Consumer Financing Brief 2024
This Brief provides a summary of consumer financing models and practices within the off-grid energy sector.
In collaboration with GOGLA and with funding from the Consumer Protection Programme, 60 Decibels designed and distributed an online survey targeting off-grid energy companies that offer consumer financing. Our goal is to deliver valuable insights to the industry by providing insights on key practices.
The insights are based on online survey data from 59 participating companies: 52 from Sub-Saharan Africa and 8 from other regions, including Asia, Oceania, Latin America, and North America. Additionally, companies had the option to share PAYGo PERFORM KPI data, with 39 companies completing this section of the survey. Learn more about PAYGo PERFORM, including full indicator definitions, here.
Key Insights
3 in 5 companies either do not provide or only offer basic training on understanding consumer financial vulnerability and mitigating the risks of financially overburdening consumers, to sales and other consumer-facing staff who are responsible for assessing customer ability to pay. Implementing more comprehensive training could improve portfolio quality and lead to higher repayment rates.
2 in 5 companies do not conduct phone calls or in-person visits during and after the sales process to ensure that consumers understand the key terms and conditions of the payment plan. Delivering this could enhance consumer understanding of their contracts and lead to better payment rates.
The three most common credit approval practices among companies are collecting down payments, conducting the credit process in the field, and using customer information to assign a credit score.
Three-quarters of companies offer payment flexibility to their customers. Many of these companies do this on a case-by-case basis.
Two-thirds of companies employ system locking when customers miss payments, often using automated processes. Unlocking usually requires customers to meet specific payment criteria, which can range from making a minimal payment to paying off all outstanding arrears. The criteria for both locking and unlocking systems vary by company, with some offering more flexible terms.
9 in 10 companies repossess the energy product or service if the customer fails to make payments or meet other conditions.
While 65% of customers complete their loans within the contracted term, a third require additional effort, such as reminders, follow ups, or loan restructuring. We recognize that companies and the sector are striving to improve this completion rate. We hope our data and insights will support these efforts, benefiting companies, investors, and ultimately customers and their families.
More Insights
This Brief complements the 60 Decibels Consumer Protection Report where we conducted analysis of our data listening to customers about their experiences of key GOGLA Consumer Protection Principles in practice. Read the report here.
The 60 Decibels Why Off-Grid Energy Matters 2024 report also contains insights on the profiles, experiences, and impact on customers, including aspects around consumer financing, over-indebtedness, the introduction of the Consumer Protection Score, and more.