Increasing Clean Energy Access through Digital Finance
Digital Finance “plus” is the use of mobile money and branchless banking to make basic, essential services and utilities - in energy, health, education, and water, for example - more accessible to people at the base of the economic pyramid. Here finance is not an end itself but a means to help solve significant development challenges in order to improve the lives of the poor. Through a series of video interviews and an animation, this blog series introduces the concept of Digital Finance Plus and highlights some of the innovative companies and individuals working in this space.
Recently we spoke with Victoria Arch from Angaza Design via Google Hangout about her company’s innovative approach to pay-as-you-go financing for solar lamps in East Africa. "Angaza, when you boil it down, is really in the business of financing…we are a payments company for solar products through the pay-as-you-go technology," Victoria explained when we chatted earlier. "Instead of trying to drive down the price of our devices or strip down functionalities to make the lamps as cheap as possible, we took a step back and decided that we could innovate on the financing side…so now with our technology we can sell a high quality solar lamp that would normally retail for over $40 for just a couple of dollars up front, which makes them affordable to pretty much everyone."
Angaza is one of the many businesses we’ve identified as part of our work on Digital Finance Plus - the use of financial innovation to help solve big development challenges, such as access to electricity for poor households. We estimate that at least 300 million people across Africa have no access to electricity but could be reached through businesses that use digital finance to make solar technology more affordable.
There are a number of businesses like Angaza, including M-Kopa, Mobisol, Simpa, Econet Solar and others in a number of countries. Some of these companies , like M-Kopa and Mobisol, embed SIM cards in their devices, while others, like Angaza, Simpa and Econet solar do not. Currently, poor people have few options beyond inefficient and costly fuel-based lighting sources such as kerosene lamps. Angaza and its competitors are trying to change this by offering solar lamps at a fraction of the cost of kerosene. They can do this by giving people the option to pay-as-you-go in small increments through digital finance channels.
Kabir Kumar and Camilo Tellez-Merchan are both with CGAP's Technology and Business Models Innovation Team. They are leading CGAP's work on Digital Finance Plus.
Let us know what you think in the comments, or tweet us @CGAP with #dfplus.