How digital services are aiding rural poverty war

Digital services are driving financial inclusion in rural areas in Kenya and across Africa. FILE PHOTO | NMG 

By FAUSTINE NGILA
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Digital technologies that enable access of vital utilities such as water and electricity are gradually transforming lives of rural dwellers, with a new report saying such services have the potential to
reduce poverty.

The report says increased digital inclusion has seen water and electricity top the list of Pay on Demand services that are adding value to the life of ordinary Kenyans.

The study by global payments company, MasterCard reveals that Pay on Demand is proving to be an ideal resource in reaching out to underserved population and helping them embark on a path towards financial inclusion, while gaining access to products that improve livelihoods and create income-generating opportunities.

The report, ‘‘Pay on Demand: The digital path to financial inclusion in Africa’’, is based on research from in-depth face-to-face interviews cross Kenya, Uganda and Nigeria.

It examines the impact that Pay on Demand has on the end users who may be making small payments daily and are realising the benefits of products and services such as electricity, water, smartphones and television.

For Kenyans, the service is changing lives by ensuring there is light in every room, phones can be charged at home, and keeping radio and TV powered. A charged smartphone means the ability to access valuable information on the internet.

“Pay on Demand is a business model that gives people the ability to pay only for what they use, as they need it, and this is lifting millions of people across Africa,” says the report.

The model gives customers the flexibility to pay for services on terms that work for them — paying daily or monthly — and allowing providers to lend confidently.

The report also explores how digital inclusion has been proven to provide better access to financial and other services. In turn, financial inclusion drives improved economic possibilities for individuals and businesses.

“The growth of digital technology has presented Africa with access to innovative, affordable solutions that help them meet their basic needs, ultimately leading to greater access to capital that can scale businesses and boost prosperity,” Jorn Lambert, Executive Vice President, Digital Solutions, MasterCard, told Digital Business.

However, for these solutions to function effectively, it is critical that all stakeholders — governments, Mobile Network Operators (MNOs), financial service companies and regulators — come together to unlock opportunities to enable greater financial inclusion.

“To further scale the model effectively and create a digital economy that works for everyone, key players in the ecosystem must collaborate to drive a new wave of inclusion through connectivity and smart devices,” he added.

“With the expansion of Pay on Demand to any connected device like smartphones, water filters or white goods, we have a real opportunity to positively impact the lives of a billion people, in the same way the telecoms industry did two decades ago.”

According to Greenlight Planet’s business development director for Africa Patrick Muriuki, offering off-grid solar solutions has considerably changed lives of rural dwellers.

“We have 7,000 sales agents across Kenya who were initially consumers. They now make additional income by selling and servicing products within their communities,” says Mr Muriuki.

Jenifer Achieng, a 66-year-old resident of Kabonyo village, Kisumu County, for instance, says access to off-grid power has transformed her life.

“Initially I used to spend a lot of money buying kerosene for my lantern. But now my grandchildren, now, enjoy doing homework at night before retiring to bed. Solar-powered lighting is reliable,” she says.

Technology and connectivity enabled by MNOs, according to the MasterCard report, have made digital inclusion possible in the three countries surveyed.

“Mobile devices became a viable instrument of digital inclusion when prepaid plans allowed individuals to recharge for as low as Sh10 at a time. Currently, prepaid connections are at 98.8 percent in Kenya, 97.5 percent in Nigeria, and 99.1 percent in Uganda with smartphone penetration in Africa projected to reach 66 percent by 2025, up from 3 6percent in 2018,” the report reveals.

Pay on Demand applies the same principle for goods ranging from mobile phones to solar panels, water filters or laundry machines.

The model, often underpinned by the Internet of Things (IoT), further bridges the ownership divide by providing affordable services and assets, driving the next wave of inclusion by keeping people connected.

These innovations can be the difference between being able to switch on electric lights at home, and an entire family living with paraffin fumes from a single lamp.

The need for off-grid solar lighting products is particularly prominent in Sub-Saharan Africa. Sales of off-grid solar lighting products topped 2.25 million (937,618 through Pay on Demand) across the region between January and June 2019, higher than any other region in the world.

In all three countries surveyed, access to basic necessities was the number one driver of Pay on Demand use, with electricity a priority for all users.

The main aspirational products acquired through Pay on Demand were digital TVs, followed by smartphones.

“These assets are vital to connecting people to the larger world, whether it is by powering electric devices or having internet access so a child can do their homework,” the report says.