Powering the powerless: Economic impact of rural electrification in Ghana

Policy brief 12 Feb 2018 Energy

Authors

Ghana has made significant progress in extending electricity access across the country, particularly in rural areas where access levels rose from 1% to 63% of the population between 1991 and 2014.
However, huge capital investment is still required to achieve universal access to electricity by the year 2020 under the National Electrification Scheme. The economic benefit of rural electrification projects also remains unclear.
This paper examines the socio-economic effects of rural electrification on rural households by looking at a variety of measures such as income and welfare levels of rural and urban households.
The result suggests although electricity access improves the gross income and welfare of households overall, it does not improve employment income in rural areas because electricity does not affect agricultural productivity.
In addition, high-income households benefit relatively more from electricity access compared to poorer households. This implies that access to electricity has the potential to widen the income gap among rural populations, and to reduce the income gap between urban and rural households.
The authors conclude that the positive links between rural electrification and welfare justify further investment in extending electrification to rural areas.