Climate Adaptation Financing Practice: A Case Study of Bidhaa Sasa

By Joseph Lutwama and Douglas Karugonjo

The Climate Challenge
Uganda is among the world’s most vulnerable and least adapted to climate change countries scoring 166 out of 181 countries on the ND-GAIN Vulnerability Index in 2018[1]. Its vulnerability has been attributed to the huge dependency on natural resources provided by primary sectors such as agriculture, water, energy, and fisheries which are highly vulnerable to impacts of climate change. Historically, Uganda was mostly dominated by a tropical climate with a single rainy season in the north and two rainy seasons in the south. The effects of climate change are affecting the seasons with the country experiencing shorter or longer rains and harsher droughts – especially in the eastern and north-eastern regions[2].

Uganda’s most pressing agricultural risks are directly related to climate change: droughts, floods, crop/ livestock pests and diseases, post-harvest loss, hailstorms and thunderstorms, and other natural risks such as landslides. The lack of ownership and control over land and resources, and their disproportionate burden of unpaid care work, restricts access to finance, extension services, and technological innovation, especially for Ugandan women involved in farming.

These women predominantly prefer Village Savings and Loan Associations (VSLAs) to formal financial institutions for savings and credit. The high usage of informal services results in less consumer protection, fewer opportunities for women to build credit histories, and less access to structured services such as seasonal loans[3]. To enhance opportunities for women, an efficient strategy for climate adaptation is needed.

Bidhaa Sasa Building a Case for Climate Adaptation Finance
In 2021, FSD Uganda partnered with Bidhaa Sasa, to pilot a unique business model that leverages mobile money technology and group lending to enable women to access credit for energy saving household equipment and climate adaptation tools. Bidhaa Sasa is a Kenyan last-mile distribution and finance company operating in Uganda since 2019. It offers a range of household goods that improve the quality of life of rural families such as technologies for clean lighting, clean cooking, and climate smart farming.

Integration of mobile money technology
Bihdaa Sasa’s entire credit process hinges on mobile money technology, thereby opening a door for rural buyers to develop their digital financial footprint and potentially engage in formal financial service, often for the first time. Bidhaa Sasa’s exclusive use of mobile money coupled with its digital literacy training of clients helps it to get more rural households into the digital financial services ecosystem and increase their likelihood of accessing other financial services.

Tailored credit approach
The Bidhaa Sasa business model is built around rural women’s needs. It offers a tailored credit approach that makes relevant technologies for households and farming more accessible and affordable. Low-income rural women, who form the majority of Bidhaa Sasa’s customers, are typically unbanked and lack their own collateral. With the use of the group liability model, they can acquire both life improvement products and agricultural tools via payment plans for goods that typically save time or money (solar saves kerosene, LPG gas saves time, stoves save wood or charcoal, and the quality of indoor air and health of a family improves when using both technologies) while keeping credit risks low.

The model does not require collateral (the products act as collateral) and there are no credit checks conducted because most clients, particularly women, tend not to have credit histories. However, the social capital of clients that exists in villages is leveraged to ensure timely repayment. Clients are typically organised in groups of at least five and share the liability since all act as cross-guarantors. This group liability model is well understood by women who are already very active in several self-help or socially-minded groups.

This intervention enables rural households to improve their productivity at home and in their farms through ownership and use of relevant technologies. For example, an improved cookstove uses less than half the charcoal the user would normally use saving them up to $200 per year. In addition, the use of solar technology and improved cookstoves reduces or eliminates the use of non-sustainable fuels like kerosene and charcoal.

The quality of indoor air and health of the family improves when using solar for lighting and improved cookstoves for cooking. In rural Uganda for example, a single efficient charcoal stove can avoid 3 tonnes of CO2 emissions each year when continuously used.

From a climate adaptation perspective, Bidhaa Sasa also provides Purdue Improved Crop Storage (PICS) bags also known as hematic bags as part of their product portfolio. Hematic bags are an affordable and effective approach to minimising post-harvest losses for farmers. Hermetic storage is airtight and works by restricting organisms such as insects and microorganisms that can damage stored commodities from thriving in its internal atmosphere by keeping its oxygen levels low. Hermetic storage is also flood-proof.

The Impact
Over a two-year period, Bidhaa Sasa has been able to support 2,206 low-income customers access energy saving equipment and climate adaptation agricultural tools. Canvases and hematic bags accounted for the biggest proportion (42 percent) of the goods sold. Over 50 percent of Bidha Sasa’s customers have been women. The overall loan payment performance over the period stood at an average of 10.6 percent PAR >30 with the female slightly lower at 7.2 percent PAR >30.

It is clear from the case of Bidhaa Sasa that social networks within rural communities once integrated with mobile money technology can deliver positive climate adaptation and mitigation solutions for both rural households and their farms.


[1] The index summarizes a country vulnerability to climate change and other challenges in combination with its readiness to improve resilience.
[2] The International Organization for Migration (IOM), 2021
[3] Financial Protection Forum, 2019. VSLA: Village Savings and Loan Associations.

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