This perspective article discusses whether energy access programs in rural Sub-Saharan Africa reach the poor in a way that most policy actors claim. We examine on- and off-grid electrification as well as improved cooking. We focus on whether the poor adopt the respective technology in typical access programs and on the triggered productive use potentials to examine both direct and indirect potential pro-poor effects.
Backed by the most recent literature, we argue that energy access interventions do not naturally deliver on pro-poor targets. If these pro-poor claims are to be met, programs need to improve their targeting. Subsidizing end-user prices is required for all technologies. Energy-efficient biomass cookstoves are most promising in terms of their pro-poor effects. Especially for electrification, the absence of substantial productive electricity use, and the low uptake among the poor suggests that care must be taken to also reach those too impoverished to afford connection costs.
The cost burden of different energy-access options
Beyond the initial selection of intervention areas, two features of energy-access programs determine the extent to which poorer strata are reached: a) the costs of the provided technology and b) the cost-sharing ambition of the program, that is, what share the end-users must contribute to acquisition costs via fees and prices.
For on-grid electrification programs, the cost-sharing ambition is generally low, but connection fees are nevertheless often too high for considerable parts of the target population. Therefore, only the relatively better-off households get connected. Connection rates ‘under the grid’ across various countries are typically way below 100 %, also several years after the grid has reached the communities. Impact evaluations document connection rates in recently connected areas of 60 % in Rwanda, 39 % in Ethiopia, less than 30 % in Tanzania, below 10 % in Kenya and Burkina Faso. To assess how responsive households are to connection fees, Lee et al. randomized different subsidy levels for connection fees across 150 communities in Kenya. They diagnose a sharp decrease in connection rates as fees increase: While almost all households connected if connection was for free, a subsidy equivalent to 57 % or 29 % increased connection rates by only 23 and 6 percentage points, respectively. Hence, considerable parts of the target population – and not least the poorer segments – do not directly benefit from grid extension programs.
Programs promoting stand-alone solar face lower technology costs than grid extension, yet most programs follow a market-based paradigm requiring end-users to pay cost-covering prices. Programs oftentimes only subsidize the marketing and perhaps the market expansion and after-sales infrastructure of a solar company. Since the demand for stand-alone solar is very sensitive to the price, poor households rarely afford the investment. Pay-as-you-go (PAYG) schemes are sometimes proclaimed to lower the barrier for poor households, but in fact PAYG schemes have been found to mostly serve the better-off strata. This is because transaction costs of setting up the PAYG schemes are high, especially when they are supposed to reach poor rural areas, but also because PAYG is always tied to branded products, which are probably of higher quality but also more expensive.
Improved cookstove promotion programs are also mostly implemented under the market-based paradigm, but costs of the technology are much lower, especially for EEBCs. At the same time, the price-responsiveness of improved cookstove demand is well established – including the diagnosis that many households in rural areas cannot afford the investment. Therefore, the cost-sharing approach screens out poorer households, especially in rural areas where the woodfuel is collected rather than purchased, so that no meaningful monetary savings can occur.
The implications of this paper depend on what the objectives of a specific energy access programs are. We contend that many claim to reach the poorest of the poor, or at least help the ultra-poor to develop out of ultimate poverty. This is also in line with the perception within the SDG framework. Against this background, the point of this perspective is obviously not that energy access harms the poor. But we have emphasized that energy access interventions do not naturally deliver on poverty alleviation targets in a way that would meet the expectations of most policy actors.
One response to this diagnosis is to put more efforts into intervention designs and selection of technologies to improve the poverty alleviation and the targeting on the poor. Existing approaches often strive for amplifying the productive uptake and thereby the economic development effect of electrification. We have raised important concerns about this approach, which imply that targeting efforts need to be a lot more effective and probably selective to really unleash significant productive uses. Beyond electrification, which absorbs the largest share of energy access portfolios, our analysis suggests that from a pro-poor perspective, EEBC promotion programs should be strengthened. Feasible technologies exist that require relatively little subsidization to become affordable.
With respect to electrification, it would also be legitimate to justify investments with a rights-based argument. This is partly reflected in SDG 7, but also what many national governments in SSA advocate. Following this account, providing energy access is a political goal for social reasons and irrespective of whether it triggers economic development. This would nevertheless imply that care must be taken to also reach the ultimate poor, requiring subsidization of end user prices and connection costs.
Excerpt of: Are rural energy access programs pro-poor? Some are, many are not (Elsevier 2024)