Box 3. Pay as you go and M-Kopa Solar Kenya was a conducive environment for the adoption and phone every time they use the electricity generated. proliferation of pay-as-you-go solar—off-grid photovoltaic Providers can turn the service off if the user misses a systems coupled with connectivity or IT-enabled payment payment. This maximizes repayment and minimizes systems. M-Kopa Solar pay-as-you-go solar panels collection costs. Without the ability to collect payments can power lighting, mobile phone charging, radio and, for each use, providers would not be able to ensure that digital TV. use matched payment. Particularly in rural areas that The M-Kopa model piggybacks on the country’s already tend to be off-grid, collection costs would be very high. well-established mobile-money system. It works through Digital collection, though, is instantaneous and cheap. the mobile-money provider M-Pesa, which is owned by As of July 2016, M-Kopa Solar had connected more than Safaricom, the country’s leading telecoms provider. By 375,000 homes to affordable solar power in East Africa, the end of 2015, nearly 70 percent of Kenyan adults were and current customers are projected to save $280 million active users of M-Pesa mobile-money services. over the next four years by using M-Kopa Solar instead of 1 buying kerosene. In the M-Kopa model, consumers put down a small deposit for the solar panel and pay per use via a mobile 1 M-Kopa Solar website, http://solar.m-kopa.com/about/our-impact/ Digital payments enable e-commerce and on-demand services to thrive More than Digital payments can also enable the growth of e-commerce channels and “sharing 11M economy” markets such as ride sharing and employment matching. rides a day through The developing world is increasingly home to success stories that replicate those of significant players in advanced economies. In e-commerce, Alibaba is now the world’s Chinese ride- largest retailer by gross merchandise value, ahead of both Wal-Mart and Amazon. By sharing platform aggregating sales from large numbers of sellers, these e-commerce platforms are able to improve choice for their customers dramatically even while reducing the prices of the items they sell. Sharing economy and on-demand services are also growing rapidly in emerging economies, mirroring the trajectory of these markets in advanced economies. One example of a rapidly growing ride-sharing platform is China’s Didi Chuxing, which is now the world’s largest mobile transportation platform. More than 11 million rides a day are completed in over 400 cities. Uber has sold its Chinese business to Didi Chuxing. ••• Digital technologies, starting with the mobile phone, have the power to transform finance in developing economies, giving access to finance to many more people and extending the reach for financial-services providers. The cost of providing those services can be dramatically lower if done digitally. As more users join the digital finance network, economies of scale kick in and costs fall even further, a virtuous cycle. Finally, digital enables new business models, creating more service options for customers and additional potential revenue sources for financial-services providers and other businesses. When all elements are working in concert, penetration can lift off rapidly, as we have already seen in several emerging economies. How big could the economic benefits be, for individual countries and for the global economy? In the next chapter, we quantify the significant impact that a comprehensive adoption of digital finance could bring, to individuals, companies, finance providers, and governments. McKinsey Global Institute Digital finance for all: Powering inclusive growth in emerging economies 41