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Pay-As-You-Go for African Development

Innovative PAYGo business models are not only lucrative for the firms that adopt them; they have the potential to improve the lives of millions of Africans, beginning with the neediest rural communities. African policymakers should focus on ensuring that this potential is fulfilled.

LOMÉ – The rise of digital pay-as-you-go (PAYGo) services in Africa is cause for celebration. By enabling low-income populations, both rural and urban, to access the goods and services they need not only to survive (food, water, and shelter), but also to thrive (education, health care, and income-generating assets), the PAYGo business model can significantly improve their quality of life. In fact, with enough support, PAYGo models can revolutionize the provision of goods and services, thereby spurring inclusive development.

Digital PAYGo models take advantage of machine-to-machine communication and sensor technology to allow companies to track usage, lock or unlock their assets, and access relevant data remotely. This, together with flexible pricing mechanisms, makes it possible for firms to offer goods and services to consumers with limited capital and variable income flows, bringing immediate improvements in living standards.

For example, by lowering the upfront cost of agricultural machinery, mills, and irrigation systems, PAYGo models can enable farmers to increase their productivity and, in turn, their incomes. To that end, the Nigerian start-up Hello Tractor, in partnership with global tractor manufacturer John Deere, has created a program that gives small farmers in Nigeria, Kenya, and Mozambique on-demand access to the company’s equipment.