale is between US$8 million and US$16 million plus administration costs. Scheme costs are based on an incentive level from US$5 to US$10 per ICS and a total number of incentive ICS sales of 3.6 million during the five years of the RBF intervention.6 In turn, this RBF level is based on an estimated7 current willingness to pay a price of below US$10 and an average charcoal ICS price of US$12 to US$20.
