This post was written by Amos Njuguna, a former EASST fellow and Assistant Professor of Finance and United States International University (USIU) Kenya. He reflects on the findings of his recent publication, "Economic Factors Influence on Funding the Supply-Side of Housing in Kenya: Case Study Nairobi", published in the International Journal of Business and Management, and available here.
The U.N.’s Department of Economic and Social Affairs estimates that by 2050, 70% of the world’s population will be living in urban areas. As a result of this increased urbanization, countries around the world are compelled to prioritize housing.
McKinsey Global Institute’s (MGI) estimates that 1.6 billion people globally (about a third of the urban population) are living in second-rate housing or are foregoing essentials in order to pay for their home within 10 years. MGI suggests that $16 trillion will be required by 2025 to tackle the housing problem. In Kenya, the annual deficit of housing units in the urban areas amount to 150,000. The Central Bank of Kenya further shows that by the close of 2015, the country had only about 20,000 mortgage accounts.
The availability of formal funding from financial institutions for housing is difficult, as it is estimated that half of the adult population worldwide does not have an account at a formal financial institution, and 75% of poor people are “unbanked.” This unbanked population relies on their savings to finance their housing projects and when savings are nonexistent, they are forced to turn to informal sources.
Henceforth, policy makers must focus on innovation and creative ways to enhance supply of decent housing. In this vein, we undertook a study to establish the effect that economic factors have on funding the supply side of housing in Kenya.
Our study sought to unveil the influence that economic factors have on supplying housing development in Kenya. Our findings indicate a negative relationship between economic factors and funding of housing development; also establishing a positive moderating effect of stakeholders on the relationship between economic factors and funding of housing development. The implication being, government and policy makers should ensure that interest rates and inflation rates are kept at a level that will encourage investments in housing, with the government acting as an enabler of these developments.
To read the full study, go here.
This post was written by Zachary Wagner, a PhD student in Health Economics at UC Berkeley, David Levine, CEGA affiliate at the Haas School of Business at UC Berkeley, and John Bosco Asiimwe, a lecturer at Makerere University and former EASST fellow. Additional PIs on the project include CEGA affiliate Will Dow. Initial funding for this project was provided through the 2015 EASST Research Grant Competition.
In many developing countries, illnesses for which we have long had effective treatments remain leading causes of death (e.g., diarrhea and bacterial pneumonia). As a result, one of the defining challenges for the global health community is to understand 1) why effective health products are underused and 2) how to increase use. With this in mind, we designed an experiment in Uganda (funded by EASST) to provide insight into why cheap and effective treatment for diarrhea is underused and to measure the causal impact of novel ways of increasing use.
Diarrhea is a perfect example of an illness that creates a large disease burden even though effective technology for mortality prevention is widely available. Diarrhea killed over 500,000 children in 2013 worldwide (mostly in sub-Saharan Africa), yet nearly all deaths could be prevented with a simple and cheap “technology”: sugar, salt and water. The discovery in the 1960’s that a sugar and salt solution was absorbed by the body more rapidly than other liquids gave rise to what the Lancet referred to as “potentially the most important medical advance of the 20th century”—oral rehydration salts (ORS). Most deaths from diarrhea are a result of dehydration, and ORS could be used to rehydrate sick children quicker and more effectively than standard fluids. And because ORS is basically just sugar and salt, it is incredibly cheap!
By the 1980s, ORS was being mass produced and widely distributed. Large information campaigns arose to spread awareness. By 1990, around 40% of diarrhea cases were treated with ORS, up from zero in 1980. But since 1990, even as diarrhea remains the second leading cause of childhood mortality, the rate of ORS use has stagnated.
There is little evidence on why ORS use remains low, and what works to increase use. In collaboration with BRAC Uganda, we designed a 4-armed, cluster randomized controlled trial (RCT) that aims to get at these questions. We enrolled 120 villages, and will implement the following interventions:
Group 1- Control: Standard access to ORS
Group 2 - Preemptive home delivery: BRAC’s community health promoters (CHPs) deliver ORS for free to all households with young children at the beginning of the study (i.e. preemptively).
Group 3 – Preemptive sales offer: CHPs visit all households at the beginning of the study and offer to sell ORS at a subsidized price.
Group 4 – Free upon retrieval: Households are informed that they can retrieve ORS for free from the home of the CHP.
Preemptive free home delivery (Group 2) will ensure that caretakers have ORS readily available when their child comes down with diarrhea. The key here is that ORS is delivered prior to a diarrhea episode. If this intervention increases ORS use substantially, it implies that caretakers are willing to use ORS if it is conveniently available free of charge, but that barriers to accessing ORS are an issue (price, distance, supply, etc.). Moreover, this is a simple and cheap intervention that could be easily scaled up by BRAC (which has CHPs in over 2000 villages in Uganda) and other community health worker programs throughout Uganda.
Moreover, comparing Groups 3 (preemptive sales offer at homes) and 4 (free ORS at the CHP’s home) to Group 2 (preemptive free delivery) allows us to isolate two barriers to ORS use: price and convenience of access. Groups 2 and 3 are identical except that Group 3 households are required to purchase ORS, whereas Group 2 received it for free. Therefore, any difference in ORS use between these groups is a result of the price effect. Groups 2 and 4 are identical expect that Group 4 has the extra hassle costs associated with retrieving the free ORS from the CHP’s home, whereas as Group 2 receives ORS at home preemptively. Any difference in ORS use between these groups is a result of the convenience effect. Understanding the importance of these two barriers is essential for designing cost-effective programs aimed at increasing ORS use.
We piloted the free delivery intervention in one village and results are encouraging. ORS use increased from 56% at baseline to 94% as endline. Moreover, the time it took caretakers to start the child on ORS was cut in half. We have since carried out our baseline survey of 4,760 households across 120 villages. Be on the lookout for the full results in early 2017!