The challenge of sustainable electrification in Africa: Economic policy and research needs

Access to electricity has been linked to economic growth through improved agricultural and firm productivity, public service delivery, enhanced household investment in human capital, and increased net income and general quality of life. Yet, as of 2024, more than 540 million people in Africa still lacked electricity, and many more suffered from unreliable power supply. The considerable untapped renewable energy potential in the region, and rapid recent reductions in cost, make sustainable and decentralized electricity service a promising option for transforming these deficits into opportunities. However, a key challenge is that knowledge on how to finance and implement new models of electrification remains limited, because the results from prior evaluation work are inconclusive and do not cover all relevant interventions or dimensions. Following a review of policy and research issues, we propose that five essential principles should guide future research in this domain: (i) use of mixed/multi methods that adequately cover the varied implications of electricity access and leverage learning in other disciplines, (ii) choice of econometric methods that provide more credible estimates of impacts, (iii) use and combinations of more informative treatment data, (iv) careful theorizing and consideration of the potential for heterogeneous treatment effects, and (v) more explicit accounting for differences in the nature of electrification interventions. We reference a simple illustrative application to show that the estimated impacts of electrification are sensitive to several of these aspects. A greater focus on impact evaluations that account for intervention and contextual nuances is needed to make economic research on sustainable electrification more informative and policy-relevant.