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How an upstart payments idea is driving African climate action

Pay-as-you-go (PAYG) is much overlooked but taking on mighty king cash and winning for the green economy across the continent

Hello – what do solar panels, irrigation systems, cookstoves and e-bikes have in common? 

They and many more green products can all run on the same payment system. And increasingly they do.

A little appreciated business model is at the heart of Africa’s green economy. It solves one of the continent's trickiest problems: A lack of cash that previously slowed climate action. 

Investors are flocking to it. They see an area where Africa is at the forefront of innovation.

Today’s reading time: 4 mins

LOGISTICS UPDATE | Thursday 30 May


📆 Rwanda hosts gathering to reimagine African agriculture (Jun 11)

📆 Sustainable African vaccine manufacture event in Kenya (Jun 27)

📆 Tanzania hosts PowerTech Africa 2024 conference (Jun 10)


💼 Shift EV seeks a head of supply chain (Egypt)

💼 Programme Assistant vacancy at UNDP (Angola)

💼 AfDB seeks lead energy industry specialist (Ivory Coast)

1.🚁 Heli view: Watch Africa’s next leapfrog

Climate action in Africa will no doubt require some heavy lifts. Take the hundreds of billions of dollars (!) that are projected for green hydrogen on the continent over the coming decades. 

  • But sometimes it’s the little things that make the real difference – and happen much faster. One of them is the Pay-as-you-go (PAYG) innovation, nay revolution.  

Head on: The problem it solves is an obvious one. Many Africans do not have enough capital to switch to cleaner and greener ways.

  • Individuals struggle to buy solar panels or clean cookstoves.

  • Few companies have upfront cash for electric vehicles or irrigation systems powered with renewable energy.

  • Plenty of climate solutions exist – but they’re not given away for free. 

Enter PAYG: What started as a workaround to onboard a few extra customers who lacked capital – has now become the single most popular innovation in the climate sector. 

How it works: PAYG is simple but was unthinkable at scale a decade ago. 

  • A provider of capital goods such as a company selling solar panels allows customers to pay in instalments rather than upfront. So far, so familiar. 

  • The difference is that the solar kit includes an off-switch linked to the mobile network that the provider can flick remotely if a customer fails to make payments. 

  • Thus customers’ equity in a device is frozen – unless and until they pay. Keeping devices on turns out to be an incredibly strong motivator to pay. 

  • Thus was born “pay as you go”, where delays in payment, due to common cashflow shortages in Africa, do not result in automatic default but merely a pause in service. 

The unlock: PAYG builds on the success of mobile phones as well as mobile money. 

  • Customers can make instant payments from their phones. 

  • And providers manage access to the half-paid devices online.

  • This became possible when Africans widely adopted mobile tech. 

Corporate interest: The solar sector is a major beneficiary. Before PAYG, solar customers had to pay for years' worth of energy upfront.

  • “By introducing PAYG – and creating the technology to enable it – we were able to make solar power affordable,” said Mansoor Hamayun, CEO of Bboxx, a solar kit provider.

  • Clean cooking is another popular application. Few households can afford a complete refill of clean gas bottles at an up-front cost of $20. 

  • PAYG allows them to pay only for the amount of gas used.

The impact: PAYG now represents 37% of global solar kit sales. Last year, 1.7 million new PAYG kits were installed, worth $200 million, avoiding more than 100 million metric tons of CO2.

  • Sun King has doubled installations in two years, with most of its 23 million customers opting for PAYG. 

More funding: The success of PAYG has unlocked capital, drawing in investors. Two of the highest funded African startups, M-Kopa and Sun King, rely on the system.

  • PAYG combines impact, profitability and risk diversification, said Patrick Walsh, CEO of Sun King. 

  • Repayment rates for the $900 million of credit it extended to customers is unusually high. 

  • And the simplicity of a system relying on mobile infrastructure makes for fast deployment and scaling.  

  • “Mobilising capital had been difficult. But with a strong track record, we’re starting to see capital flow into the PAYG energy market in Africa,” said the BBoxx CEO. 

Challenges ahead: There are a few hurdles to overcome. 

  • “The locking mechanism may be tempered with by users who want to bypass payment,” said Max Garnick, an independent consultant. “Network accessibility in rural areas can also be challenging.” 

  • “Varying regulatory frameworks across countries can complicate implementation,” said Tonye Irims, CEO of WiSolar, a provider. “Companies must navigate local laws related to financial services, energy provision and consumer protection.”

Future plans: The vibe in the sector though is upbeat. The Bboxx CEO said, “There is almost unlimited scope to expand this into other markets.”

2. Cheat sheet: Seven green reasons to pay as you go 

(i) Mobility: Electric bikes are increasingly popular PAYG products. Electric buses are also sold on a “pay as you drive” basis. 

(ii) Batteries: Where grids are dirty or non-existent, many more can now afford to store energy.

(iii) Solar: The most common PAYG systems are home solar packages providing basic lighting and mobile phone charging. 

(iv) Clean cooking: Smart gas valves attach to the top of LPG cylinders and allow customers to pay as they cook.

(v) Agriculture: Solar-powered water pumps for irrigation via PAYG rent-to-own models have widened access to clean tech.

(vi) Circular economy: ENGIE aims to offer bio-digesters on PAYG to convert waste into biogas and fertiliser.

(vii) Green industrialisation: The next wave of PAYG innovation is expected to be in industrial applications such as cooling systems. 

3. Number of the week

… is the amount that South Africa plans to invest in its transition from coal to renewable energy. Key components of the plan include reskilling coal workers to prepare them for employment in emerging sectors and fostering the development of new industries.

4. Network corner

👉 BasiGo CEO Jit Bhattacharya met President Biden at White House

👉 Standard Bank and MiDA Advisors partner with Acorn Holdings to provide green housing in Kenya

  • Regulation: Kenya's new Finance Bill threatens e-mobility growth. It proposes a 10% excise duty and a minimum specific tax of $99 on electric motorcycles and $5.7 per kg for batteries.

  • AfDB: Africa’s economy loses between $7 billion and $15 billion annually to climate change. This is due to the adverse effects of floods and droughts despite the fact that Africa’s emissions account for less than 4% of the global emissions. If not addressed the losses could increase to $40 billion by 2030.

  • Construction: FirstRand South Africa receives $250 million from the IFC for green housing. The funding includes up to $200 million directly from the IFC and the rest from the Managed Co-Lending Portfolio Program. 

  • Bio-pioneer: South African State Bank plans to launch its inaugural biodiversity fund. It will initially receive 50 million rand ($2.7 million) in seed capital from the DBSA’s Green Fund and aim to secure further financing.

  • Power sharing: Ethiopia earns $78.5 million from power exports. It generated 15,000 gigawatt hours in recent nine month period and exported a portion to Djibouti, Kenya and Sudan.

  • Industrialisation: Botswana EV startup Giyani secures $26 million investment for batteries. The company has a unique process to produce high-purity manganese sulphate monohydrate, essential for lithium-ion battery cathodes used in electric vehicles.

Don’t have time to read 100+ media sources and reports every day? We’ve done the reading for you. Check out our full monitoring here.  

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