Using Solar Home System Customer Insights, Pawame Pilots Educational Loans
Since Pawame was founded in 2016, it has been driven by the idea that energy is just the beginning. We’ve known for a long time that our solar home systems can have a transformative development impact in the lives of our customers; and we’re proud of the fumes from kerosene that we’ve saved, the hours we’ve provided for study, and the additional revenue we’ve helped to generate by lighting shops and stalls into the evening. But, as we’ve grown and developed our corporate strategy, it has become clear that we can make an even bigger impact — above and beyond energy.
We use proprietary machine-learning software to understand our customers through their repayment behaviors and other survey data, then we use these insights to offer product financing and loans above and beyond home solar. When we began to notice that repayment dipped seasonally, around the time school fees were due, we understood that there was a real need to offer micro-loans to cover the cost of school fees as one of these life-enhancing loan services.
Access to quality education, a UN Sustainable Development Goal, remains one of the most powerful ways to transform a life, a community and a country. Education reduces birth rates, primes a workforce for innovation, and has even been cited as one of the most powerful strategies for climate change mitigation. But, school fees, even for government schools, in Kenya are high as compared to the average monthly income in rural areas. For many families, school fees are their largest expenses all year. Even more challenging, they are due in lump sums at the beginning of terms, proving an insurmountable out-of-pocket cost for many families. Every January, May and September, families face this lumpy expense and children cannot return to school until fees are paid, which causes a disruption in their education, and to the progress of the class in general.
After months of careful planning, we’re very proud that, beginning last week, we offered our first school loans.
We are currently in a pilot phase to understand the feasibility of this offering, but all of the initial feedback has been overwhelmingly positive. We began by offering the loans to a small group of customers with high repayment rates, who eagerly took advantage of the opportunity. Nearly one-third of the customers we contacted chose to purchase the loan. Though it’s early, repayment has been high and we are optimistic that we’ll be able to offer this to our customers who have built strong credit through timely payment on their solar home system.
We also have reason to believe that this offering will incentivize better repayment, create more financial resiliency, and will enforce financial literacy across our customer base. Since the pilot launched, our Customer Care team has fielded several calls from customers who didn’t qualify for the initial pilot, but who are interested in the loans. These customers now have a clear incentive for timely repayment, and Pawame can easily point to this loan to explain how building credit works. Customers who do benefit from the loans will no longer have large, lumpy expenses, which affect their ability to make payments on their Pawame products.
We’re proud of the social impact of this loan, but are also keenly aware of the business potential for Pawame as we are focusing on achieving cash flow break even. It could end up being a lucrative financial product for us — a real win-win.
We’re excited to analyze and understand the results from the pilot and hope to commercially scale-up the offering later this year.
