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Empowering off-grid entrepreneurs in Sub-Saharan Africa

By Haweya Ismail - posted Thursday, 24 October 2013

The World Bank has acknowledged that economic growth does not always lead to development, and are now focusing on providing 'inclusive growth', which will ensure that aid is broad based and will benefit a wider demographic.

If the World Bank wants to be successful in this strategy it will need to rethink current policies on energy investments.

Billions of dollars have been invested in Africa over many years in the form of aid, foreign direct investment and private investments. In spite of that 70% of people in Sub-Saharan Africa still do not have access to modern energy. In many areas of rural Sub-Saharan Africa, this number exceeds 90%.


And the trend is getting worse with the International Energy Agency warning that if policies by the World Bank, Governments and multilateral organisations don't change, more then 1.6 billion people will be without access to modern energy by 2030.

With the World Bank moving away from funding coal power projects in developing countries, the focus has now been on exploiting Africa's renewable resources in an effort to provide safe and clean energy to more people.

The World Bank's goal is to provide universal electricity for all by 2030. However, funding has been focused on large-scale centralised projects aimed at extending the grid. Recent funding initiatives such as the US's Power Africa initiative and the European Unions have also been heavily skewed towards funding large centralised projects.

The problem with this is that it may take decades for the grid to be extended reach rural populations. The IEA warned that over investment in centralised projects, together with a rapidly increasing rural population, will mean that 1.6 billion people will still be without access to electricity by 2030. And, if "sustainable energy for all" targets are to be achieved, at least 55% of connections need to be off-grid.

Decentralised off-grid technology using solar power, such as stand-alone photovoltaics (PV), is an appropriate option for rural communities because it can be used in almost any location, and is easy to install, maintain and upscale. It can also be connected to micro-grids which can be run and maintained by the local rural communities. Currently the main challenge to the diffusion of stand-alone PV is the initial affordability, as low-income consumers are unable to pay the upfront cost of installing and owning the PV system.

M-KOPA, a social enterprise based in Kenya, has found a home-grown solution to this problem. It uses a pay-as-you go solar payment solution to remove the initial investment barrier that low income households face. Customers pay a 15-20% down payment to take the solar panels home and are allowed up to a year to pay it off. They purchase "energy credit" from top up shops, just as you would buy mobile credit. This allows customers to pay from remote locations, and gives M-KOPA the leverage to deduct payments from their sim card. This highlights the importance of finding community based solutions to development problems.


According to the UN, the solar market is expected to grow from $750 million in 2004 to $57 billion by 2020. Many African Entrepreneurs have decided to fill this market gap, and have been laying the groundwork for Africa to leap frog impractical or cost-prohibitive centralized grids in favour of distributed off-grid low carbon technologies. And it is doing this in the same way technology advances in the 90s allowed millions of people to skip to decentralised mobile technology instead of waiting for landline connections.

Hundreds of companies have now been trying to grab a piece of this market and, as a result of increased competition and technological improvements,thecost curve in solar has fallen dramatically, with costs decreasing by 500 per centover the past 10 years, making it more affordable for low-income households.

Entrepreneurs are the driving force of long-term development and increased GDP in Africa. They create jobs and provide government tax revenues that fund infrastructure and public services. The future of Africa lies in the entrepreneurs and small to medium enterprises SME and a strong public sector.

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About the Author

Haweya Ismail is a student at The University of Western Australia and a Global Voices delegate to the World Bank and IMF Annual Meetings in Washington DC in October 2013.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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