Emerging lessons from the PAYG Bicycles pilot in Zambia

DFID through Frontier Livestreaming Technology (FTL) has partnered with ONYX Connect Zambia, a technology company, to bring enhanced mobility to households of all low income earners in Zambia. DFID is supporting ONYX with grant money provide to access and ownership of bicycles in Zambia through technological and financial innovation. You can read more about the background on this here and here.

With affordability, accessibility and ownership in mind, for this initial trial phase Onyx Connect has bundled technology, financial inclusion, access to energy and communication into a single offer. For as little as $15 (about K160) per month, low income communities are now receiving a packaged mobility comprising;

• BICYCLE with GPS tracker
• Bundled with a Smart Phone
• Helmet
• Solar Pico Light
• Life Insurance — Funeral cover
• Mobile payment solutions

Application of PAYG allows these to be paid for incrementally over up to 24 months. In this way technology can enhance the well-being of communities and provide life changing solutions to poor communities in peri-urban and rural Zambia and Africa. Customers are now able to increase household income by increased mobility and access to markets for their produce for small farmers like milk farmers. Rotational shift workers are able to be productive as they have enough rest between work and family life because they are now able to reach work and home on time, and fishermen and women are able to carry fish to the market throughout the day and increase earnings.

Having kicked off in the last few weeks with workshops with key customer groups we’ve picked up the following points of learning which will guide as we move forwards:

• Lack of cycling experience, especially amongst women, is one initial barrier — at the kick-off workshops with security guards in Lusaka we were surprised at the number of people who have never ridden a Bicycle before. So we need to provide training to first time users of bicycles as we assumed everyone knows how to ride a bicycle. Over 20% of the guards interviewed during the workshop have never ridden a bicycle before and out of that 90% are women. Not only training to use the bicycles but also how to make repair such as changing a tyre or putting air pressure in the tyre etc. And a user guide to riding and enjoying the bicycle.
• There is apparent demand for a quality product — with a touch economic outlook in Zambia, every penny counts for low income earners. But our pilot design has assumed that a quality, higher cost, product would be necessary to support a PAYG model and that bicycles made for the African environment such as Buffalo would be needed. But given the costs we were worried about the affordability. So we have been pleasantly surprised that potential customers have given a strong indication of their willingness to pay suggesting that the monthly payments should be affordable. Even though the Buffalo bicycles are relatively high cost we got strong acceptance of the price point proposed and a positive reaction that customer are able to choose to pay over 6–36 months according to wallet size. The trade-off between price and quality appears to be recognised.
• Flexibility to overpay is important — we perhaps underestimated the value of bicycles to low income earners in peri-urban and rural communities. Customers insisted on topping up payments during the course of the PAYG period so they can finish payments faster. This was interesting to note as they wanted to fully own the Bicycle and all the bundled offerings in the shortest possible time whilst taking advantage of the flexibility that PAYG offers.
• Demand is high but a lot of conditioning to the specifics of the model is still required and this could drive costs — the nature of this model is very new in Zambia, particularly applied to bicycles. For example, customers asked if they could use the bicycles as they pleased or whether there would restrictions on usage. To us the answer was obvious — you own the bicycle, you are free to use the bicycle in whatever form and shape you so wished. But this means that there will be a need to educate customers, potentially on a one-on-one basis. We will need to consider how to manage the costs of doing this.
• Businesses also see value in new mobility models — one of our first workshops involved management of a local security company. With our model they are considering how it might help them to deploy more rotational shift workers in places and areas hard to reach since they would have now acquired traceable mobility bicycles for business expansion and revenue generation.
• Rent to own is much more popular than renting…..for now — whilst the idea of renting a bicycle sounds great, our experience in Zambia is that most people prefer to own than rent. So far customers have declined the option to rent the bicycles as they want to own the bicycle after paying for it. But to validate this assumption further, we will still set up a rental Kiosk at Soweto market, one of the busiest markets in Lusaka, to see what the actual reaction is once the product is real. We will run a campaign focusing mainly on the market runners who carry goods for traders every day from early morning to late at night in the evening and see if deeper engagement with a rental model changes minds.
• The pilot offers an opportunity to test other offers that can enhance development impact — it wasn’t originally our intention to provide lights but via DFID Zambia we were put in touch with SunnyMoney/Namene who produce and distribute the UK-designed high quality, low-cost SM100 pico-solar lamp. Working with the local team at Buffalo Bicycles we’ve explored ways of being able to flexibly attach these lights to the bikes, whilst also making it adaptable for other use. Lights that, when not in use on the bicycle, can also help children to study at night and families to feel more secure at home. The pilot will give us the basis to test this more firmly.

Written by: Wyson Lungu CEO - Onyx Connect (First published on Medium)