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Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin

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  • Mamadou Saliou Barry

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

  • Anna Creti

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

Abstract

We analyze pay-as-you-go (PAYG) contracts subscribed by 10,120 consumers living in Benin (Sub-Saharan Africa) to purchase solar kits or panels for lighting and charging services. PAYG are flexible loans that allow fees payment through mobile banking. Most of the PAYG consumers live in well electrified areas (Cotonou, Porto Novo, Abomey Calavi, in the coastal zone). By estimating a very simple multinomial logit model, we find that these customers have a high probability to enroll in PAYG contracts. Living in urban and peri-urban areas, they use solar devices to substitute expensive and often unreliable grid electricity services. Consumers located in more periferic and less electrified areas (Savalou) have a low probability to default, as the substitution effect is weaker. Overall, in our case study, PAYG targets credit worthy consumers, in order to decrease the investment risk of the company providing solar devices. These results cast some doubts as to whether PAYG bridges the "last mile" electrification gap.

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  • Mamadou Saliou Barry & Anna Creti, 2020. "Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin," Post-Print hal-03148505, HAL.
    • Handle: RePEc:hal:journl:hal-03148505
    DOI: 10.1016/j.eneco.2020.104843
    Note: View the original document on HAL open archive server: https://hal.science/hal-03148505
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    2. Weisser, Christoph & Lenel, Friederike & Lu, Yao & Kis-Katos, Krisztina & Kneib, Thomas, 2021. "Using solar panels for business purposes: Evidence based on high-frequency power usage data," University of Göttingen Working Papers in Economics 428, University of Goettingen, Department of Economics.
    3. Mukisa, Nicholas & Manitisa, Mele Sikimeti & Nduhuura, Paul & Tugume, Erick & Chalwe, Chanda Karen, 2022. "Solar home systems adoption in Sub-Saharan African countries: Household economic and environmental benefits assessment," Renewable Energy, Elsevier, vol. 189(C), pages 836-852.

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