Figure of the week: Electricity access in Africa

Boys walk past electricity pylons and the cooling towers of the defunct Orlando Power Station in Soweto, South Africa, June 28, 2018. Picture taken June 28, 2018. REUTERS/Siphiwe Sibeko - RC164C8E8250

Earlier this month, the World Bank released its Electricity Access in sub-Saharan Africa report. The report measures the status quo of access to electricity, compares the nuances of regional and country variations in access to electricity, and identifies some root impediments to increasing access to electricity in sub-Saharan Africa.

The lack of access to electricity primarily constrains modern economic activities, provision of public services, and quality of life. In addition, it severely limits adoption of emerging technologies in sectors such as banking, education, agriculture, and finance that could otherwise alleviate some of the core challenges facing Africans, such as low productive employment opportunities and limited healthcare.

Figure 1 below from the report gives an idea of how far Africa is lagging compared to the world and the variation within the continent. Its current average 43 percent access rate to electricity is half of the global access rate of 87 percent. The report also warns that the current number of people without electricity will continue with Africa’s population boom.

Figure 1. Access to electricity in sub-Saharan Africa

Figure 1. Access to electricity in sub-Saharan AfricaFigure 1. Access to electricity in sub-Saharan Africa, b. Households with electricity, latest available data (percent)

Source: World Bank World Development Indicators; Demographic and Health Surveys; Multiple Indicator Cluster Surveys; national surveys.

Note: In “panel a,” high-income countries are excluded. In “panel b,” recent data are not available for Equatorial Guinea, Somalia, and South Sudan. Latin America and Caribbean and Middle East and North Africa have a near perfect overlap on the figure.

One of the constraints the report emphasizes is the cost of electricity provision. In particular, Figure 2 from the report uniquely shows the cost constraint by benchmarking how much it would cost to power a refrigerator for a year. While the cost is negligent for all advanced economies, for most African economies it is substantial and far more burdensome than for the rest of the world. With this, the report highlights expensive utility service cost as a barrier to electricity access.

Figure 2. Price of powering a refrigerator for a year as a percentage of GDP per capita

Figure 2. Price of powering a refrigerator for a year as a percentage of GDP per capita

Another impediment the report investigates is how electricity outages influence employment, as seen in Figure 3. The strong negative relationship between more outages and employment reduces the probability of employment by approximately 35 percent in a community. This impact is even more pronounced for the nonfarm sector (55 percent), but surprisingly slightly less impactful (27 percent) for high-skilled employment, given many high-skilled jobs require electricity. The findings suggest improving electricity reliability merits attention, not just access to electricity.

Figure 3. Effects of electricity outages on employment

Figure 3. Effects of electricity outages on employment

Source: Mensah 2018.

Note: The reported coefficients are of outages in a community using the instrumental variable regression approach.*** p < 0.01.