Better Financing to Promote Access to Water and Improve Dairy Farming in Kenya

Last registered on November 21, 2022


Trial Information

General Information

Better Financing to Promote Access to Water and Improve Dairy Farming in Kenya
Initial registration date
November 16, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 18, 2022, 12:18 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
November 21, 2022, 9:10 AM EST

Last updated is the most recent time when changes to the trial's registration were published.


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Primary Investigator

University of Michigan

Other Primary Investigator(s)

PI Affiliation
University of Chicago
PI Affiliation
University of Chicago
PI Affiliation
Harvard University

Additional Trial Information

In development
Start date
End date
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
This project attempts to improve on existing lending models to finance the purchase of large agricultural assets. Jack et al. (2019) studied water tank loans offered to dairy farming households in central Kenya and found that allowing borrowers to collateralize their loans with the asset itself — rather than 100% with cash deposits by the borrower and guarantors — increased demand by 10-20 fold without meaningfully increasing default. In this project, we will test three potential ways to further increase access to finance for large agricultural assets. First, we will estimate the impacts of loan contract duration on demand and repayment. Given the durability of the water tanks, which have a 15-30 year lifespan, longer loan contracts might be socially optimal, allowing for manageable monthly payments for the poorest borrowers who otherwise couldn’t afford to take out a loan. However, the impact of offering such contracts on lender profits is ambiguous: longer loan contracts could decrease default by reducing the monthly payment amount, but they could also bring in more risky marginal borrowers or expose the lender to an increased risk of macroeconomic or climate shocks during the longer repayment period. Second, we will examine whether layaway plans, with scheduled monthly savings toward a water tank, improve the ability of farmers to obtain water tanks — many SACCOs in Kenya are capital constrained and can only finance a small number of loans. Layaway plans for large assets might help to increase adoption when local financial institutions can’t meet members’ demand for credit, and they may also be attractive to poor or debt-averse borrowers who are unable or unwilling to take out loans. Finally, we will test a novel contract combining commitment savings and credit, which allows members to save gradually in a layaway plan until they reach a minimum down payment and then transition to a loan whenever they choose; our design will allow us to measure the effects of reducing savings constraints while providing guaranteed access to future credit.
External Link(s)

Registration Citation

Carney, Kevin et al. 2022. "Better Financing to Promote Access to Water and Improve Dairy Farming in Kenya." AEA RCT Registry. November 21.
Experimental Details


Our intervention is an offer of a financing product for a 5,000-liter Kentank rainwater harvesting tank. Approved, treated participants will be randomly offered one of the following contracts:

-A layaway savings plan: Members will be given a commitment savings account earning 5% non-compounding annual interest. Deposits will be deducted by default from their monthly payments for milk delivered to Nyala Dairy Multipurpose Cooperative Society (MPCS), our lender’s partner dairy cooperative. However, members will have the option to adjust or opt-out of these default deposits. Members will receive their tanks once they have saved the full tank price plus a KSh 700 administration fee. Default deductions are planned to allow members to obtain their tanks in 2 years, however they will be allowed up to three years to save the full amount. Members who fail to save the full tank price within 3 years or choose to withdraw will have their money refunded to their SACCO account, minus the KSh 700 administration fee. Interest will be paid at the end of the contract only to members who have saved the full amount within the allotted time.

-2-year and 3-year asset-collateralized loans (ACL): Members will be required to pay an administration fee of KSh 700 and to make a down payment of 1/6th of the total tank price. They will then receive their tanks and be issued a loan for the remaining balance, with mandatory monthly payments of 1/24th or 1/36th of the principal plus 6.5% annual interest on the full principal. Like in the layaway contract, monthly payments will be automatically deducted from milk payments from Nyala Dairy MPCS, which may be supplemented by cash payments. If a borrower defaults on their repayments, Nyala Vision SACCO will repossess the tank and refund the borrower’s money, minus the cost of repossession and resale and the KSh 700 administration fee.

-A hybrid layaway-ACL contract: Members will be offered a layaway savings plan. They will be allowed to switch to an ACL (with monthly payments equivalent to the 2-year ACL above) and receive their tanks any time after they have saved the KSh 700 administration fee and down payment of 1/6th of the tank price, as long as they are on track to complete their contract within 3 years.
The price will include the tank and tap as well as delivery to the farmer’s home.
Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
-Willingness-to-pay for each water tank financing contract (KSh)
-Obtained a new large (>= 5,000 L) water tank: (1) From Nyala; (2) From any source
Primary Outcomes (explanation)
Estimated per-contract SACCO profits will be calculated as revenues (such as interest payments to the SACCO, the KSh 700 administration fee, and price markups) minus costs (such as staff time for loan marketing, registration and administration, the cost of tank repossession and resale, and interest owed on savings deposits). The exact construction of this variable will be informed by observation of SACCO operations and interviews with staff.

Secondary Outcomes

Secondary Outcomes (end points)
Detailed repayment indicators:
-Tank repossessed
-Ever late on a monthly payment
-Received a pending default letter
-Down payment reclaimed
-Failed to complete full repayment by end of contract period
-Total amount outstanding at end of contract period
-Months late to complete repayment
-Repaid early
-Months early

Water storage and usage:
-Number of water tanks owned
-Total water storage capacity
-Piped water usage (meter readings)

Real impacts on dairy production:
-Self-reported daily milk production
-Monthly milk sales to Nyala Dairy MPCS
-At least one cow got sick
-Estimated per-contract SACCO profits
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Sampling: Our sample will consist of dairy farmers who delivered an average of 25 - 2,000 kgs of milk per month to Nyala Dairy from January to March, 2022. This results in a sample of 9,203 dairy members, 72% of all active Nyala producers over the period. We remove members with average monthly milk deliveries less than 25 kgs because this is the approximate amount necessary to pay the full tank price within three years using milk earnings alone. We further remove large producers and producers that are evidently not households (e.g. schools) to focus our analysis on smallholder farming households.

Randomization: Members will be randomized into 5 main treatment arms: Control (12.5%), Layaway (12.5%), 2-year ACL (25%), 3-year ACL (25%), and Hybrid (25%). The price of the water tank offered to each member will also be randomly assigned. Both randomizations will be stratified by the nearest Nyala Vision SACCO branch and milk production quartile.

Baseline Survey: Eligible dairy farmers will then be approached for a baseline survey, which will be conducted either at their homes. The survey will collect information on demographics, farming practices and milk production, asset ownership, water access and storage, time use, health outcomes, and social groups. At the end of the survey, treated farmers will be given information on the terms of the four possible contracts and told that they may be offered a discount. They will be invited to visit their local SACCO branch within the three months to register for a contract. Members will not be told at this stage which contract or price they will be offered.

Loan Approval: The research team will share the ID numbers of all members interested in purchasing a water tank with Nyala Vision SACCO. Nyala will not be informed of the treatment status or given any individual-level survey data. Nyala will then choose whether or not to approve each member for a two-year loan contract. Approved members will be our main sample for this analysis.

Becker-DeGroot-Marschak (BDM) Elicitation: When approved members visit the SACCO branch to register for a contract, a surveyor will administer a Becker, DeGroot and Marschak (1964) preference elicitation. Farmers will be asked if they would like to take out each contract at various prices, ranging from the retail price down to zero. Then, the surveyor will then reveal the true randomly selected contract offer and price. If the farmer’s stated willingness-to-pay for the randomly-assigned contract was as least as high as the price drawn, the farmer will be given the contract for that price. Otherwise, the farmer will not be given a financing contract. Until the price is revealed, neither the potential borrower nor the surveyor will know the contract or price assigned.

Administration: Nyala Vision SACCO will administer contracts to those who took them out during the BDM elicitation, and they will collect administrative data on repayment that will be used as outcome data. During tank installation, a subset of households connected to piped water will be fitted with a water meter, which will collect data on piped water usage.

Endline Survey: IPA will collect an endline survey to gather data on outcomes including water tank ownership, storage capacity, milk production, and related outcomes.
Experimental Design Details
Not available
Randomization Method
Public lottery, randomization done in office by a computer, coin flip, etc.
Randomization done in office by a computer
Randomization Unit
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
9,220 dairy farmers
Sample size: planned number of observations
9,220 dairy farmers
Sample size (or number of clusters) by treatment arms
1,131 control
1,152 layaway
2,307 2-year ACL
2,296 3-year ACL
2,317 hybrid layaway-ACL
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
Harvard University-Area Committee on the Use of Human Subjects
IRB Approval Date
IRB Approval Number
IRB Name
Maseno University Ethics Review Committee
IRB Approval Date
IRB Approval Number