By Abby Love, Fatema Rajabali and Robert O’Sullivan

In June, the fifth international climate change adaptation conference, Adaptation Futures, was held in Africa, a first for the conference series. Around 1,200 people attended Adaptation Futures in Cape Town with a program that reflected the growing emphasis on climate information services (CIS) in the adaptation community.

Ahead of the conference, the USAID-funded Learning Agenda on Climate Services in Sub-Saharan Africa hosted a full-day workshop with partners from the Climate System Analysis Group (CSAG) at the University of Cape Town. The Learning Agenda, consisting of the Mercy Corps-led Climate Information Services Research Initiative (CISRI) and the Winrock-led Sustainable CIS program, convened 65 participants to examine and discuss recent research on the generation and delivery of CIS. Throughout the day the participants — including researchers, donors, members of NMHSs and implementing partners — explored the needs of CIS end users, how to quantitatively assess the capacity of national meteorological and hydrological services (NMHSs), the role of public-private partnerships, financial revenue generation models for NMHSs, and the challenges of social and sector inclusion of CIS.

Participants play an interactive game to better understand the user end of climate information services. Photo: Mirianna Budimir/Practical Action

The opening remarks of Professor Bruce Hewitson, director of CSAG, articulated an important theme of the event: data is not equal to information. For data to have value for end users, it must be contextualized. For knowledge to be empowering, therefore, the needs of climate information users must be recognized and understood. This requires considering the complexity of the systems within which climate information is produced and delivered, the contexts within which end-users work and use the information, and the many factors that drive decision-making.

The way in which climate information is made available to different users in different sectors raises another fundamental question: can climate information be both a public and private good? This launched a discussion of different revenue models that can support NMHSs to deliver climate services sustainably, and the role of the private sector in producing and delivering CIS. A conclusion from the work to date on the climate and weather enterprise in Sub-Saharan Africa is that any private sector participation must be complemented by continued public investment in climate services. As panelist Floribert Vuguziga from Meteo Rwanda put it, we need to “invest in roots to grab fruits.” Vuguziga also commented that providing information in context can be challenging and partnering with the private sector to deliver information can lift a burden from NMHS’s shoulders.

Other rich discussions during the day revolved around a new tool to quantitatively assess the capacity of NMHSs and gender and social inclusion. For the first time, the assessment tool combined the Global Framework for Climate Services along with World Meteorological Organization (WMO) categorization of NMHS capacity to create a standard approach to assess and compare NMHS capacity and gaps. The value of the tool was recognized, as was the need to further refine some of the metrics and indicators.

Cathy Phiri (Winrock), Kellen Eilerts (Viamo) and Mo Check (Earth Networks) discuss the role of the private sector in climate information services. Photo: Mirianna Budimir/Practical Action

During the closing panel, Kellen Eilerts from Viamo noted that CIS end users were a major focus of the day’s discussions yet continue to be excluded from these conversations. Increased representation of end users should be a priority in taking CIS learning forward. Similarly, Erica Allis from WMO pointed out the inherent power relations that are reinforced by “user/producer” framing, reiterating the need for users to be included in these discussions. Julia Bradley-Cook from USAID had a related remark, highlighting the need to move away from a linear view of CIS generation and delivery to one that includes feedback loops and the creation of a virtuous cycle. Ana Bucher from the World Bank emphasized the importance of showing the value of CIS to economists, embedding the value of CIS within ministries of finance, and engaging countries to ensure CIS is part of a country’s national climate change strategies.

For knowledge to be empowering, the needs of climate information users must be recognized and understood. Photo: Mirianna Budimir/Practical Action

The Learning Agenda is extremely appreciative of the rich contributions of the participants and panelists at the workshop and looks forward to incorporating their inputs into the coming stages of our research. In particular, CISRI thanks participants for their input on the participatory CIS systems mapping methodology and plans to incorporate their feedback as the team finalizes the guidance materials over the next few months. The Sustainable CIS team welcomed the feedback on the metrics, the role of the private sector and how to think through revenue models for NMHSs that will be incorporated into the team’s final products.

For more information on the Learning Agenda projects, please visit the project site and sign up for the quarterly newsletter.  For a ClimateLinks article on this conference, click here.

By Katie Gross and Evgenia Sokolova

When Lilian first saw the modern charcoal stove for sale through a local retailer in her town of Kiserian, Kenya, she admired the product. But with only 1,000 shillings (USD $10) in her pocket, she couldn’t afford to pay for the $40 stove outright. School fees were a struggle and kept her savings account empty. “You save a little, you buy something,” says Lilian, who also lacks access to a microfinance or savings group that might lend her the money.

But this was before Josephine, a LivelyHoods cookstove sales agent, told Lilian she could use the daily tips from her job as a barmaid to make micro-payments on the stove through her existing mobile money account. Within a month Lilian had paid off the stove and it was delivered to her home. Now she is happy that “my sufuria [pot] is not getting black all over,” thanks to her new, cleaner stove that also saves fuel and associated fuel costs. “If they were selling it on cash, I couldn’t get it” she said. “By paying in installments it is easier, because you have time to organize yourself.”

Before this purchase, Lilian was one of the 40 million Kenyans using inefficient, dirty stoves or open fires to cook their daily meals. Globally, the use of inefficient cooking devices contributes to more than four million deaths annually from respiratory and heart diseases. In addition, charcoal cooking fuel — for which demand is growing and unsustainable production practices are causing deforestation at alarming rates across Africa — can cost as much as a third of a low-income family’s earnings. Using a more efficient stove can save up to a half of that. The challenge, as Lilian discovered, is that the improved stoves cost more and require upfront payment.

To address this gap, USAID awarded Winrock the Developing a Sustainable Cookstove Sector project with the goal of expanding the distribution of and financing for advanced fuel-efficient cookstoves for Kenyans. It was a project tasked with increasing local financing options and expanding consumer access. However, we immediately ran into a problem that affects many products targeting low-income consumers: small loan size. How do you finance products, such as improved cookstoves, that are too expensive to purchase outright but too cheap ($30-$80) for traditional lenders to take on?

Our first idea was to incentivize traditional lenders to add cookstoves and other household energy products to their current portfolios using aggregation and bundling. The good news is that in three years of working with formal financial institutions in Kenya to develop consumer financing channels for advanced biomass cookstoves, these channels facilitated the sale of more than 30,000 stoves! However, we realized that there was still a large untapped market beyond the financial institution networks — “unbanked” consumers who did not have cash to pay for stoves upfront and who also lacked credit options. While formal financial institutions had proven an excellent distribution channel because of their ability to aggregate and provide financing to clients in their networks, they were bypassing consumers for whom lack of financing was a major barrier to purchase.

The Developing a Sustainable Cookstove Sector project expanded the distribution of and financing for advanced fuel-efficient cookstoves for Kenyans.

But how do you provide financing to consumers with no bank account, no collateral and no history of borrowing? One solution is for product manufacturers and distributors to provide credit, but this adds stress to already thinly stretched working capital, not to mention a level of complexity to back office systems for tracking and following up on payments. It also turns a trusted service provider into a debt collector, changing the tone of the relationship and customer experience. We urgently needed to find alternative solutions.

Through a call for innovative financing proposals, Winrock selected three grantees through which two separate solutions to this challenge emerged:

Solution #1: Develop innovative end-user finance solutions through existing financial networks that can reach previously excluded customers.

Psychometric scoring emerged as one such solution. BioLite, a leading cookstove manufacturer, teamed up with Juhudi Kilimo, a Kenyan microfinance institution, to integrate psychometric scoring into Juhudi’s customer appraisal process, with the goal of bringing previously unbanked customers into its network. Psychometric scoring was developed by Entrepreneurial Finance Lab with the objective of relying on an individual’s strength of character as a proxy for credit history. It does so by asking the customer to complete a 45-minute survey that tests for character traits of a client likely to repay, such as integrity and autonomy. It casts a wider net of potential borrowers by relying on strength of a character as a predictor of credit repayment in the absence of a formal credit history.

Solution #2: Develop informal financing solutions through local retailers as alternatives or gateways into formal finance networks.

Pay-as-you-can layaway and credit schemes became another answer for low-income borrowers. Two grantees — LivelyHoods and Wisdom Innovations — proposed to develop internal financing systems that would sidestep the usual working capital hurdles associated with in-house credit provision and allow them to pass that benefit on to the consumer. LivelyHoods developed a layaway system using mobile money payments called LivelyHoods Installment Payment Arrangement, or LIPA (which means “pay” in Swahili).  Customers paid what they could, when they could, with most making micro-payments daily that paid off the stove in just one month. Meanwhile the stove remained in LivelyHoods’ possession until the final payment was made, thus reducing the risk of default. Wisdom Innovations provided credit through local women’s groups, using monthly group meetings to collect and aggregate cash payments that could be paid collectively via mobile money, with the repayment insurance that a group lending model brings.

Local women’s groups used monthly group meetings to collect and aggregate cash payments that could be paid collectively via mobile money to help women purchase cookstoves. Photo: Wisdom Innovations

We learned a lot through these pilots. Juhudi found the survey very time consuming for its loan officers, leading them to a second pilot using text messages rather than in-person surveys. Juhudi also realized that by selecting a specific cut-off score (which was designed to see repayment rates on par with its traditional clients) on the psychometric test, they were still excluding customers who might otherwise borrow and repay on time. For that reason, they see psychometric scoring as one in a suite of potential credit appraisal options.

LivelyHoods had to readjust its agent training and introduce proper incentives to expand the use of LIPA versus the previous status quo. They also increased the down payment from the initial amount, after learning through the pilot that the increased buy-in, while still affordable, attracted customers who were more likely to finish making payments. And, as Lilian confirmed, they found that the flexibility of allowing people to pay what they could when they could resulted in high levels of on-time in-full stove purchases.

Wisdom found that shortening the repayment period led to better overall repayment rates. They also realized that hiring more women sales agents resulted in higher sales among women’s groups, and they have now shifted their company strategy to integrate women at every stage of the value chain. Through this pilot, Wisdom also readjusted its business model to target small shop owners as aggregators. Providing shop owners with credit can extend financial inclusion benefits to additional customers.

 Naomi, another LivelyHoods customer, provides one such example. She decided to open her own shop at the market eight years ago selling children’s clothing because “jobs are few in Kenya.” But her income isn’t consistent, and 80 percent of the money she makes from the sale of her clothing is reinvested in new inventory.  Naomi belongs to a savings and credit cooperative but had a bad experience — someone “ran away with the money,” she says.  Now she prefers to continue alone, reinvesting in her business, hoping to one day get the opportunity for an individual business loan.  When she found out she could pay for her stove little by little over five months, as she had extra money available, she jumped at the opportunity. What she likes most about the stove is its speed, saving her time and saving her expensive charcoal. Although she’s never extended credit before, she is now considering providing the same option to her own customers.

Through these pilots, 1,500 stoves were financed in six months, primarily to individuals who would not have purchased them otherwise. All three programs continued beyond the funding period and have seen transformative impacts on sales and company strategies. So, while financing unbanked consumers for the purchase of life-improving products is still a challenge, we were able to demonstrate that creative alternative solutions exist for customers like Lilian and Naomi. These solutions will help them and many others cook cleaner and more efficiently and will unleash savings for the future.

Winrock President and CEO Rodney Ferguson outlines his vision for creating maximum impact.

Interview by Chris Warren

As the President and CEO of a development organization with projects in the U.S. and around the world, Rodney Ferguson often carves out reading time while on airplanes. On a recent trip from his home base in Washington, D.C. to Winrock International’s office in Little Rock, Arkansas, Ferguson read the book Factfulness, which Bill Gates found so compelling that he offered free copies to every graduating college senior in America. At a time when headlines can paint a dim view of the state of the world, Factfulness is avowedly optimistic, arguing that advances in democracy, health and education, women’s rights and other metrics across the world are both positive and irrefutable.

Ferguson can’t help but see the work of his Winrock colleagues in these advances. “Winrock has made significant contributions over the course of our history to the improved social and environmental metrics currently on display around the world. We have helped spread agricultural success. We have brought energy to the places in the world where it’s needed most. We are helping eliminate trafficking in places where it was thought to be intractable,” he says. “These are all part of the global trend toward a healthier, more democratic, more capable world. But it also points out that we still have a very long way to go and we cannot retreat or move backwards.”

Now five years into his job as CEO, Ferguson devotes much of his time these days to thinking about how to best ensure that Winrock is in a position to continue and expand its important work long into the future. Along with the entire executive team, Ferguson recently completed a strategic review to identify ways to augment the impact of existing projects and to identify long-term initiatives that will make Winrock an even more powerful force for good.

Ferguson recently sat down for a wide-ranging interview and explained the vital importance of continuing to diversify funding sources, the long process of cultivating individual donors and why Winrock is needed more than ever.

You and your executive team recently completed a strategic review of the organization. What was your main finding?
Any organization has to look very hard at the reliability and predictability of its primary funding source. No business anywhere would advise a strategy of becoming overly reliant on one channel of money. So our push to continue to look for diversified funding is continuing and will continue. We see diversification in a couple of different ways. One is the source of the funding. We are open to new primary sources of funding, which we are going to act on. But the need to leverage our traditional government money is also increasing. More and more, we are seeing money coming out of our traditional funders where the match requirements or partnership requirements is increasing. And the onus is on us, the recipient, to bring other money to the table.

Can you explain that a bit more? Does it mean when Winrock is applying for USAID funding it has to bring money to the table from foundations, corporations, or even its own funding?
It’s all of the above. Often times the requirement is in terms of a percentage of the available funding. If it’s a $10 million project, the government says we’ll give you $8 million. But this project is still a $10 million project. It’s up to you to find another $2 million.

What are the implications of those requirements for Winrock?
We are trying to attack this problem in a number of different ways. One sounds wonky, but it is important. We are proceeding with becoming full cost accounting standards compliant so we can have more flexibility to pursue contractual work. We already pursue contracts but we are limited in the percentage of our overall revenue that can be managed as contracts by the fact that we are not fully compliant. When this happens, we can pursue more contracts because it allows us to charge fees to generate unrestricted revenue that we can then plow back into the business.

Are you also pursuing entirely new funding sources?
Yes, we are continuing on a path to raising unrestricted money from donors. We are now really beginning to identify and meet with people who we think would see Winrock as a good recipient of their philanthropy. One of our board members said this is a long and arduous process; it’s a ten-year project. But we are on it and there’s really no turning back.

Why is it such a long process?
While we are very well known and well respected in the world of development, we are largely unknown by donors who could make meaningful gifts to Winrock. This becomes a bit of a branding and awareness challenge for Winrock and it requires doing it person by person. We are also an organization that has never really invested in driving philanthropic support. We are just now doing that on a small scale. We are not going to go out and make major investments in fundraising until we have demonstrated some success in doing it. The other thing we are doing is looking at how to get our board more involved to help to fundraise and to bring potential donors and philanthropists closer to the organization, and potentially serve on our board. All of these things take time.

How do you find individual donors who would be interested in supporting Winrock’s work?
Like everything, it is an algorithm. One part is an interest in the broad thematic work we do: International food security, renewable energy generation and sustainability, anti-trafficking, domestic economic growth and skills development. There are lots of people who are interested in these issue areas. We have to do our homework to identify individuals who we believe are sufficiently interested in these areas to engage with us. Then you have to look at their space in life. Are they in a position where they can become donors to Winrock? And you also look at geography. These people often have geographic interests that are regional, local, and in some cases global. You add these things up and then focus on the people who you think are the most compatible with Winrock, the most intrigued by our work around the world, and the most ready to contribute. We’ve already had some successes identifying people who are very interested in hearing Winrock’s story.

You mentioned that you want to have board members involved in this effort. What about program staff?
That’s an important point to emphasize. This idea didn’t just come out of my head. This sprang out of conversations with program folks. I believe our projects and programs and new ideas are essentially investable assets. But we also have to do the work to develop materials that describe those assets. Winrock’s staff have been extremely helpful already in helping us identify what those investable assets and ideas are.

Can you give an example of how this works in practice?
Sure, let’s start with our Ecosystem Services team. There are a couple of different ideas that have sprung up from them that we believe would be of great interest to a potential donor. That would include supporting our work in preventing forest degradation and deforestation, which would be of great interest to someone who is really interested in one of the most measurable opportunities to decrease global warming. On the agriculture side, we believe that international food security remains a big issue. People who believe that one of the challenges of the 21^st century is ensuring a safe and reliable food supply for what could potentially be 11 billion people in the world is important to many people. Then of course there is the institution writ large. There are also people who will believe in Winrock as an institution, and understand that we are uniquely positioned around the world to have a lot of impact.

There has been a lot of attention on impact investing recently. Is that also something Winrock is considering?
I think the answer is that we are already quite involved in the world of impact investing. If you look at our history and our current portfolio, things like Innovate Arkansas, the Delta I-Fund in partnership with IBERIABANK, the PIER (Private Investment for Enhanced Resilience) project, which we’ve had with the U.S. Department of State, and the American Carbon Registry. These all involve finance. But is Winrock going to look at getting into the game of raising money ourselves and essentially become the at-risk investor? That is a question we are looking at with our board. But in as much as we have to do that to unlock additional investable resources, we will look at that.

As you know, impact investing has many skeptics. Does that concern you?
There is a lot of impact investing money and there is also a lot of skepticism about it in the world. We understand the skepticism, and in some cases, it is well-founded. However that is not to say there is not a tremendous amount of very serious money around the world that is looking at how to best engage for impact through investing rather than through the traditional form of donations. We need to acknowledge that and examine ways to responsibly pursue impact investing.

If you’re successful at attracting new donors and financing, what will that mean for the future size of Winrock?
Well, the other thing that came out of the strategic review is the recognition that in order to be able to exercise the market power and the economies of scale we need to be fully competitive we do need to grow. And a lot of the questions are around how big we should be and how much we should grow. Here’s what we settled on: We think it’s an attainable target to reach $150 million in the next five years or so. That is the marker we are setting for ourselves. But we also agreed that we have to bring our systems along as we grow. We’ve made some progress, but we have to make more progress.

How do you achieve that level of growth?
I think we get there primarily through organic growth. We could also use smart combinations to get there, meaning mergers and acquisitions. We believe that there is and will continue to be some consolidation in the development industry going forward. And with that there will be organizations that have tremendous talent and skills – particularly in a niche that is complementary to what Winrock already does – that may be interested in joining with a larger organization.

Are there growth strategies you won’t consider?
Winrock is not going to be absorbed by anyone. The other question that comes up is whether we are interested in getting into businesses we are not in already? The answer is that we are not going to say categorically that we won’t do that. But the near-term is more looking for things that are more immediately complementary. But in the long-term we are interested and amenable to looking into new lines of business. That may be certain aspects of health care delivery, and certainly nutrition is an area where we should and must continue to add resources.

In the last Winrock Forward we talked about development organizations evolving and growing to address challenges on a regional basis rather than country by country. Has that continued?
The development world is continuing to move in a bit of a dichotomy. There are big organizations that can take on large regional challenges. An example is the Gates Foundation’s strategy in Africa. They are working on a big implementation scale and they may also work with smaller organizations in particular areas and particular verticals across geographies. But organizations also need large-scale managers and implementers who are able to work across geographies. That is an area where we have to be prepared. We want to be able to compete as an at-scale implementer while still implementing vertical projects in things like agriculture and trafficking. We can do both but our future is in being able to play at scale, not as a niche provider. Organizations like the Rockefeller Foundation, the Gates Foundation and the Norwegian government, who are looking at deforestation around the world, they all want large-scale partners.

You’ve been in this job for over 5 years now. What’s is most satisfying and motivating about the work?
The thing that I appreciate so much about Winrock is the depth of commitment and passion of the people involved. Winrock is an inspiration, and I derive a lot of energy from that. I see so many people who are deeply committed to solving problems around the world. And that is anywhere from the Innovation Hub in North Little Rock to the people who are running our entrepreneurial programs in Southeast Asia to the folks who are running our ag projects in Nepal. Across the board it’s gratifying and it helps give me the energy to keep pushing forward to do the things I know we need to do as an organization to put ourselves in the best position to succeed.

Winrock’s work has always mattered. Is it even more important in today’s global political environment?
I look at Winrock as the best our country has to offer. These are the best people out there working for us and representing our country. They are the best we have to offer the world. When I see people that deride what we do and deride the causes we work for or the people we work with around the world, it propels me and makes me want to work all the harder to overcome those misguided sensibilities and succeed. We have to succeed. The United States is a country full of wonderful and generous people and when people who are not wonderful and generous find themselves in a position to control our destiny, it’s up to us to take it back. I think we do that by succeeding. By doing great work and by showing the rest of the world that there are many faces to this country. And I want Winrock to demonstrate to everyone that the best that our country has to offer is engaged in trying to help the world. But this isn’t just about America. The people we work with globally very much feel the same way about building better futures for themselves and their families. It’s a very exciting and dynamic thing to see the best of our country working with the best people in Bangladesh and the best people in the Philippines. These are people who are really strivers and want to improve their lives and improve their position and improve the lives of their children. That is what drives me. Winrock is needed more than ever.