Can Pay-As-You-Go, digitally enabled business 2 models support sustainability transformations in 3 developing countries? Outstanding questions and a 4 theoretical basis for future research 5

: This paper examines the rapidly emerging and rapidly changing phenomenon of pay-as-you-go (PAYG) digitally enabled business models, which have had significant early success 15 in providing poor people with access to SDG relevant technologies (e.g. for electricity access, water 16 and sanitation and agricultural irrigation). Data is analysed based on literature review, two 17 stakeholder workshops (or “transformation labs”) and stakeholder interviews (engaging 41 18 stakeholders in total). This demonstrates the existing literature on PAYG is patchy at best, with no 19 comprehensive or longitudinal, and very little theoretically grounded, research to date. The paper 20 contributes to existing research on PAYG and sustainability transformations more broadly in two 21 key ways. Firstly, it articulates a range of questions that remain to be answered in order to 22 understand and deliver against the current and potential contribution of PAYG to effecting 23 sustainability transformations (the latter we define as achieving environmental sustainability and 24 social justice). These questions focus at three levels: national contexts for fostering innovation and 25 technology uptake; the daily lives of poor and marginalised women and men, and; global political 26 economies and value accumulation. Secondly, the paper articulates three areas of theory (based on 27 emerging critical social science research on sustainable energy access) that have potential to 28 support future research that might answer these questions, namely: socio-technical innovation 29 system building; social practice, and; global political economy and value chain analysis. Whilst recognising existing tensions between these three areas of theory, we argue that rapid 31 sustainability transformations demand a level of epistemic pragmatism. Such pragmatism, we 32 argue, can be achieved by situating research using any of the above areas of theory within the 33 broader context of Leach et al.’s (2010) Pathways Approach. This allows for exactly the kind of interdisciplinary approach, based on a commitment to pluralism and the co-production of 35 knowledge, and firmly rooted in a commitment to environmental sustainability and social justice, that the SDGs demand.

increasingly cheaper solar PV to construct PAYG payment plans that come close to replicating 247 existing payments for energy (e.g. kerosene) and practices around purchasing mobile air time or 248 using mobile banking technologies.

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Within the analysis of technical-financial dimensions in the existing literature, four issues in 251 particular tend to be emphasised. Firstly, several authors emphasise the benefits of PAYG over 252 traditional micro-finance based approaches [8,22,23], particularly when targeting lower income 253 households with access to basic energy services [19]. Secondly, the availability of mobile banking 254 services is discussed by several authors as having implications for the viability of PAYG. Whilst 255 attempts have been made by some businesses to overcome this, for example via the use of scratch 256 cards, these have been plagued by logistical limitations relating to making cards available in remote 257 locations and gathering cash from vendors [24]. Zollmann, Waldron [28] note experimentation with 258 other revenue collection approaches, including cash collection and exchange of mobile airtime for 259 solar credit, but find that such approaches suffer from significantly higher cost and coordination 260 issues than mobile banking based PAYG business models.

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A third issue emphasised in the existing literature refers to the difficulties companies face in 263 raising working capital [5,10,19,26,28]. This is due to a range of issues, including the need for long 264 repayment terms and foreign currency risks, a lack of data on customer repayment ability/credit 265 ratings, high transaction costs associated with mobile money and a lack of experience and 266 understanding of PAYG business models by commercial banks within countries of operation. The 267 latter has been hypothesised as one reason why most PAYG companies are foreign owned and 268 headquartered [5] (an important issue in relation to questions of how much local companies and 269 countries are benefiting from PAYG, which comes up in the stakeholder consultation and political 270 economy discussion further below). In light of this, it is not surprising that many PAYG

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One key socio-cultural dimension that is almost completely ignored in the literature to date is explicit, gender focussed research on the ways in which PAYG might impact positively or negatively 302 on gender relations (an issue discussed in more detail further below). Barrie and Cruickshank [9] do 303 mention gender, noting that their respondents reported women being in charge of payments, 304 leading (they report) to men feeling justified in wanting to keep a solar home system, despite 305 payments being defaulted on. Zollmann et al.
[28] also touch on gender, reporting purchase 306 decisions for PAYG as being made by men, despite resistance from their wives whose household 307 budgets are often negatively impacted on by the purchase (including when decisions are made to 308 acquire more assets once the initial solar loan is paid off).

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At multiple points in their detailed analysis, Barrie

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Finally, it is worth noting that the "diffusion of innovations" theory applied by Barrie and 334 Cruickshank [9] does include attending to a notion of the "social". One example of this is their 335 inclusion of the "nature of the social system" as a key analytical variable. But this is then rather 336 crudely described as social systems being either "urban" or "rural", with the implicit assumption of 337 a lack of variability between different socio-cultural attributes within different rural or urban locales.

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They also acknowledge in their discussion that new innovations being different to existing 339 "practices" can be a key factor mitigating against widespread adoption of a new technology. It is 340 interesting, however, that it is the solar home system that they note as matching existing consumer

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The type and number of stakeholders that participated in the two T-Labs are summarized in 408 Tables 1 and 2 (note that private sector participants were all PAYG based businesses, other than one 409 participant who was a lawyer previously involved in drafting relevant legislation).

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Four of the participants in T-Lab 1 also took part in T-Lab 2 and 1 participant in T-Lab 2 was also 442 interviewed. This brings the total number and type of stakeholder consulted through the research to 41 443 (as summarised in Table 4).

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The results of the two T-Labs and the interviews were analysed to identify common themes and 449 group different questions, concerns and insights according to these themes (see Section 4). These

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Based on these three levels, and the broader concern of this paper to consider PAYG within the 516 context of sustainability transformations, we have identified three distinct areas of theory that 517 could provide useful points of departure for framing future, action-oriented research in this field.

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Each of these focuses at the three different levels articulated above and each draws on the nascent,

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sits behind the PAYG story, such hype is arguably understandable. This is especially so given the