Publication - The Impact of Rural Electrification – Results of the 2013-2019 Impact Monitoring of the Investments in Rural Electrification in West Nile Sub-Region, Uganda

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Title
The Impact of Rural Electrification – Results of the 2013-2019 Impact Monitoring of the Investments in Rural Electrification in West Nile Sub-Region, Uganda
Publisher
KfW Development Bank
Author
Gaul, M., Berg, C., Schmidt, M., Alff, U., Luh, V., and Schröder, M.
Published in
November 2019
Abstract
This reports presents the result of a rigorous 6-year impact monitoring exercise of a rural electrification project in the West Nile region of Uganda, where 15,000 customers in 9 rural towns and 60 smaller trading centres were connected to an isolated 487 km network powered by a 3.5 MW hydropower plant. Using a control group and difference in difference approach for impact attribution,a total of 9,750 interviews with households, businesses, secondary schools, and health centres were conducted over four consecutive surveys in 2013, 2015, 2017, and 2019.

Impacts of grid access have been moderate in comparison to high off-grid solar electrification levels both in the control and treatment group. Grid access leads to an increased use of electrical lighting and of larger appliances, but for rural households the differences are limited. Similarly, secondary schools and smaller grid connected health centres show a significant increase in electric lighting and appliance use but this does not translate into significant impacts on the educational or health services provided. It appears that most rural households and even health centres and schools are able to satisfy their basic power demand based on off-grid solar, provided that solar systems are reliable and service is available, which seems not always to be the case.

Even for rural businesses in trading centres, grid electricity does not appear to be a game changer: even though more businesses use TVs and fridges, they did not increase business hours or employment, nor their turnover. In opposite, town business increased employment by 22% and more than doubled their turnover in the same time period. Observed economic effects might be suppressed by low reliability of grid power and the limited business capacity and access to financing in rural areas. But increased competition between rural and urban businesses should be investigated, to check for possible crowding-out effects of grid access in rural areas.

For decades, the grid extension has been perceived as the ultimate means for rural electrification, its high costs were justified by the achieved welfare gains in rural development. But cost reduction in off-grid solar as well as sobering results of recent impact studies for grid and off-grid electrification emphasize that policy makers should re-consider impact assumptions and cost-benefit rationales for future electrification planning and strategies. Future grid extension strategies should primarily target economic focus areas, building on sound assessment of business capacity, market potentials and linkages, and integrate these into rural economic development strategies.

The impact monitoring was implemented by SiNERGi GmbH and comit GmbH on behalf of the Government of Uganda and KfW Development Bank.


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