Encouraging on-time bill payment: A field experiment in East Africa

Last registered on June 17, 2022

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Pre-Trial

Trial Information

General Information

Title

Encouraging on-time bill payment: A field experiment in East Africa

RCT ID

AEARCTR-0009598

Initial registration date

June 15, 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

June 17, 2022, 4:16 PM EDT

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

Locations

Country

Kenya

Region

Primary Investigator

Name

David Fuente

Affiliation

University of South Carolina

Contact Primary Investigator

Other Primary Investigator(s)

PI Name

Joseph Cook

PI Affiliation

Washington State University

Contact Investigator

Additional Trial Information

Status

In development

Start date

2022-06-24

End date

2023-06-30

Keywords

Environment & Energy, Finance & Microfinance

Additional Keywords

municipal water, sanitation, bill payment

JEL code(s)

Q25

Secondary IDs

Q56

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

The World Bank estimates that it will cost approximately USD 100 billion per year to meet the Sustainable Development Goals’ aspirations of ensuring safe and affordable water and sanitation for all by 2030 (Hutton & Varughese, 2016). Donor funds are not sufficient to meet this funding gap, which means funds will need to be secured through tax revenue or user fees (i.e., tariffs). Utilities in low- and middle-income countries charge customers far below the full cost of providing water and sanitation services and tariffs will need to be increased to help finance the infrastructure needed to achieve universal access to water and sanitation services. Even at the relatively low prices utilities charge customers for water and sanitation services, many customers fail to pay their bills on time and have arrears (negative balances) on their accounts. Indeed, it is not uncommon for 40-50% of customers to have balances on their accounts. Reducing arrears and encouraging on-time bill payment is thus an important component of getting utilities in the Global South on the path to financial sustainability. There are several ways in which utilities can encourage customers to pay their bills in a timely manner. This study examines whether one-time arrears (debt) forgiveness can encourage future on-time bill payment.

External Link(s)

Registration Citation

Citation

Cook, Joseph and David Fuente. 2022. "Encouraging on-time bill payment: A field experiment in East Africa." AEA RCT Registry. June 17. https://doi.org/10.1257/rct.9598-1.0

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Experimental Details

Interventions

Intervention(s)

One-time arrears (debt) forgiveness

Intervention Start Date

2022-07-01

Intervention End Date

2022-08-05

Primary Outcomes

Primary Outcomes (end points)

Arrears accumulated over six months, number of positive monthly payments, number of full payments

Primary Outcomes (explanation)

This study has three main outcomes of interest. The first outcome examines the total arrears (debt) accumulated over six months. The second outcome measure is the number of times customers make any payment towards their water bill during the study period. The third outcome indicator measures whether the number of times the customer makes a payment that is greater than or equal to the billed consumption for that month.

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

Randomized arrears debt forgiveness

Experimental Design Details

This study examines whether one-time arrears (debt) forgiveness can encourage future on-time bill payment. In particular, we randomly select 1000 residential customers of a water utility in Sub-Saharan Africa with arrears between 500 and 5000 local currency and forgive their outstanding debt. Customers receive a text message informing them of their eligibility for the debt forgiveness program and a call to obtain their acknowledgment that this is a one-time program. We observe customer bill payment behavior for six months after the experiment.

Randomization Method

Randomization will be conducted in office via Stata 16.1

Randomization Unit

Customer accounts

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

Approximately 1,012 customers in the treatment group. We cannot provide an exact number a priori. The total budget is fixed, but the amount of arrears varies by customer, so the total number of accounts forgiven will depend on the mix of arrears randomly drawn. Our estimate is based on the average arrears in our target group and our total budget.

Sample size: planned number of observations

~1,012 customers (treatment); control group is the remaining customer base that meets eligibility criteria (~40,000)

Sample size (or number of clusters) by treatment arms

~1,012customers (treatment). (Only one treatment arm).

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

This study has three outcome indicators of interest: Arrears accumulated over six months, number of positive monthly payments, number of full payments. The study population has a mean (sd) accumulated arrears of 457 (4534) local currency. With a power of 0.8, the minimum detectable effect (two-sided) is estimated to be 565 local currency with equal-sized treatment and control groups (conservative estimate). The study population made a mean (sd) 2.24 (1.6) payments over the past six months. With a power of 0.8, the minimum detectable effect (two-sided) is estimated to be 0.2 payments with equal-sized treatment and control groups. Finally, the study population made a mean (sd) 1.73 (1.15) full payments over the past six months. With a power of 0.8, the minimum detectable effect (two-sided) is estimated to be 0.15 full payments with equal-sized treatment and control groups.

Supporting Documents and Materials

IRB