Lack of energy access as a barrier to doing business

One of the biggest challenges Africa faces, is undoubtedly lack of access to reliable and cost effective energy. Less than 50% of the African population is connected to a national grid, and in some countries such as Uganda only 20% have access. The benefits of  energy access to human wellbeing are well documented, including access to clean drinking water, heating, cooking and other economic activities.

Over the years, there has been a growing recognition that if the material wellbeing of vulnerable people is to be improved, universal access to energy must be achieved, as outlined in the Sustainable Development Goal 7 (SDG 7), which aims to “ensure access to affordable, reliable, sustainable and modern energy for all.”

It’s also well recognised that, its practically impossible to connect everyone into the national grid, where in some cases such infrastructure is even none-existent. And in some cases the cost of connecting to the grid is so exorbitant, it does not make business sense. As a result, there has been a strong push for distributing off-grid energy solutions, such as solar to vulnerable communities that require electricity. It’s estimated that over the last 10 years, millions of Africans have managed to access off-grid lighting solutions, resulting in their improved wellbeing, and catalysing other opportunities for economic development.

Unfortunately, most of the progress has been limited to accessing electricity for lighting, with very limited opportunities for productive use. Little progress has been achieved in unlocking energy for productive use, such as the powering of machines for small scale manufacturing and irrigation. This is partly because even though solar technology has become ubiquitous, it’s still extremely costly for productive use. Other systemic challenges such as access to finance has also impacted on the wide uptake of solar technology for productive use.

Over the last couple of months researchers from the African Centre for a Green Economy, have been documenting some of the key challenges small enterprises face in accessing affordable energy for their business. For example between November and February, our researchers interviewed more than 450 small to medium enterprises in the West Nile Region of Uganda. Here are some of the top five barriers to accessing energy for productive use that were mapped:

  • The cost of solar is still prohibitively high for powering small businesses, which require power beyond lighting
  • Lack of dedicated solar providers in rural areas, which are most impacted by lack of access to the grid
  • Poor understanding of the potential solar power provides to improve their productivity and profitability
  • Lack of effective regulatory requirements to adhere to high quality solar technology, often means that small business invest substantial amounts, which are lost due to technology failure
  • Lack of after-sales services from solar providers, often means that users are unable to optimally utilise the solar systems, and cant’t fix minor problems which could have been solved as a result of an effective after-sales service.