Response to "Electricity does not change poor lives as much as was thought" by The Economist 2019

Introduction

In February 2019, the Economist published an article titled, ”Electricity does not change poor lives as much as was thought”. According to this article, there is not enough evidence of how electricity impacts the lives of poor people in order to justify that countries “spend a lot of scarce cash” to foster energy access today.

We think this article needs a response as it is not inclusive of the different aspects of off-grid electrification, misinterprets some of the studies it cites and is pushing for exaggerated expectations of energy access. We also sincerely hope that it will not have a negative effect on the great work of many Governments, NGOs, companies, and individuals working towards sustainable energy for all. It is great to see that many organizations came forward with responses to the article.

This article summarizes all the responses to the controversial article in the Economist. Please feel free to add your response as well!

The article cites excellent studies but misjudges their outcomes

The article questioned if electricity and light truly transformed people’s lives and lists selective parts of two studies to support its claim: Grid Electricity Expansion in Tanzania by MCC: Findings from a Rigorous Impact Evaluation and Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda.

From the first study, the article cites that, “Offering cheap connections cut the proportion of people living on less than $2 a day from 93% to 90%—hardly a transformation “. This statistic is only based on the people who were offered subsidized connection. For the people who actually got a grid connection, the proportion of people living on  $2 a day dropped from 90% to 85%. From the second study, the study cites that, “giving solar lamps to Rwandan households hardly changed the adult life – solar lamps do not seem to rescue people from poverty”. However, when we look into the study itself, it concludes that solar off-grid electrification has positive pro-poor impacts.⁽ⁱ⁾

In his response, John Keane, the CEO of SolarAid and SunnyMoney, considers questioning the importance of electricity in fighting poverty a “dangerous takeaway” and offers four reasons: 1. poverty is not just about money, 2. the problem with ‘disposable’ batteries is undignifying for the poor, 3. light and Electricity will not solve poverty alone, and 4. subsidy also has a role to play.

The article overlooks evidence

There are dedicated organizations such as GOGLA who conduct off-grid analysis every year and have found positive impacts on the economic situation of the selected households in their studies. We would urge the author to also have a look at this study. We also invite the author to browse through all the productive use cases that we have documented on energypedia. These case studies showcase how the off-grid sector impacts the lives of the people/businesses e.g. people could open their business during evening hours, expand their business by offering additional services such as mobile phone charging, selling cold drinks etc. and all other activities that have been made possible by off-grid energy.

GOGLA states in its response that “the economist article overlooks substantial evidence of the positive economic impact of off-grid solar energy.” They ignored the economic benefits of switching from (expensive) kerosene to solar lanterns. In total, from 2010-2017, 8 billion USD; almost 70 USD per year for each family. This is transformational for families living under 365 USD per year!

The article expects fast transformational change via energy access

The word transformational is multi-faceted. As mentioned by the author, electrification does not always bring monetary benefits; but why should it anyway? The fact that people do not have to sit through smoky kerosene lights and have a bright light at night already improves their quality of life. Also, if off-grid electrification reduces the amount of time for an activity, they can use this extra time to relax or enjoy with their family. Do they have to use this extra time for other productive activities? The article cites the improved study time for the children: these children are the future of tomorrow – so it is an investment into the future generation. This can eventually help children to break out of the poverty cycle (via education).

In its response, Practical Action states that they “recognize that there remain serious challenges but we disagree with the Economist’s suggestion that cash-strapped countries should now effectively de-prioritize energy access.”In many countries, large subsidies brought electricity to people “that could not have imagined” the benefits that we are all used to today. Why should this be any different for others?

There is a need to invest more and to improve the evidence base by long-term studies

We agree with the suggestion that off-grid electrification has made leaps in terms of affordability, but still has a long-mile to go. However, the off-grid sector has a great potential for providing sustainable energy for all. Also, the energy sector has always been subsidized by the government – whether that might be subsidies for fossil fuels, subsidies for renewables or subsidies for different industries. Therefore, it is important for the government to decide if they want to provide subsidies for providing energy access to the poor people or not. To help the government decide, we need more clarity on direct impacts and financing options for all! Evaluating long-term impacts of all kinds of energy use (cooking, lighting, productive uses) is needed in order to understand the impacts of electrification on the poor. And everybody should be able to afford to meet their energy needs.

Let’s hope that the outrage about so “many of the world’s poor still lack electricity” leads to good policies that support local Governments, International Cooperation, financing institutions, companies and civil society organizations in their efforts to reach sustainable energy for all!

Further Readings

• Check out the other references from organizations/individuals such as Practical Action, GOGLA, Cross Boundary, Richendra van Leeuwen and John Keane.
• Productive use portal on energypedia
  

Footnote

i)In their response, Cross Boundary further explains the misunderstanding about merely offering subsidized grid connections do not change much for the poor from the first study; and secondly, citing Grimm’s work to state that “solar lamps appear not to rescue people form poverty” is misleading as those excellent studies show in fact that benefits outweigh social costs."^[4]