FinDev Guide

Gateway Guide to Pay-As-You-Go Financing for Basic Services

Learn more about this innovative business model which is helping low-income customers access electricity, water and cooking fuel
Gathering water, Vietnam. Photo by Thang Nguyen Duc, 2015 CGAP Photo Contest.

Around the world, 800 million people still lack access to electricity. Close to 3 billion still rely on inefficient and polluting cooking systems. And 785 million lack even a basic drinking water service. The Sustainable Development Goals for clean water and sanitation and affordable and clean energy aim to address these problems, setting targets and indicators for each of these basic services. 

A key piece of the puzzle to making progress on these targets is figuring out how to finance these services - both for infrastructure installation and ongoing service payments. Pay-as-you-go (PAYGo) financing is a growing business model that shows great potential to help more low-income people access basic services. The model varies depending on the service and the equipment needed for a household to access that service, but essentially it offers customers a way to set up a utility such as solar power, a water connection or a clean cookstove, and pay for the equipment and their ongoing usage as they go, instead of having to pay a large up-front cost. Since customers don't put up collateral, companies incentivize repayment by using technology that can automatically turn off the service if customers don't make their payments.

So far, most progress with PAYGo financing has been made with off-grid solar power, and in fact FinDev Gateway now hosts a community of practice, PAYGo PERFORM, dedicated to developing a reporting framework and key performance indicators for the PAYGo solar industry. However, other sectors, including water and cooking fuel, are starting to explore this model as well. 

In this Gateway Guide, we share with you our latest FinDev Gateway resources on PAYGo financing for basic services. You can learn more about this business model through recent webinars and blog posts by professionals working in the field, as well as several publications which explore the challenges and opportunities experienced thus far.


WEBINAR: Key Performance Indicators for PAYGo PERFORM: How Far We Have Come

This webinar shares progress-to-date made by three PAYGo PERFORM working groups and tackles outstanding challenges for getting to the next version of its Key Performance Indicator framework.

BLOG: How PAYGo Solar Companies Can Shine for Investors

To attract larger-scale investment, pay-as-you-go solar needs to grow up and standardize

PUBLICATION: Taming the Strange Beasts: Servicing and the Future of PAYGo

How can PAYGo solar companies expect and prepare for service failures?

PUBLICATION: Strange Beasts: Making Sense of PAYGo Solar Business Models

Guidance on financial analysis of companies that fuse manufacturing, retail and finance

PUBLICATION: Escaping Darkness: Understanding Consumer Value in PAYGo Solar

In-depth discussions with customers on purchase decisions, value assessments and cash flow patterns

PUBLICATION: Digitally Financed Energy: How Off-Grid Solar Providers Leverage Digital Payments and Drive Financial Inclusion

Explaining how digital finance is enabling pay-as-you-go energy expansion


BLOG: Making Clean Cooking Affordable

How innovative consumer financing catalyzes clean cooking in developing countries

WEBINAR: Innovative Consumer Financing for Cooking Energy Access

This webinar explores various consumer financing approaches for expanding access to clean cooking fuels for household energy, including microfinance, pay-as-you-cook and digital finance.

BLOG: Why Decided to Forego MFI Partnerships

Biogas system producer shares its five steps to building an asset-based financing program


BLOG: Productive Versus Consumption Loans: A Distinction That Hurts Rather Than Helps explains why water and sanitation loans have high repayment rates and should be prioritized by MFIs, and makes a call to all microfinance professionals to reject the misguided labeling of loans as either productive or for consumption only.

PUBLICATION: Testing the Waters: Digital Payments for Water and Sanitation

Outlining the benefits of digital payments on water supply and sanitation sector

PUBLICATION: Smart Meters to Enhance Access to Water Services in Rural Africa

Addressing the three important challenges that limit the provision of basic utilities to the poor

Do you have experience with PAYGo financing for basic services, or do you know of other resources on this topic? We invite you to share your resources and experiences in the comments below.


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15 January 2020


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