Nairobi News

Demand for Pay-as-You-go (PAYgo) financing for products in the East African Market is set to skyrocket in 2022 as more consumers opt for alternative payment solutions as opposed to cash first payment.

The latest data from Angaza, a leading provider of technology for distribution sales and customer management shows despite an increase in demand for sophisticated products like smartphones and TVs, the majority of consumers are unable to pay for these items upfront.

Angaza Customer Success Director Peter Thuo says the Pay-as-you-go model shows great potential to help consumers in emerging markets access products they previously could not afford through flexible payment terms.

“Pay-as-you-go (PAYGo) financing has in the past been used to help more low-income consumers in emerging markets access basic services. We are now seeing a paradigm shift as more middle-income earners are seeking this financing model in a bid to access more sophisticated durable products like smartphones, TVs, Fridges that they cannot pay for upfront,” he said.

The model also supports distribution businesses in selling any product to reflect their consumer bases’ unique needs. With the financing model, consumers who cannot afford to pay for a product upfront can choose to pay a distributor partial, affordable installments over an agreed period of time.

These partial payments are either made until the product is paid off and the consumer owns the product or on a continuous basis. If the consumer cannot make their installment payments, the product automatically shuts down until payment is made.

“This ability to make installment payments on time creates a financial “ladder” of opportunities for consumers to increase their creditworthiness and access opportunities to finance larger, more complex products over time. Smartphones, TVs, laptops, refrigerators, clean stoves, and motorbikes are the most sought-after products for this model,” he said.

This comes as the smartphone market is expected to rise in the near future. Africa’s smartphone market shipments are expected to grow 7.4 percent in 2021, reaching 1.37 billion units, followed by 3.4 percent growth in 2022 and 2023 according to data from the International Data Corporation (IDC).

East Africa’s smartphone adoption is expected to grow by 18 percent from 42 percent to 60 percent in 2025 according to GSMA 2021 Mobile industry.

Furthermore, almost 100 million people gained access to clean cooking between 2015 and 2018, according to the 2021 Clean Cooking Snapshot report.

To increase access to these in-demand products, Angaza has expanded beyond pay-as-you-go (PAYG) solar products.

The firm has partnered with over 25 manufacturers, including Burn Manufacturing, Samsung, NuovoPay and SureChill, to provide distributors with the opportunity to sell clean cookstoves, smartphones, and other transformative products.

To make payments for products safe and convenient for consumers and enable cashless operations for distributors, Angaza has partnered with over 60 mobile money providers across 25 countries.

“The option of mobile money has led to a significant decrease in cash usage over the past few years, enabling consumers to pay at any time, from anywhere while saving distributors the cost of physically collecting payments. We are very excited about distributors’ strong interest in the Angaza platform to get transformative products like smartphones, electronics, and cookstoves into the hands of millions of consumers around the world,” explained Thuo.

Last year the firm received Sh1.3 billion in Series B financing to support efforts to scale customer service and commercial business teams, primarily located in Nairobi, Kenya.