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11.01.2018, Africa Progress Panel

Powering small enterprises and farms with solar

Across Africa, the majority of people are employed in agriculture and small service and manufacturing enterprises. Nearly 50 per cent of firms in the region identify inadequate access to electricity and poor quality of supply as serious constraints to production. Owners of small businesses and farmers rank inadequate access to electricity as one of the greatest obstacles they face. A Gallup poll surveyed 17 African countries; in 13 of them, over half of all respondents reported that their workplaces have no access to electricity at all (Table 1). The figure ranged widely, from 12 per cent in South Africa to over 90 per cent in Burkina Faso, Mali and Niger.

Table 1: The energy defivit in the workplace is significant

Solar power systems can help improve the earnings of these enterprises. Like households, businesses that shift from fuel-based to solar lighting frequently save money. Improved lighting after dark also increases the time available for productive work and allows users to shift the timing of productive tasks.

Larger solar PV systems can also displace costly diesel generators and power appliances that enhance productivity. Electricity alone is not enough to drive productivity gains. However, when it is combined with new machinery, access to markets and the right training, the productivity of farms and small enterprises is likely to rise.

The larger PV systems can power a broader range of appliances that enhance productivity (Table 2). 

Table 2: Larger solar power systems are transforming productivity

Many pay-as-you-go companies sell solar power systems in the necessary range. Medium-sized solar home systems can enable numerous rural services, such as hair salons, tailoring and movie screenings on television. Solar-powered phone-charging stations are increasingly common. In Tanzania, phone-charging businesses can earn US$100 a month, paying off a US$480 solar PV system in under five months.

Farmers can improve productivity through solar-powered egg incubators, milking machines, electric fences for rotational grazing, and water pumps for livestock and irrigation. Irrigation lengthens growing seasons, reduces risk and, in general, doubles agricultural yields. Yet in Sub-Saharan Africa, only 4 per cent of cropland is thought to be under irrigation. Given their high capital costs, solar irrigation systems remain out of reach for most smallholder farmers. However, costs are declining. The World Bank recently reported that smaller solar irrigation pumps are now more cost-effective than diesel-powered ones in India.

Larger systems can power basic woodworking and construction equipment. Although energy-efficient appliances for productive uses are becoming more widely available and increasingly cost-effective, supplies are still severely limited, as with residential appliances. Further investment will be required to meet demand and build supply-chains in new markets. Further innovation will also be required, both to drive down costs and to diversify the lines of energy-efficient off-grid appliances on offer.

The capital costs of energy-efficient appliances remain beyond the reach of many small enterprises and farmers. Where they can afford them, consumers often do not trust the new technologies, are unaware of their existence, or do not have experience in operating and maintaining them. Training, information campaigns and consumer finance – through banks, microfinance institutions or pay-as-you-go models – are vital to ensure that productivity-enhancing off-grid appliances become mass-market goods.

 

Excerpt of: Africa Progress Panel: Lights, Power, Action. An in-depth follow-up to the Africa Progress Report 2015. 2017, p. 38-41.

 

 

Download the full report here.