9 Transitioning to a Low-Carbon Economy and Renewable Energy …
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9.3.6 Affordability by Local Communities
Seasonality impacts heavily on the spending behaviours and patterns
of rural customers who largely depend on subsistence farming. A
2016/2017 household survey by UBOS reported 43% of households
in the country do depend on subsistence farming, and 25% depends
on wage employment. Crop yields increase during rainy seasons, which
means more income for farmers, and the opposite is true where incomes
will reduce during dry spells. On the one hand, companies that are
manufacturing clean energy products are profit-oriented and therefore
need to recoup their costs for profitability. On the other hand, the need
to become profitable is passed on to the end-user who in most cases has
limited ways to afford the product upfront since most available income
must be conserved for food, and health (World Bank 2008). Uganda
has two annual harvesting seasons, and the typical subsistence dependent family gets money in those two-time windows. During off-peak
seasons, there is less inclination to purchase clean energy products. There
is therefore, a growing need for SMEs to devise innovative financing
mechanisms for their products during low peak seasons in rural Uganda.
9.3.7 End-User Flexible Payment
Civil society and some manufacturing companies have devised ways
to address this challenge. Installment basis type of payment has been
popular since the early 2000s in the form of pay-go systems. This enables
customers to acquire a full solar home system without paying its full price
upfront. A customer pays a certain percentage of the system, usually
about 20%, and the balance is paid in instalments depending on the
income status of the customer. The instalment frequency is sometimes
daily for an average of as low as $0.50 and other times monthly for as
low as $50. This enables more stock turnover for the company but more
importantly provides an affordable avenue through which an individual
can pay for the cost of a solar home system which would have otherwise
put a dent in one’s income (USAID 2017). Companies like Dlight have
297
9.3.6 Affordability by Local Communities
Seasonality impacts heavily on the spending behaviours and patterns
of rural customers who largely depend on subsistence farming. A
2016/2017 household survey by UBOS reported 43% of households
in the country do depend on subsistence farming, and 25% depends
on wage employment. Crop yields increase during rainy seasons, which
means more income for farmers, and the opposite is true where incomes
will reduce during dry spells. On the one hand, companies that are
manufacturing clean energy products are profit-oriented and therefore
need to recoup their costs for profitability. On the other hand, the need
to become profitable is passed on to the end-user who in most cases has
limited ways to afford the product upfront since most available income
must be conserved for food, and health (World Bank 2008). Uganda
has two annual harvesting seasons, and the typical subsistence dependent family gets money in those two-time windows. During off-peak
seasons, there is less inclination to purchase clean energy products. There
is therefore, a growing need for SMEs to devise innovative financing
mechanisms for their products during low peak seasons in rural Uganda.
9.3.7 End-User Flexible Payment
Civil society and some manufacturing companies have devised ways
to address this challenge. Installment basis type of payment has been
popular since the early 2000s in the form of pay-go systems. This enables
customers to acquire a full solar home system without paying its full price
upfront. A customer pays a certain percentage of the system, usually
about 20%, and the balance is paid in instalments depending on the
income status of the customer. The instalment frequency is sometimes
daily for an average of as low as $0.50 and other times monthly for as
low as $50. This enables more stock turnover for the company but more
importantly provides an affordable avenue through which an individual
can pay for the cost of a solar home system which would have otherwise
put a dent in one’s income (USAID 2017). Companies like Dlight have