Addressing the Challenges of Sustainable Electrification in Africa through Comprehensive Impact Evaluations

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Muchapondwa, Edwin
Jeuland, Marc
Shimeles, Abebe
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African Economic Research Consortium
Access to electricity leads to overall economic growth through improved agricultural and firm productivity, public service delivery, and enhanced household investment in human capital, net income, and general quality of life. Yet more than 540 million people in Africa still lack electricity today, and many more suffer from unreliable power supply. The considerable untapped renewable energy potential, and the associated rapid reductions in cost, make sustainable and decentralized electricity service a promising option for the continent, for transforming these deficits into opportunities. However, knowledge on how to finance and implement new models of electrification remains limited, because the results from prior impact evaluations are inconclusive and do not cover all relevant interventions or dimensions. Following a review of policy and research issues, we propose that five essential principles should guide future research efforts in this domain: (i) use of mixed/multi methods that adequately cover the varied implications of electricity access, (ii) choice of econometric methods that provide more credible estimates of impacts, (iii) use and combinations of more informative treatment data, (iv) careful theorizing and consideration of the potential for heterogeneous treatment effects, and (v) accounting for effects from treatments of different magnitudes. We demonstrate the last three of these with an illustrative application of the World Bank Multi-Tier Framework data for Kenya. New insights emerge as research moves from a focus on average treatment effects to heterogeneous and multi-valued treatment effects. Notably, the impacts of electrification may depend on the extent to which households and other economic agents can make complementary investments to benefit from an electricity connection. Thus, electrification may need to be combined with complementary programmes, for example, those that make appliances more accessible and affordable. A greater focus on holistic impact evaluation approaches is needed to make economic research on sustainable electrification more informative and policy-relevant.