Driving formal financial inclusion and expanding energy access have traditionally been considered separate development and profitability objectives. However, this may be ripe for change, thanks to the improved distribution and financing options presented by off-grid solar. Many of those accessing solar energy for the first time are using informal means of credit. This greater energy access provides additional opportunities.
However, selling financed assets that are paid for more than 12 to 24 months, requires a cheap source of lendable funds. Unlike banks that fund their loan portfolios through cheap customer deposits, the reach and impact of these solar PAYGo companies is often limited by the investor or shareholder capital.
We, therefore, have a situation in which a group of companies that are proficient in reaching and servicing a large subset of underserved customers is limited in the type of service they can offer. On the other hand, banks that can offer a wider range of services to the same customers do not have the infrastructure and knowhow to sustainably reach them.
Full article: Daily Monitor