Musings on market-oriented approaches to International Development
In some parts of the world, the sun is the most reliable source of light for many households. At night, entire families learn how to clean and eat with light from the moon or lung-debilitating paraffin lamps.
The paradox of this scenario is noteworthy: modern day inventions of cell-phones are side-by-side lamps that have been in households for centuries.
These experiences are particularly pervasive in Asia and Africa. In India, around 700M people are”off the grid” – lacking access to the national electricity network.
Sub-Saharan Africa does not fare much better, with ~2/3 of its inhabitants in a similar position.
What’s the problem?
Access to unreliable electricity matters in many ways (and with compounded effects) that may not be initially expected. Children cannot do homework, nor can parents continue to work (e.g. making clothes or food) in the evening.
Poor academic outcomes can mean low-income career opportunities that perpetuate a subsistence existence. Without stable electricity, banks, schools and other ventures are unwilling to “set up shop” in a town. Expand this across entire countries and the challenge becomes clearer: lack of light hinders the advancement of ~2 Bn people in the world.
Is there a solution?
The capital intensive nature of building electricity networks and resource scarcity of governments in the developing world has created a platform for private-sector actors on a stage managed by public sector leaders.
Private firms run the gamut of different product offerings: from medium scale solar driven approaches to power plants driven by rice-husks. According to one source, 250 social entrepreneurs/NGOs are seeking to promote rural off-grid power.
Some of these firms work on a relatively larger scale – for example, Omnigrid Micropower Company (OMC) has enough electricity to support telephone towers and sell electricity to ~3,000 households in India.
However, more needs to be done in order to provide energy for more households, small businesses and large firms / organizations.
What else can be done?
1. Continued investment in research and development:
a. One of the primary hindrances to non-conventional forms of power generation gaining scale in the developing world is cost. Support for finding cheaper ways to make this product would be helpful in driving change
2. Continued investment in domestic small-scale and large-scale energy production:
a. Subsidizing the provision of electricity while driving collaboration between public and private actors will be key in developing the energy network needed to power nationas. President Obama’s Power Africa initiative – which commits more than $7 Bn USD over the next five years to this effort – is a step in the right direction; as part of this initiative, General Electric has committed to bring online 5,000 mw of new, affordable energy in Tanzania and Ghana
3. Progressive regulatory framework:
a. With likely continued private-sector involvement in driving energy interventions, a common framework among governments (covering topics such as purchase of land) would help to implement a predictable market that encourages investment and proliferation of electricity providers