Let's think together: Every week the World Bank team in Tanzania wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a couple of questions. This post is also published in the Tanzanian Newspaper The Citizen every Sunday.
Energy fuels economic development and the evidence is before our eyes every day. Businesses require a steady supply of energy to produce goods and services. Electricity allows school children to study after sunset and hospitals need it to save lives Insufficient or irregular energy supply is associated with significant economic cost for businesses and households. Lack of access to clean energy also creates a myriad of health and environmental hazards, such as indoor pollution from cooking on traditional open-fire stoves and deforestation.
Unfortunately, affordable access to clean energy remains an elusive dream for most Tanzanians, especially those living outside of urban centers and the poor:
- Only 14 percent of the Tanzanian population has access to electricity in 2010.
- Rural areas are virtually disconnected from the national electrical grid: Only three percent of people living in rural villages use electricity, while 95 percent use firewood for cooking.
- Access to electricity is almost zero for the two poorest quintiles of households even in urban areas.
- Annual electric power consumption stands at less than 90 kilowatt-hours per capita, just enough to power one light bulb per person for three hours every day.
- Over the past decade, Tanzania has increased access to electricity at a rate of less than one percentage point per year. At this rate, it would take well into the 22nd century to achieve universal electrification.
- When managers of firms are asked directly about the most serious problems they face in conducting business, electricity comes out as their number one concern. Almost 75 percent of Tanzanian enterprises consider routine load shedding and power outages as the most serious constraint to doing business, while another 15 percent mention it as a significant problem.
Of course, there are a number of reasons why progress in improving access to electricity has been slow. Expanding the electric grid to remote rural areas requires significant upfront capital investments and public subsidies, which often conflict with funding to other well-needed public services and investments, such as education, health and road infrastructure. An increase in power access also requires substantial investments along the production chain and in the transmission to firms and households. Technical choices are not always obvious since technologies and opportunities evolve over time, such as the recent discovery of new on-shore and off-shore gas reserves. Policymakers have to make a series of strategic decisions within and between sectors, which naturally involve trade-offs and in many cases uncertain economic benefits. And finally, governance also plays an important role in this sector, where less than perfect public utilities often operate as monopolies.
Against such challenges, it should come as no surprise that electricity access rates of less than 20 percent are the rule rather than the exception in sub-Saharan Africa. On average, one in three Africans has access to electricity – but this figure is strongly affected by a handful of countries that are doing exceptionally well in terms of providing electricity, such as South Africa (75 percent coverage) and Ghana (60 percent). Amongst Tanzania’s neighbors the situation is less impressive. Malawi and Uganda have even lower access rates (at nine percent), while Kenya and Zambia are doing only slightly better than Tanzania. Yet, Africa can look to achievements in other regions, where the majority of the population is connected to the electrical grid, including the developing countries of East Asia (more than 90 percent coverage) and South Asia (62 percent).
- Should the government subsidise electricity expansion to remote rural areas? Or should it focus on urban areas where most economic activity takes place and where population density is higher?
- What is the appropriate technology mix? Should the focus be on the public grid – or should off-grid solutions be considered? What about renewable energy sources?
- Should all consumers pay for the cost of the electricity they consume or should there be a subsidised rate or ‘lifeline tariff’ for poorer households? What about cross-subsidisation between industrial consumers and private households?
- How will natural gas exploitation affect domestic power generation in Tanzania?
Note: The statistics above are based on Demographic and Health Surveys (DHS), the World Development Indicators (WDI) and World Bank research. Data from these sources are publicly available and results can be readily replicated.