Powering the powerless: Economic impact of rural electrification in Ghana

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Even though rural electrification projects in Ghana started in 1970s, less than 50% of rural households in Ghana have access to electricity, compared to 72-75% at the national level. This suggests wide disparities in electricity access between rural and urban households, which could explain a large share of the observed inequalities in income and welfare between rural and urban households. In 2014, the ministry of energy highlighted on the improvement made in rural electrification coverage from under 5% in 1989 to about 72% in 2011.

We have two key motivations for this study. Firstly, there is a knowledge gap that needs addressing. The National Electrification Scheme (NES) is expected to positively impact on the socio-economic development of rural households by generating employment, improving local development and reducing poverty. However, to the best of our knowledge, there is no acknowledged impact evaluation evidence on Ghana. We find that substantial academic research (Ilskog and Kjellstrom, 2008; Dinkelman, 2011; Taele et al, 2012) attention have been devoted to the experiences of Latin America, Asia, Eastern and Southern African countries, with little from Ghana. Secondly, on the policy front, evidence on the socio-economic benefits of the rural electrification through the NES serves as a benchmark to sway policy-makers decisions in negotiating future private sector participation, development partners’ support, and government budget allocations towards improving electricity penetration into rural areas towards achieving universal access targets in 2020. The empirical evidence will substantiate prospective investment in rural electrification in Ghana.

The study employs existing data from the Ghana Living Standard surveys (GLSS) rounds 5 (2005/2006) and 6 (2012/2013) to study rural households with/without electricity access and the changes in their socio-economic characteristics in-between the two periods. We consider that a subset of the households in rural communities gained access to electricity between the two survey periods. Households with electricity will constitute the treated group, while households without electricity as at 2012/2013 survey represent control group in our estimation strategy to uncover the effects of rural electrification on rural welfare. New data will also be collected from households in 10 districts who were without electricity access to validate the impact assessment based on the GLSS data.