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Energy Poverty and Financing
By admin July 13, 2018

 

Thanks to the electricity, we can watch our favorite shows on TV, make a phone call to our friend and read books at night before we sleep. Because electricity is a part of almost every aspect of our daily lives, we may feel helpless when a sudden blackout occurs. However, there are still over 1.2 billion people around the world who lack access to the electricity; primarily in Sub-Saharan Africa and developing Asia. For them, turning a light is not a natural thing, let alone watching TV, and reading a book at night is a luxury.

Reducing energy poverty is fundamental to increasing the quality of life in developing countries. In general, mitigating the energy poverty issue is much more expensive than providing food or medical aid to developing countries. It takes a far more careful consideration because projects related to improving energy poverty usually require an enormous investment and a long-term commitment. For example, according to the Brookings institution, $55 billion per year in investments are needed to meet Africa’s electrification goals. Financing these energy projects in Africa is challenging for African governments. In many cases, they do not have stable economic conditions and favorable investment environment. The probability of African governments financing electrification projects on their own is low, meaning that external financial resources are desperately needed.

Acknowledging the importance of every poverty issue, multilateral organizations such as the World Bank and Asia Development Bank, have financed energy projects in developing countries. Unfortunately, because of the huge investment size, public financing alone cannot adequately provide financial resources in time to meet the demand. That is why, private sector financing can help in term of financial needs. However, the challenges remain. Pubic-private partnerships can be complicated, leaving the following questions unanswered: Is private-sector interests compatible with public sector interests? How is the private-sector going to be assured for investing in financially risky countries for a long time?

Once these questions are addressed, we may see trends towards alleviation of energy poverty and further realization of our global development goals.

FURTHER READING:

The Worst Kind of Poverty: Energy Poverty

The 5 toughest questions on energy poverty

How electricity access makes a big impact in the fight against poverty


Thanks for sharing !


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