Come As You Are, Pay As You Go

The Liberian economy is a “pay-as-you-go” economy. Most things are pay-as-you-go, or “PayGo,” where small quantities of an item can be purchased as-needed and whenever money is available. This goes for almost everything, including phone credit, laundry soap, gasoline, mayonnaise, and even electricity. PayGo is very convenient when you need only a little bit of something, like a handful of macaroni or a single razor blade. Or, if you don’t have the money, you can buy that which you can afford, like a precious ten minutes of phone credit.

A scratch card vendor selling $1 phone cards.

The PayGo model works in an environment that lacks capital – more accurately, petty cash. Many Liberians have neither a savings account nor a steady income. This makes it difficult to engage in things like monthly contracts, where regular payments are expected. Additionally, the economy isn’t supportive of expensive high-end goods that require a large up-front investment. You won’t find a Crate-and-Barrel or Best Buy here. They just don’t fit the model.

For food items, there are other reasons that PayGo is prevalent. The vast majority of homes have no means of refrigeration. To avoid spoiling, food must be used within a day or two. Additionally, pests like mice, ants, and small children make it difficult to store food in the house. Excess food will often disappear or, if noticed by neighbors, be requested as a gift. Therefore, it is rare for a Liberian to buy more than the day demands. In fact, our neighbors are quite surprised when we keep food on-hand or buy anything more than a day in advance.

As a routine example of PayGo in action, let’s suppose someone wants to bake a loaf of banana bread. It all starts with a trip to the market. The baker will visit several vendors to procure what she need. On the way to the market, she sees a child selling bananas from the top of his head. The baker sorts through the pile and buys three ripe ones.

Bananas are sold in two’s or three’s

At the market, she buys a teaspoon each of baking soda and salt. From a different vendor, she buys two cups of flour and a cup of sugar. From a third: three tablespoons of butter. Down the street she visits the “egg guy,” where she buys two eggs – maybe three in case one is rotten.

Baking goods – butter, eggs, and baking powder – sold in small quantities.

Each item is bagged in its own small plastic bag. When the baker returns home, she fixes the banana bread. The bread is eaten or shared that same day. There will be no leftover ingredients and no leftover banana bread – nothing to spoil, nothing to disappear, and nothing to tie up much-needed cash.

The standard assortment of items for sale at almost every stand

Liberia’s economic climate makes it look like a difficult place to do business. However, entrepreneurs have found creative, grassroots ways to provide goods and services even where cash-flow is tight. For example, cell phones in Liberia don’t require a contract. Phone credit is purchased as-needed via “scratch cards.” Even some municipal electricity grids are designed for PayGo. Just like with cell phones, electricity credit can be purchased as necessary, on an hourly basis. Specialized meters connect the home with the power grid. These innovations make it possible for anyone, regardless of financial means, to access valuable resources like energy and communications.

Moreover, PayGo extends beyond sales of services and foodstuffs. The material things people buy are also pay-as-you-go. Most of the manufactured goods sold in Liberia come from China and are of a very low quality. Liberians, themselves, will refer to the Chinese material as C-Grade items. Furthermore, they will tell you that all the A-Grade Chinese material goes to the United States. Regardless of how this assertion sounds, it is supported by the evidence. Looking around, you will see some truly cheap junk in Liberia – stuff that breaks after only a few uses. If you ever thought that Dollar Store products were flimsy, imagine a step down from that. The market here is flooded with cheap junk. Liberians don’t even have access to high-quality products.

However, this shouldn’t be viewed as unfair or unjust. In fact, it is by design. What’s more, its in the people’s interest. The products available in the market may be low-quality, but they are inexpensive. Having cheap products available is a good thing, as it fills an important niche for those with less cash. If you don’t have the money to invest in a long-lasting product, you can buy a cheap one that will last for a few months. Then, you can buy it again, and again, as you need it. If you don’t need it, you don’t buy it.

Economy-grade housewares for sale along the road

For example, many Liberians have inquired about the hiking sandals that Angie and I frequently wear. When they inquire about the price, they are usually astonished by our response. To them, it is absurd to spend $100 USD on a pair of shoes, regardless of how long the shoes last. Instead, Liberians will buy two, three, four, or more pairs of shoes per year for as much as $20 USD per pair. In doing the math, you will see that the long-term cost is much more for the cheaper product. The A-Grade shoes are more expensive, initially, but they last much longer. The savings are gained by making a large up-front investment and avoiding overhead costs such as packaging and shipping.

The C-Grade shoes are considerably more inexpensive per unit, but they wear out sooner. This works for someone who either doesn’t have the money or only needs the shoes for a short time. (Indeed it also works for style-chasing fashionistas!) Even though the shoes are cheaper in the near-term, there is a catch. The price of the shoes includes a premium which, paradoxically, covers the overhead of providing a cheaper shoe. Essentially, you pay more to pay less! In reality, the PayGo customer is paying for the flexibility of a product that fits his personal or fiscal needs.

Pay-As-You-Go Lessons

Pay-As-You-Go means buying only what you need or can afford. It’s quite reasonable to buy only what you need, and it’s just plain dumb to buy more than you can afford. And even though it goes against the capitalist mindset, some of these strategies are worth adopting. In many cases, PayGo can save a lot of money. Think of cell phones. I don’t think western cell phone plans, with their contracts and overage charges and early termination fees, are designed to save you money. These contracts probably cost you more. PayGo phones are available in the US and could possibly save a lot of money. They are worth checking out.

Also, PayGo can cut down on waste, such as when buying small quantities of bulk items. This reduces the garbage generated from packaging and also cuts down on losses due to waste or spoilage. Food co-ops, supermarkets, hardware stores, and surplus outlets have been following these principles for years. In Liberia, a surprising array of items can be bought in small quantities: spices, sheets of paper, nails, screws, toilet paper, cosmetics, etc. From a frugal standpoint, I can tell you that It is liberating to buy a single egg.

On the other hand, there is a trade-off to the PayGo model. Paying-as-you-go for consumer products costs more over the long-run, uses more energy, and creates more waste. For each cheap Chinese flashlight we buy and break, the trash heap grows bigger. Instead, if you intend to keep or use it for a long time, and you have the cash, invest in a high-quality product. This will save you lots in the long-run – money, energy, and time.

The pay-as-you-go model works for Liberia. For lots of people, cash is tight. For others, saving money is important. PayGo is a flexible, convenient business model that gives people access to the things they need – cell phones, electricity, consumer goods, and much more. PayGo, from the ground up, liberates and empowers people. This is important for the development, and enjoyment, of the nation. The people deserve it. For Liberia, PayGo is the WayGo.