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The role of mobile in enabling energy & water access for “under-grid” areas of Kenya

The International Energy Agency estimates that more than 590 million people, mostly in rural areas, live without access to electricity in Sub-Saharan Africa. Achieving access to universal electricity by 2030 in Africa will be require complementary approaches of on-grid, mini-grid and isolated off-grid solutions [1], the latter representing up to 70% of the total mix.

The concept of “under-grid”
A recent research by the University of California, Berkeley, reveals the potential for on-grid solutions as households and businesses’ connections to the electricity grid could be largely improved in places where the grid is already available, the “under-grid”. [2]
To illustrate this finding, the research team focused on a dataset of 20,000 geo-tagged structures located across 150 rural communities in Western Kenya. The study provides evidence that electrification rates remain very low despite significant investments in grid infrastructure.

The study’s main findings & recommendations

  • Electrification rates remain low even up to five years after infrastructure has been built. Results showed that in an ideal setting where there is a high population density and extensive grid coverage, electrification rates average 5% for rural households and 22% for rural businesses.

  • Connectivity is low for poor but also relatively well-off rural households and businesses – one of the main challenges to connectivity is the current connection prices of 35.000 KSh (or ~US$412) for a single phase power connection, not affordable for poor population.

  • Half of the unconnected households in the sample are estimated to be “under grid”, or clustered within 200 meters of a low voltage power line and could be connected at a relatively low cost.

 
Based on these results, the team provided recommendations to design future electrification strategies for governments:

  • Subsidize mass connection programs
  • Support innovative financing and payment approaches to raising connectivity
  • Support group based subsidies tied to the number of applicants

The role of mobile in enabling energy access for “under-grid” areas
When considering the off grid solar Pay As You Go approach, providing consumer finance is an im-portant driver to the adoption of clean energy solution and is currently unlocking a new market of poorer households being able to meet the upfront cost associated with electrification [3].
In an “under-grid” context, innovative financing solutions, coupled with pre-paid metering and mobile payments, could allow a currently unconnected population to afford electricity connections, while reducing the risk of default through affordable pre-paid electricity tariffs.

The case for water connections in Kayole Soweto, Nairobi
Such consumer financing model (or social connection model [4]) is already being implemented in Kenya for piped water connections since 2012. Inhabitants of the Kayole Soweto slum in Nairobi, home to 90,000 residents, are benefiting from a service developed in partnership between Nairobi City Water and Sewerage Company, World Bank, Safaricom and a local microfinance bank.
Previously, poor households could not afford the initial US$100 required for piped water connections; now, selected households can receive a 5-year loan to finance their connection and make repayments using their M-Pesa account when they pay for their water bill. In January 2014, the World Bank announced that a US$4.33 Million (Sh371 million) grant had been given to water service providers within Nairobi County to increase access to water in informal settlements, connecting up to 16.000 households, over the next three years [5].
In this context, policy makers, local banks and donors have the ability to unlock the growth potential of innovative financing solutions and mobile stakeholders (operators and innovators) and mobile channels, notably mobile payments, could act as enablers to support new connections to existing electricity and water infrastructures. However, from a service delivery perspective, challenges on the capacity and reliability of current networks would still need to be addressed. 

[1] World Bank Global Tracking Framework 2013
[2] Barriers to Electrification for Under Grid Households in Rural Kenya, http://www.nber.org/papers/w2032
[3] More than 100,000 households and businesses PAYG systems having been sold in East Africa as of August 2014.
[4] http://www.worldbank.org/en/news/feature/2012/11/09/social-connections-increase-access-to-water-for-kenya-s-urban-poor
[5] http://www.businessdailyafrica.com/world-bank-water-access-to-urban-poor/-/539546/2148884/-/f9f5ta/-/index.html

Michael Nique is Innovation Manager at GSMA Mobile 4 Development 

Source: http://www.gsma.com/mobilefordevelopment/the-role-of-mobile-in-enabling-energy-water-access-for-under-grid-areas-of-kenya

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