Three Haas professors are bypassing traditional grants and going straight to crowdfunding to raise money for a study on how to get people in rural Uganda to replace dangerous kerosene lanterns with life-changing solar lamps.
Professor David Levine and Assistant Professors William Fuchs and Brett Green have launched a campaign on Indiegogo—a crowdfunding website co-founded by Haas alumni Danae Ringelmann and Eric Schell, both MBA 08—to research the barriers to widespread adoption of low-cost solar lights. The trio aims to raise $20,000 by April 23 for their study.
“Traditional research grants are tied to strict inflexible cycles,” explains Fuchs, a finance professor who specializes in contracting. “Crowdsourcing is a way to get funding more quickly. Going with Indiegogo was a no-brainer given the Haas connection.”
The project grew from Levine’s past research on incentivizing Ugandans to switch to fuel-efficient charcoal cook stoves. Although the stoves are cheap and much safer than traditional stoves, adoption has been frustratingly slow. Levine tested a new sales offer: a free trial, a payment plan, and the chance to return the stove if it didn’t work. It was a hit: 47 percent of those studied took the free trial and just 2 percent returned their stoves, compared with a 5 percent adoption rate with the cash-and-carry offer.
The question was, why don’t local retailers use these types of offers themselves? The answer: small retailers don’t have the financial capacity to extend credit themselves. Levine joined up with Fuchs and Green to devise a business model that a larger distributor or manufacturer could use to extend credit to their retailers, who in turn would be encouraged to do this with the final consumers. The team now wants to test the alternative sales model to expand the use of solar lamps.
Worldwide, more than 1.3 billion people lack electricity. Many of them use kerosene lanterns, spending billions on fuel and risking burns and carbon monoxide poisoning. Portable solar lamps have been shown to be transformational, casting a renewable supply of high-quality light that allows children to study and adults to extend their working hours.
“Even though these lights cost $20, for many people it’s like what buying a refrigerator would be for us—or even more,” Fuchs says. “But is it just a case of being expensive, or do people not trust the technology? We are trying to understand why these markets aren’t developing and come up with a model for organizations to follow.”
The research team is in the process of “hiring” 640 Ugandan women who are already involved with a microfinance program through BRAC, the world’s largest nongovernmental development organization. The plan is to give each woman four $20 lanterns, which she can sell for $24 each. She can then repay the money and purchase more at $20, keeping future profits. The test will be whether the women come back.
“They could just disappear with the four lamps, but we want to entice them to come back,” Fuchs says. “It’s very important to have a dynamic relationship so the small entrepreneur can see the benefit of growing the business.”
The researchers have partnered with Ugandan economist Vastinah Kemigisha and Barefoot Power, which has developed a range of low-cost lamps that also charge cell phones and other devices and is already working in Uganda.