Electrifying growth: Electricity access for productive use

Background, challenges and context

The new government of Sierra Leone calls improving the supply of energy “an imperative for any meaningful development and poverty reduction.” However, recent research has questioned the assumption that expanding access to electricity necessarily leads to economic growth and improved development outcomes, and suggests that researchers and policy makers have only a partial grasp on the type of electricity expansion that improves social welfare.

Electricity is an enabling technology, with its impact depending on the use of productivity-enhancing technologies. For example, electricity itself will not improve crop yields, but it enables the use of irrigation pumps that will. Therefore, in order to realise the potential of expanding access to electricity, it may be necessary to also provide access to productivity-enhancing technology.

In Sierra Leone, 61 per cent of the working population are employed in agriculture, and improvements in productivity could boost income. However, many technologies that have the potential to boost rural incomes require electricity, and only 2.5 per cent of the rural population has access to it, and even then, it is unreliable. So even when electricity is available, entrepreneurs struggle to use energy-intensive, productivity-enhancing technologies.

There are two major research gaps to address; firstly, the role of firms and entrepreneurs as driving forces behind the development benefits of electricity expansion (most studies focus on villages or households), and secondly, the role that complementary, productivity-enhancing technologies play in producing the benefits of electrification.

Research overview and objectives

This project focuses on the effect of improving access to electricity for rural firms and rural entrepreneurs, and will test if the development benefits of electricity are greater when rural entrepreneurs have increased access to productivity-enhancing technologies that require electricity.

The team will measure the social and economic impact of two interventions, introduced through randomised field experiments.

The first intervention improves energy access for rural entrepreneurs by subsidising their connection to rural Power Towers, which supply stable solar energy to connected users. The Promoting Renewable Energy Services for Social Development (PRESSD) project is implementing European Union-funded Power Towers in Sierra Leone, built by WHH and COOPI. The rural areas of Kailahun, Kenema, and Port Loko each has a Power Tower with substantial productive power and storage capacity. Subsidised connection will be offered through a village-level public lottery.

The second intervention subsidises rural entrepreneurs’ access to complementary productive technology assets, purchased via a public auction. The assets will be determined by a baseline survey, focus group discussions and an expert panel.

Those who receive subsidies will be compared to those who do not. Key outcomes, such as household income and savings, agricultural production, trade activity, and use of energy and appliances, will be measured. Crucially, the team will be able to measure if household/entrepreneur willingness to pay for an asset changes when they also receive an energy subsidy. The research team will be able to assess if the interventions have different effects on the rich and the poor, and will also consider gender dynamics.

Specifically, the team aims to provide evidence that will help to determine:

• The most inclusive and effective strategies to expand the grid and mini-grids to achieve meaningful development and poverty reduction

• Whether existing or planned grid expansion strategies may in fact be detrimental to social welfare and inclusive poverty reduction

• What electricity-reliant productivity-enhancing technologies can be leveraged to increase entrepreneurial production in newly electrified areas

• How subsidised electricity rates can increase grid connectivity in a way that leads to poverty reduction

This research project aims to inform decision making that leads to reducing (energy) poverty in Sierra Leone and beyond. The research will provide high-quality data and actionable evidence on potential fiscal and regulatory policies.

Local partners

Welthungerhilfe (WHH) and Cooperazione Internazionale (COOPI) – NGOs operating in Sierra Leone

Ministry of Energy (MoE), Sierra Leone

International Growth Centre (IGC), Sierra Leone team

Centre for Economic and Social Policy Analysis (CESPA) – an independent Sierra Leone-registered policy and development institute