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Access to Consumer Finance for Vulnerable Groups: One Size Doesn’t Fit All

 

Consumer finance mechanisms have been instrumental in enabling increased access to off-grid solar (OGS) products. With the total price of a household tier 1 OGS product averaging USD 147 and approximately 40% of Sub-Saharan Africans living on less than USD 1.25 per day, they are prohibitively expensive for many.

Consumer financing mechanisms reduce the upfront cost of these products and require relatively small regular repayments until the cost of the system, plus additional fees such as interest, is paid off . The most well-known consumer finance model in the OGS sector is mobile money enabled pay-as-you-go (PAYGo) but traditional asset financing, financing through microfinance institutions (MFIs), and community-based models, among others, all play a role in supporting consumers to overcome affordability constraints through access to consumer finance.

However, the current coverage of consumer finance models is not universal, and some groups, particularly in vulnerable communities, are left un-or underserved. Despite reducing affordability barriers, 46 million people are still unable to afford OGS products through consumer finance mechanisms.

Additionally, many of the 670 million consumers that are theoretically able to afford OGS products lack the means to access them. Marginalized and vulnerable groups in Sub-Saharan Africa such as women, refugees, and religious minorities often face the greatest challenges in accessing the available consumer finance models due to their social or financial situation.

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