Attachments
Executive Summary
Providing adequate cooking fuel and clean-burning, fuel-efficient stoves in displacement settings has long been a major challenge for local authorities, humanitarian agencies, nongovernmental organizations (NGOs), local communities and refugees themselves. Refugees generally have limited access to modern cooking solutions. Most either depend on insufficient humanitarian agency handouts of ‘in-kind’ firewood or have to travel long distances to collect firewood (in the latter case, exposing themselves to the risk of attack and/or sparking conflict with host communities). In many displacement settings, such as in Tanzania and Bangladesh, a crisis point is being reached in which firewood from the local environment is no longer available and no alternatives exist. In many cases, host governments are recognizing the environmental damage and are now pushing for change, banning in-kind firewood distribution or requesting humanitarian agency support to transition refugees to alternative fuels. All these issues are present in the Kakuma refugee camp complex in Kenya, which prompted the Moving Energy Initiative (MEI) to explore alternative solutions to meeting residents’ cooking energy needs.
There is significant potential for private-sector engagement in this context – which, though largely overlooked to date, could result in win-win scenarios for all stakeholders. Refugee camps and other displacement settings present opportunities for private-sector cooking fuel companies to expand their customer bases, with the added advantage for vendors of offering concentrated demand and scope for economies of scale. Studies show that refugees are already engaging with existing suppliers, using what little income they have to purchase traditional cooking fuels (i.e. firewood and charcoal). On a global scale, however, private-sector investment in the supply of alternative fuels to these markets has been limited to date.
There are several reasons for this, including in most cases a large degree of uncertainty surrounding refugees’ legal status and unclear government policies regarding their economic integration. For the Kakuma complex, the MEI decided to engage with the private sector directly. It asked firms to propose creative solutions for overcoming the obstacles to private investment in alternative fuels for refugee and host-community populations. This research paper records that process, and reviews lessons from the MEI’s experience in Kenya. It also includes relevant examples from other countries, to provide insights and lessons for future private-sector engagement in refugee cooking energy markets.
The results of the MEI’s 2016 survey of households in Kakuma camp in Kenya showed a gap between user demand and ability to pay for cleaner alternative fuels. Based on these results, the MEI set out to establish a concession system that would subsidize the provision of alternative fuels to the consumer, with prices capped at a level deemed affordable to a majority of households in the overall Kakuma complex. The MEI requested expressions of interest (EOIs) from local private-sector companies for expanding sales and distribution of fuels in the camp complex through the concession. One of the parameters was that the difference between the true cost of the fuel and the subsidized price to the consumer would be paid to the concession-holder upon proof of sales. Companies shortlisted during the EOI phase were invited to submit detailed proposals for the concession, with one of the design challenges being to integrate the concession into a sustainable business model.
The winning company – National Oil Corporation of Kenya (NOCK) – is to receive a prize of $50,000 for its proposed concession to supply liquefied petroleum gas (LPG) both to refugees in the Kakuma complex and to the surrounding host community. NOCK’s proposal included income-generation opportunities and entrepreneurship training for women and youth inside and outside the complex, with participants offered roles in the distribution and exchange of LPG cylinders through local retail shops. In addition to the impact for income generation, NOCK anticipates that its proposed concession will result in improved health among LPG users and reduce forest degradation.
The MEI also conducted interviews with various stakeholders in other contexts and countries who are engaged in efforts to develop market-based approaches to providing clean, fuel-efficient cooking solutions to refugees. The findings were developed into a series of case studies that are presented in the annexes to this research paper. Lessons from the concession competition and the case studies are elaborated, including a comparison of subsidy-based and commercial approaches (or, perhaps more accurately, an analysis of how various initiatives have transitioned along the spectrum from fully subsidized to fully commercial). Also discussed are strategies for building on existing local market dynamics and incentivizing greater privatesector engagement, such as how donor support and government policies can influence private company appetite for, and success in, fuel markets in refugee camps.
Based on these lessons, the MEI recommends greater donor investment and longer-term guaranteed funding for cooking interventions. This is needed to allow sufficient time to build sustainable markets and secure the requisite engagement and investments from the private sector. This is especially worthwhile where refugee income is constrained (due to legal status or lack of income opportunities), and where alternative fuels are new to the market. Interventions should be done at scale, once sufficient data have been gathered on user preferences and ability or willingness to pay, rather than through pilot-only schemes. The interventions should also be integrated as much as possible with the host community and larger region, rather than set up as standalone markets for refugees. Larger, longer-term investments by the private sector – supported through partnerships with donors and humanitarian agencies – in infrastructure and demand creation (both in and outside the refugee community) can reduce the price of alternative solutions and support a gradual transition away from subsidies. The lessons and recommendations in this paper provide guidance for designing interventions in the future, and for scaling up existing activities to secure refugee access to modern cooking solutions that protect health and the environment.