Beyond Electricity Access : Output-Based Aid and Rural Electrification in Ethiopia

Over the past 15 years, Ethiopia has focused on raising electrification rates, mainly by extending the national grid system to more villages and towns. The World Bank funded Electricity Access Rural Expansion Project (Phase 2) was implemented since 2007 to assist the Government of Ethiopia (GoE) to develop a sustainable program for expanding access to electricity in rural communities. As part of the project, a GPOBA grant was provided to the national utility to make the adoption of electricity more affordable for rural populations. The national utility agreed to allow customers to pay for the connection charge over time, thus lowering the financial barrier to adopting electricity. The results of an impact assessment analysis reported in this study show that increasing numbers of households adopted electricity because they could spread out the connection cost over time. Because more households connected to the electricity supply, they were able to take advantage of the many benefits of electricity. Connection-charge programs are an important component of strategies for rural electrification. However, they are not a panacea for all that ails the power companies in Sub-Saharan Africa. Complementary programs to encourage greater use of electricity would include providing credit for new businesses and incentives for households to adopt efficient electric appliances