Unleashing the power of electricity in sub-Saharan Africa
For the developed world, access to electricity is taken for granted. However, many people still do not have access to this precious and life-changing commodity. Access to electricity has a dramatic impact on the social and economic development of a village, town, district, country or even an entire region – such as sub-Saharan Africa (SSA).
Yet, the current level of effort to increase access to electricity in SSA is insufficient. Furthermore, the increase in new connections achieved in recent years will soon be offset by the accelerated population growth on the continent.
Access to electricity has dramatically improved across SSA over the last 20 years, increasing from approximately 20% of the total population in the early 2000s to approximately 40% of the total population in 20161 (i.e. an average of 18 million people connected every year). Yet, at a regional level, there were still over 600 million people with no access to electricity in 2018. In addition, and the population is expected to keep growing at the average rate of over 2% per year between now and 2050 (i.e. an average increase of 34 million people a year). In other words, population is expected to grow faster in the next three decades than access to electricity has improved in the last two.
This means that, at the current pace, electricity access is set, at best, to stagnate at current levels – and, at worst, to decrease. Therefore, it is essential to amplify the efforts of the last two decades and urgently implement solutions to accelerate electrification programmes.
By doing so, SSA will do far more than only improve its population’s living standards. There is now evidence across the continent that access to reliable and affordable modern energy services decent provides substantial benefits to consumers and plays an instrumental role in the socio and macroeconomic development of countries. Energy for community facilities is fundamental for socioeconomic development and improved human capital through education, health and governance services2.
Data shows that access to electricity is particularly discriminating for certain demographics and especially important for women and girls. The energy-intensive tasks in households traditionally affect women, which also implies that policies for access to electricity are not gender neutral. Many women in developing countries spend long hours gathering fuel and hauling water, using their own strength to carry heavy loads over long distances. They are especially vulnerable to the adverse impacts of deforestation, desertification and ecosystem disruption. Access to electricity enables women to save enormous amounts of time and energy. Time saved can be reinvested in income-generating activities and means that women need less support from children, allowing them to attend school.
There is no doubt that most countries in SSA are committed to provide access to electricity to a larger share of their population than at present. However, current efforts are slowed down by a series of limitations (e.g. inefficient institutional and/or regulatory frameworks, and poor technical and commercial performance of incumbent state-owned utilities) and because policy ambitions often fail to recognise that access to affordable and reliable electricity does not necessarily require a physical connection to the main grid anymore.
Good policies and strategies are generally based on ambitious and realistic targets. Good targets should be based on indisputable metrics. One fundamental issue on this topic is that electricity access rate, the most common metric used in access expansion strategies, is by no means appropriate or indisputable.
The work of the Energy Sector Management Assistance Program (ESMAP) on a ‘Multi-Tier Framework for Measuring Access to Household Electricity Supply’ is effectively rejecting the binary approach towards electricity access, whereby a household is categorised as either having access to electricity or not. The main reasons for this is that it fails to capture fundamental notions and common bottlenecks associated with electricity access such as the quality and reliability of the electricity supply, the affordability of electricity and the legality of the underlying connection to the network. The framework defines six tiers, each corresponding to a different class of electricity access. Tier 0 households have no access to electricity at all. Tier 1 and tier 2 households have limited access to poor quality and unreliable electricity, often at high rates. Tiers 3 to 5, have increasing levels of reliability, affordability and quality. The proposed metric to measure electricity access based on this method is effectively the weighted average tier of the community/region/country considered.
Another limitation for the acceleration of electrification programmes is that traditional grid extension has been (and, in many countries, continues to be) the only option seriously considered by national utilities to provide electricity access to new consumers. Solutions involving isolated (mini) grids and off-grid systems (e.g. solar home systems) become increasingly cost-competitive and have already been successful in a number of countries including Uganda, Kenya, Tanzania, Ethiopia, Zambia, South Africa and Ghana.
Governments, regulators and utilities should consider electrification programmes with an open mind, and on a case-by-case basis to determine which electrification option is the most economic. The private sector can certainly help and contribute to implementing some of those solutions at low cost. At the same time, utilities could consider offering new services to increase access (e.g. solar home systems to small customers expressing interest in having electricity as one option among others including connecting this same customer to the main grid).
Finally, one paradox in SSA is that, while all agree with the observation that access rates are too low and industrial expansion is too slow in most countries, the main challenge reportedly faced by utilities across the continent is that they struggle to expand their customer base and unlock demand. It is fair to say that there is no shortage of power generation projects across the region, with increasing support from the private sector. The explanation for such paradox is two-fold:
- Transmission development, essentially driven by the public sector, has been slower than generation expansion.
- Many utilities have a history of focusing on the supply side while neglecting the demand side of power networks.
An often neglected, but important, aspect of access expansion is that most households cannot even afford the cost of internal wiring in their house, irrespective of the cost of electricity in the country. This can be mitigated by offering more payment flexibility (e.g. instalments), setting up credit support facilities or implementing ready-board roll-out programmes (ready boards are all-in-one boxes which include an electrical board, power points and lightbulbs which remove the need for internal wiring).
The current level of efforts to increase access to electricity in SSA is insufficient and the increase in new connections achieved in recent years will soon be offset by accelerated population growth on the continent. The range of socio-economic benefits that can be unlocked with electricity access is enormous and often underestimated – extending not only to standards of living, but also gender empowerment.
Accelerating access at costs affordable to end users will require a profound shift in mindset. This includes an integrated approach combining grid and off-grid technological solutions, and balancing financing efforts at all levels to alleviate demand-side as well as supply-side constraints.
In recent years, we have been working on a wide range of projects that contribute to accelerating and expanding access to clean and affordable electricity, including:
- Providing identification and financial assessment of sector reform options to accelerate access expansion in a country in East Africa.
- Designing affordable end-user tariff schemes in various countries in Eastern and Western Africa.
- Scoping and benchmarking rural electrification projects in a country in East Africa.
- Preparing development plans and electrification strategies in various countries in Western Africa.
Meet us at the Africa Investment Exchange, 13-14 November, London
If you would like to find out more, please contact our experienced senior consultant, Thomas Amram, on Thomas.Amram@ricardo.com or call 01235 753364.
If you are attending the Africa Investment Exchange in November, Thomas will be a panellist at the Distribution Options session on Wednesday 13 November between 15:45 and 17:15.
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