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

Mamadou Saliou Barry and Anna Creti
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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

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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.

Keywords: Electricity access; Africa; Household saving (search for similar items in EconPapers)
Date: 2020
Note: View the original document on HAL open archive server: https://hal.science/hal-03148505v1
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Citations: View citations in EconPapers (3)

Published in Energy Economics, 2020, 90 (August 2020), ⟨10.1016/j.eneco.2020.104843⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03148505

DOI: 10.1016/j.eneco.2020.104843

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