Leasing and Sharing – Using Instead of Owning

Global population growth and the need to provide people with at least an acceptable minimum standard of living entails a significant increase in resource consumption in the linear economy.

But today it is possible to do what was impossible 10 years ago:

Building a Leasing and Sharing Economy as a substantial part of a Circular Economy requires Information and Communication Technologies (ICT) that

  • the localization of capital and consumer goods with inexpensive sensors and mobile phone systems
  • the identification of users via retinascan, fingerprint and images;
  • condition monitoring to remote management;
  • low transaction costs with pay-as-you-go like M-Pesa.

Using goods without having to buy them means higher productivity, maintenance of credit, higher living standards and also a more efficient use of resources. People thus have access to technical equipment that was previously denied to them.  Living standards and quality of life are increased more quickly, jobs are created, rural exodus and migration pressure are reduced. Goods must become more durable in order to improve profitability, spare parts management and service are created and components and goods remain the property of the lessors.

In industrialised countries, leasing and sharing concepts are already recording high growth rates, while in Africa the effects on social progress have not yet been fully recognised.
With the help of suitable financing concepts, companies can be made easier to enter the market and manufacturers can be given the opportunity to quickly bring a critical number of goods onto the market, making the establishment of management, maintenance and spare parts supply systems economically viable. This is where development banks in close cooperation with development cooperation advisory institutions are called upon to mobilise and deploy the necessary expertise. Circular Economy Funds” to be implemented by the private sector with corresponding, country-specific objectives are necessary, such as the still small Equity for Africa Fund, which must, however, be equipped with much more technical expertise.

Necessary laws and regulations and the establishment of institutions to enforce law and investment security are tasks in which the governance departments of German Development Cooperation could provide effective support.
The applicability of new economic concepts extends to all sectors of development cooperation. The establishment and expansion of corresponding think tanks should therefore be supported by the German Government in developing and emerging countries.