• In August 2016, Microcred Senegal and Baobab+, a new brand launched by the Microcred Group, debuted a payment option for solar lamps, called “Pay-As-You-Go” (PAYG).
• The impact of solar-powered lighting is enormous — one Senegalese school experienced an improvement in the end of year exam success rate from 30% the previous year to 92% in 2016.
• In only 2 months, more than 350 homes in Senegal have been equipped with a PAYG Solar Home System.
• PAYG is a means to financial inclusion for clients who otherwise would not even be eligible for microloans.

PAYG enables the sale of a range of solar-powered lighting solutions to populations for whom it would otherwise be too expensive. Currently, PAYG is being piloted in St. Louis, Ziguinchor and now also in Kaolack, Senegal. In Senegal, access to electricity is only 28% in rural areas and even where the grid does reach the village, there are frequent electricity outages. Furthermore, only 9.4% of adults in rural areas have a bank account; 9 million Senegalese live in a commune with no bank and 4.3 million with no microfinance institution.

To respond to this gap in services, Baobab+ has coupled sustainable lighting solutions with financial products in order to meet numerous needs in rural areas. The solar lamps not only light up homes and shops in the evenings and enable adults and school children to be productive for more hours of the day, but they also cost less overall than the constant purchase of candles and fuel for lanterns. Another important advantage, is that solar lamps are much safer and reduce the risk of homes catching on fire.

Recently, the Baobab+ team spent 2 days presenting the solar lighting solutions to new prospective rural clients in the Kaolack region and activating their solar lamps. In the village of Guague Cherif, the local school had received 70 portable solar lamps to support around 200 students in preparing for their exams and studying in the evenings. These lamps were provided through a special program called, “Baobab+ Solidaire” and its “Buy One Give One” model. The students range from 7–14 years old. All of the students live in a village that does not have access to electricity, where it is generally dark starting at around 6 or 7pm, leaving another 3 hours of time where people are generally active spent in the dark.

As a result of the students having access to solar lamps, the end of year exam success rate went from 30% the previous year to 92% in 2016! This is an enormous success and the entire village from the chief to the parents were beaming with pride when they announced this news to the Baobab+ team. As a result, the regional school director has asked what the secret to success was and some of the other teachers and parents had already purchased a solar home system using the PAYG plan.

By the end of the presentation, 5 clients including teachers and parents, were eager to sign up for the PAYG plan to purchase their first solar home system, consisting of a rechargeable battery that has a USB port for mobile phone charging, a solar panel and 3 interconnected lamps with individual switches.

So how does PAYG actually work?

At the base of the pay-as-you-go idea is an understanding that people with low and/or irregular incomes need flexible payment plans in order to make important purchases. Another crucial aspect of the PAYG technology, is that the product purchased is controlled to allow the use of the product for as much as the client has paid. The Angaza platform used by Baobab+ also enables the team to track payments, monitor the portfolio at risk and map the location of clients.

Here’s how it works in the case of Baobab+ PAYG solar products:

1. The client pays a small deposit (around 10% of the total price of the product)
2. The solar battery is activated for 7 days.
3. In order to keep using the product after 7 days, the client can make payments whenever they want to use the product and the payments accumulate until the client owns the solar lamp.

The success of PAYG is based on the fact that clients can manage their payments however they want. If they decide to make daily payments, they could pay from 170–250 FCFA (0.25–0.38 EUR) per day for 6–11 months until they own the product depending on the solar lamp they choose. In addition, clients can use Microcred’s Baobab network to make their payments. Today, more than 350 homes in Senegal are equipped with a PAYG Solar Home System.

Through PAYG, clients who were previously too risky even for microfinance institutions to lend to, can become eligible for more financial services and products. In the future, once the clients own their solar lamps, their payment history can be used to calculate their eligibility for nano loans or their solar lamp could be used as a guarantee for other loan products from Microcred.

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