Off-grid Electrification Can Drive Economic Growth in Sub-Saharan Africa

Off-grid Electrification Can Drive Economic Growth in Sub-Saharan Africa

Compared to other regions in the world, sub-Saharan Africa (SSA) exhibits the lowest electrification rate at 47% and the degree of urban-rural electrification inequality is also greater in the area than anywhere else. Off-grid electrification can play a vital role in extending electricity access to rural communities and improving economic resilience, finds a new report.

It can reach end-users in remote locations by using local renewable energy resources while providing cost-effective electrification options, shows the report.

University College London’s (UCL) Engineering for International Development Centre and off-grid, pay-as-you go solar company BBOXX have released a study entitled “Off-Grid Energy and Economic Prosperity,” to synthesise the existing evidence in academic and grey literature on links between off-grid (e.g. pico-photovoltaic (under 10Wp lighting systems), solar home systems (SHS) and mini-grids) energy access and economic prosperity at household and community level in SSA in light of COVID-19.

Under the 2030 Agenda for Sustainable Development, the United Nations (UN) established Sustainable Development Goal (SDG) 7 in 2015 to ‘ensure access to affordable, reliable, sustainable and modern energy for all by 2030’. However, despite significant efforts before the coronavirus (COVID-19) pandemic, 789 million people still live without access to electricity, nearly 70% of which is concentrated in sub-Saharan Africa.

The COVID-19 pandemic has further challenged the resilience of the economies in SSA and is threatened to reverse the recent progress towards the UN’s 2030 Agenda. The regional growth contracted by -1.9% in 2020, triggering its first recession in 25 years, and per capita output is not expected to return to 2019 levels until after 2022.

Moreover, cumulative output losses from the pandemic are estimated approximately 12% of GDP over 2020-21. It was also estimated that the catastrophic effects caused by the pandemic may have pushed an additional 26.2 million to 40 million people into extreme poverty in SSA by the end of 2020.

As governments and international organisations plan the COVID-19 recovery, they must look at effective interventions that have the largest impact on the resilience and prosperity of the poorest and most vulnerable communities.

Off-grid electrification can improve living standards and community services including education and healthcare services. In terms of local economic growth, off-grid energy provides numerous benefits including better household and business financial capacity (i.e. increase income and reduce expenditure) and improvement in employment and business efficiency.

Access to off-grid electricity has enabled 36% of rural consumers in Kenya, Mozambique, Rwanda, Tanzania and Uganda to increase their monthly income by 35 USD a month, more than half of the average monthly GDP per capita, cites the report. It offers the following evidence on off-grid systems’ relation with energy access and economic prosperity:

  • Off-grid electricity systems reduce a household’s energy expenditure through the transition from kerosene and fuel-based lighting to off-grid technologies. The additional income and savings can be reinvested in food, children’s needs including nutrition and education, lead to time saving for women or improvement of their businesses.
  • The off-grid solar value chain could create up to 570,000 full-time equivalent jobs in SSA by 2022
  • There is immense untapped potential for domestic off-grid companies to add value in the off-grid energy ecosystem, with a total addressable market of 11.3 billion USD for SSA.

Finally, the report makes the following recommendations to governments to drive energy access and economic prosperity in a post-pandemic world:

  • page5image654160016Prioritise off-grid electricity sector investment: As electricity is a key catalyst for economic recovery, it is critical to prioritise maintaining and increasing energy access as a key response to the COVID-19 crisis. Governments should focus on designing supportive policies and address enabling environment barriers to advance off-grid energy access and associated economic development.
  • Integrate PUE into government electrification strategies: PUE can strengthen the links between access to electricity and economic prosperity as it reinforces the creation and improvement of local value chains, and reduce vulnerability to external shocks.
  • Greater attention on promoting gender inclusive interventions: Gender mainstreaming is necessary to incorporate women’s concerns and experiences as a critical dimension of policy and project planning. Designing appropriate gender- focused interventions will enable women to enhance financial literacy and access more productive and profitable activities.

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Soumya Duggal

Soumya is a master's degree holder in English, with a passion for writing. It's an interest she has directed towards environmental writing recently, with a special emphasis on the progress being made in renewable energy.