CGAP Photo by Temilade Adelaja via Communication for Development Ltd. CGAP Photo by Temilade Adelaja via Communication for Development Ltd.


CGAP Photo: Temilade Adelaja via Communication for Development Ltd.
Emmanuel Kahomey attends to a patient in Lagos, Nige-ria. A financed “pay-as-you-go” (PAYGo) off-grid solar system powers his small clinic. “Using PAYGo solar is more economical than using a conventional fuel-powered generator to run the clinic,” he said. CGAP Photo: Temilade Adelaja via Communication for Development Ltd.

In the context of global development, asset finance is about much more than enabling consumers to purchase expensive goods: it’s about helping people to afford the tools they need to improve their lives. Whether it’s a new mobile phone that helps a small business owner to sell her products online and generate income, or a solar home system that lights a family’s home and keeps smoke from other energy sources out of their lungs, the right asset can make a big difference in people’s lives. Traditionally, asset finance has been out of reach for people with low in-comes in emerging markets. However, that is changing thanks to business models emerging in places from Mexico to India. In the resources below, learn about these innovations and what funders, policy makers, and providers can do to harness them for development impact.

What is asset finance and why does it matter for global development?

Asset ownership is important for people’s overall quality of life, ability to generate income, and resilience in the face of shocks. However, many useful assets, from refrigerators to vehicles, are too expensive for low-income households to purchase in cash. To promote asset ownership, some governments and development agencies have set up programs that give poor households important assets such as cows. But funding constraints mean that these asset transfer programs are difficult to scale so as to reach everyone that needs them. Asset finance products like loans and leases help households to spread the cost of asset acquisition over time, allowing them to obtain assets they would otherwise be unable to afford. If scaled responsibly with appropriate consumer protections, new asset finance models could become sustainable pathways to widespread asset ownership in emerging markets. Alongside asset transfer programs, they could potentially narrow the $2.5 trillion annual investment gap for the SDGs.


New asset finance business models are breaking down old barriers to putting life-changing assets into the hands of poor households. But to meaningfully advance SDGs, they’ll need to scale responsibly, and this is where funders can play a role.

CGAP has undertaken a comprehensive review of the available evidence to understand (i) how asset ownership can lead to improvements in well-being for poor households and (ii) whether obtaining an asset through a loan or lease as opposed to a transfer, grant, or outright purchase affects the benefits associated with ownership.

This paper uses research and interviews with customers to understand the value they derive from PAYGo solar, why they decided to purchase it, how they were able to afford and pay for it, and whether they considered the product a “good deal” in the end.

What innovations are making asset finance more accessible to the world’s poor?

From pay-as-you-go business models that leverage digital payments and remote lockout technology to offer flexi-ble financing, to new e-commerce solutions that use financing to reach rural customers, nascent business models are gaining traction in emerging markets. Today, these models are being used to finance everything from low-cost phones to expensive, income-generating assets like tractors. What they have in common is that they use a mix of technology and novel approaches to lending to extend asset finance to households that have traditionally been un-served because they cannot make large upfront payments, lack collateral, or do not have credit histories.

Reading Deck

With the SDGs facing an estimated annual investment gap of $2.5 trillion, innovations in asset financing offer a more sustainable alternative to transfers, with the potential to drive asset ownership at scale.

Without appliances, people cannot make use of electricity. But how can low-income households afford costly electrical appliances? One answer is for utilities to offer consumer financing.

Despite their relatively recent emergence, PAYGo companies are rapidly approaching maturity. These businesses have the chance to reduce the energy poverty gap, drive financial inclusion, and improve the quality of life for millions of people.

Additional resources


Pay-as-you-go (PAYGo) solar has enabled energy access for around 27 million customers. Funders can help PAYGo providers further close the energy access gap — while advancing financial inclusion — by focusing on these priorities for the sector.

Pay-as-you-go (PAYGo) solar financing has electrified the homes of more than 100 million people. What does the available evidence say about its impact on women?

On January 15, 2020, as part of CGAP’s global exploration of innovations in asset finance, we hosted a webinar on pay-as-you-go (PAYGo) smartphone financing featuring PayJoy’s Tom Jahnes.

Pay-as-you-go financing is increasing poor people’s access to life-changing assets beyond home solar systems, from solar-powered water pumps to smartphones.

Despite its tremendous promise, the PAYGo industry is still young and challenging. Entrepreneurs and investors should expect and prepare for some failures. To plan for the future and prepare for unpleasant contingencies, there needs to be more focus on loan servicing in the PAYGo sector.