• M-KOPA’s $1.5B PAYG receivables could be securitised but lack scale, trust, and regulatory clarity.
• Pension funds, DFIs seen as key early investors to de-risk and build confidence in PAYG securitisation.
• Data gaps, high costs, and fragmented rules still block PAYG assets from becoming full capital-market products.

M-KOPA has grown into one of Africa’s largest pay-as-you-go (PAYG) financing platforms, using mobile money to help low-income customers acquire smartphones and other essential devices through small daily payments. To date, the company says it has extended more than $1.5 billion in cumulative credit to about 5 million customers across multiple African countries.

Individually, these daily receivables are modest. But when aggregated, they create large and predictable cash flows that, in principle, could be securitised—similar to how banks package auto loans or mortgages. Kenya already has a regulatory framework for asset-backed securities (ABS), and development finance institutions such as FSD Africa have studied how micro-receivables might be pooled into structured products to widen access to capital.

So far, M-KOPA has relied on private credit lines and blended-finance arrangements rather than issuing listed bonds. The infrastructure for turning PAYG receivables into tradable securities exists in theory, but in practice remains underdeveloped. What separates M-KOPA’s portfolio from a full capital-markets instrument is still scale, regulatory approval, and investor trust.

One feature stands out: the ability to disable devices remotely when payments are missed. This mechanism gives M-KOPA unusually strong repayment leverage, lowering default risk compared with other forms of consumer lending. That makes the receivables potentially attractive to investors looking for predictable cash flows. Yet audited data on repayment and recovery rates remain scarce, limiting confidence.

The bigger challenge is systemic. Most PAYG providers—whether in solar, smartphones, or agriculture—rely on internal repayment metrics that are not verified to international standards. This absence of standardized and independently audited performance data keeps investors cautious. Regulatory frameworks for securitisation are still patchy across Africa, with only a handful of markets, such as Kenya and Côte d’Ivoire, piloting social ABS structures.

Investor appetite will be decisive. African pension funds, with their growing asset bases, and development banks are the most likely early adopters. They have both the mandate and the capacity to test new instruments, provide first-loss capital or credit enhancements, and set precedents. If they can establish performance benchmarks, the broader market—insurance companies, asset managers, even international impact investors—could follow once trust is established.

Transaction costs are another barrier. PAYG portfolios are relatively small and dispersed geographically, making securitisation expensive until receivables can be aggregated across providers or countries. Development banks can help by underwriting pilot transactions or supporting the creation of regional data standards to reduce these costs over time.

In short, M-KOPA’s receivables are not yet part of a capital-markets product, despite some critics’ description of “poverty-futures.” What they represent is the emergence of a new class of financial assets that, with regulatory innovation, harmonised reporting standards, and institutional backing, could eventually be securitised. The potential is real—but the market is still waiting to be built.

Idriss Linge