Energy Services for the Urban Poor in Africa: Issues and Policy Implications
320
Energy Services for the Urban Poor in Africa: Issues and Policy Implications
320Hardcover
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Overview
This book examines the affordability of modern energy sources for the poor; the relevance of energy subsidies; the impact of subsidies on public finances; and how electricity tariffs affect the operations of small and medium enterprises, the main source of livelihood for the majority of the urban poor outside the formal economic sector.
Product Details
| ISBN-13: | 9781842775585 |
|---|---|
| Publisher: | Bloomsbury Academic |
| Publication date: | 08/01/2004 |
| Series: | African Energy Policy Research |
| Pages: | 320 |
| Product dimensions: | 5.50(w) x 8.50(h) x 0.88(d) |
About the Author
Ikhupuleng Dube is an expert on the energy sector working in Zimbabwe.
Bereket Kebede is a senior lecturer at the School of International Development, University of East Anglia.
Ikhupuleng Dube is an expert on the energy sector working in Zimbabwe.
Read an Excerpt
Energy Services for the Urban Poor in Africa
Issues and Policy Implications
By Bereket Kebede, Ikhupuleng Dube
Zed Books Ltd
Copyright © 2004 African Energy Policy Research Network (AFREPREN)All rights reserved.
ISBN: 978-1-84813-063-0
CHAPTER 1
Impact of Urbanization on Energy Consumption Patterns
Stephen Karekezi and Lugard Majoro
While most of Africa is still essentially rural, the continent's towns and cities are growing rapidly. As shown below (Figure 2.1), sub-Saharan Africa has the highest urban grown rate. It is estimated that for most African countries the urban growth rate is close to double the national population growth rate (Figure 2.2). Large urban centres are growing rapidly and dominate their respective national economies. Examples include Cairo, Lagos, Nairobi, Dar-es-Salaam, Kampala, Lusaka, Harare and Gaborone. The second largest city in most African countries is usually much smaller and rarely known outside the country.
In many ways, the urbanization patterns that are emerging in Africa are somewhat similar to those prevalent in much of Latin America today, namely heavily urbanized countries dominated by a single city that is often both the nation's political and economic capital. In a number of Latin American countries, high urbanization rates are the norm and the capital city can account for as much as 60 per cent of the national population. For example, Bolivia, Colombia, Chile and Argentina have urban populations that account respectively for 63, 75, 86 and 88 per cent of the national populations (World Bank, 2003b).
Similar trends are emerging in Africa. For example, in Zimbabwe the two towns of Harare and Bulawayo dominate economic activities and account for about 79 per cent of the country's earnings and employment (Table 2.1). In Botswana, out of 15,346 operational business establishments in the country, 6,679 (about 43 per cent) are found in two towns, Gaborone and Francistown (CSO, 1998c).
Rapid urban population growth rate in sub-Saharan Africa has been accompanied by high levels of urban poverty. As shown in Figure 2.3, the levels of poverty in most urban areas are fairly high, which underlies the importance of focusing on the urban poor.
The distribution of income in most countries in Africa shows a large disparity between the poor and the non-poor (see Table 2.2). In Ethiopia (Kebede, 2001) the Central Statistical Authority (CSA) classified urban households into five income groups and found that 47.7 per cent of the households were very poor and poor, and control only 15 per cent of the overall urban household income (Table 2.3). On the other hand, 41.2 per cent of the rich and very rich households controlled up to 77.7 per cent of the urban household income.
In spite of the high levels of poverty, urbanization is accelerating, and energy use in urban areas is expected to increase rapidly. Typical activities of the average urban resident are usually more modern and energy-intensive than the activities of a rural resident. Consequently, the ongoing rural–urban demographic shift is expected to result in a large increase in modern energy consumption (Karekezi, 2002a).
Conventional thinking argues that as the population moves from rural communities to increasingly crowded urban cities, their energy use patterns change (Barnes, 1995). Charcoal, kerosene and LPG replace wood as the primary cooking fuels. The three-stone fire is abandoned and charcoal braziers, kerosene stoves and LPG cookstoves become the cooking devices of choice. New energy devices are acquired. Examples include electric lights, radios, televisions, fans, refrigerators and air conditioners. The demographic shift to urban areas is supposed not only to trigger changes in the type and form of energy used but also to imply a much higher demand for energy. Per capita use of energy increases significantly as the population moves from rural communities to urban conglomerations (Karekezi, 2002b).
As the urbanization of Africa gathers pace, sub-Saharan Africa's energy sector will probably begin to acquire the characteristics prevalent in Northern Africa and Latin America. This implies major increases in demand for modern energy services. This would, however, be subject to rising real incomes for the majority of inhabitants. Otherwise, the increase will be met by unprocessed and environmentally unsound biofuels (Karekezi and Majoro, 1999).
Urbanization in many Latin American and Asian countries generally also implied a greater degree of industrialization and trading as production and commercialization became more centralized. Consequently, a rapid increase in energy demand for the industrial and commercial sectors was experienced. Energy demand for productive activities in urban areas often requires modern fuels and energy services, largely provided by centralized energy generation plants. The transition to clean modern energy in urban areas relies heavily on increased incomes — a trend that is found in only a few African cities (Karekezi, 1993). Stagnation in the economies of most African countries results in failure to generate the expected level of increased demand for energy (Karekezi and Majoro, 1999).
Although the bulk of current energy investments in Africa are aimed at serving the urban population, not all segments of the urban population benefit equally. There is some evidence that a larger proportion of government financing, subsidies and international development aid is aimed at developing modern energy infrastructure that largely serves the needs of the urban-based formal sector, commercial and industrial sectors and the medium- and high-income urban households. For example, data from Ethiopia comparing energy sector capital budget shares of different energy sources shows that the allocation for the traditional energy and petroleum products that meet the bulk of the energy needs of the urban poor is on average 10 per cent of the total allocation (see Figure 2.4). Energy services for the urban poor are not a major concern that is high on the development agenda.
As shown in Figure 2.5, urban electrification levels are low in most sub-Saharan African countries. The limited available evidence indicates that the situation is even worse in low-income urban households. This is particularly troubling since the low-income areas are usually not very far from major electricity transmission and switching stations. Low-income areas are often close to the city centre and are densely populated: the associated transmission and distribution costs of electricity extension are therefore not high. In many cases, the costs are lower than the cost of extending electricity to low-density high-income areas.
Current trends indicate that the increase in urban energy consumption will be in the form of traditional biofuels. Of the estimated one third of Africa's population who live in urban areas, only about 25 per cent have access to electricity (Tomlinson, 1999; World Bank, 2003b). As shown in Figure 1.5, urban household electrification levels are generally below 30 per cent. Between 1970 and 1990, Africa's population increased by about 150 million, but over this period the number of persons with access to electricity increased by only about 60 million. Over a 30-year period (1970–2000) the number of urban inhabitants that were not electrified increased from slightly less than 40 million to close to 96 million by 1990, and by 2000 the number had increased to over 100 million — the equivalent of the whole of Nigeria, the most populous country in Africa, going without electricity.
Energy demand patterns of the urban poor largely revolve around household energy end uses such as cooking and lighting as well as energy services for small-scale and informal commercial and productive activities. At the household level, most low-income households in urban areas of sub-Saharan African countries rely on biofuels for cooking (often charcoal in East Africa and wood in Southern Africa), while coal is a main source of energy in certain Southern African countries such as Zimbabwe, South Africa, Swaziland and Lesotho. LPG is rarely used in low-income households. Kerosene is usually the fuel of choice for lighting (Kebede, 2003; Dube, 2002; Katyega, 2003; Kyokutamba, 2002). As mentioned earlier, electricity continues to be a rarity in many low-income urban households.
An important aspect of urbanization, particularly in Africa, is the growth of the informal sector. The informal sector is one of the largest employers in most African cities. Informal sector activities are essentially dominated by the urban poor. While most informal sector enterprises are characterized by energy use at low to medium intensity, they are an important group to consider. Currently, many informal sector enterprises extensively use unprocessed biofuels and residual oil products. Some studies have shown that provision of efficient and affordable energy could lead to improved performance in the informal sector (Hosier, 1994).
Typical commercial energy applications in the informal sector include use of electricity, kerosene and charcoal for cooking and lighting in small restaurants, food kiosks, shops, bars and video halls. Another important informal sector activity is urban transport, particularly mini-buses for commuter transport and pick-ups for freight delivery (Karekezi et al., 2003). It should, however, be pointed out that the transport energy question, although important, is not be addressed in this book. There are other important energy applications in the informal sector, including the fabrication of simple household items and various mechanical and electrical repair services.
In general, urban energy in Africa is characterized by the following features (Karekezi, 1993):
• per capita energy consumption much higher than in rural areas;
• an urban energy consumption spectrum with two extremes: on one hand the energy-intensive heavy industry generally classified as the formal sector, on the other the informal sector and the low-income households with low-to-medium energy consumption levels;
• disparity between the rich and the poor in urban areas and concomitant wide disparity in provision and access to energy services — discussed in the next section.
CHAPTER 2Energy Use among the Urban Poor
With the growing rate of urban poverty and limited development of modern energy infrastructure in low-income areas, the cost of modern energy services is increasingly becoming prohibitive for low-income households and informal sector enterprises (the informal sector is often the largest source of employment for low-income urban residents). Many low-income urban households are faced with the difficult and almost daily choice of apportioning dwindling urban incomes between essential food purchases and cooking fuel. The increasingly desperate measures that many low-income urban dwellers and informal sector enterprises resort to in an attempt to procure modern energy services are indicative of the suppressed demand and increasing relative cost of modern energy services. Examples include the frequent and growing problem of illegal electricity connections and repeated attempts to avoid the high duty placed on petroleum fuels (Karekezi, 1993).
For ease of analysis, urban energy consumption patterns in sub-Saharan Africa are discussed at two levels: households and the informal sector (made up of small and micro-enterprises, or SMEs).
Consumption patterns and the cost of household energy
As shown in Table 2.4, lower-income groups pay a much higher proportion of income to meet their energy needs compared to higher-income groups. This is corroborated by a study carried out by Barnes (1995) in 45 cities in 12 developing countries, which classified the households by income per person per month. It showed that the lowest earners (US$7–11 per person per month) spent about 22 per cent of their income on energy while the highest earners (US$107–216 per person per month) used 9 per cent of their income.
Several other studies (Hosier, 1994; Barnes, 1995; Smith, 1998; Qase and Annecke, 1999; and Dube, 2001) confirm that the urban poor pay more for each unit of energy consumed. This is partly attributed to the low-grade fuels used by the poor. Dube (2001) and Smith (1998) demonstrate that the use of modern energy by the poor is hampered by the upfront costs of acquiring the requisite appliances. For example, in Zimbabwe connection to grid electricity using a compact ready board is about 300 per cent higher than the poor households' average income.
A similar trend is observed at national level (Table 2.5). The poor countries tend to spend a larger proportion of their income on energy compared to the relatively richer countries.
The high energy costs that the poorer households incur indicate the prevalent use of biofuels, which have low energy content per unit of input. For example, 1 kg of fuelwood produces markedly less energy than the equivalent quantity of LPG.
This disparity underlines the equity dimension of the urban energy question. Tyler (1994) cites three factors that explain why the poor spend more on energy than the non-poor, namely:
• low-quality fuels that burn less efficiently when used, so that more fuel is required to perform the task;
• purchasing fuel in small quantities at the end of a chain of small distributors, resulting in higher retail prices; and
• energy subsidies, for example on electricity, that are largely captured by high-income groups.
Energy consumes a substantial portion of the income of the urban poor. Even at national level, household energy expenditure in Africa accounted for 7–18 per cent of the total household income (ADB, 1996). The data may be dated, but the underlying pattern is unlikely to have changed significantly. As mentioned earlier, the higher energy expenditure also results from the purchase of lower-grade fuels rather than smaller quantities of modern fuels — a choice dictated by the low and irregular income of most urban households.
The study by Barnes (1995) shows that for countries with close to 100 per cent electrification, the poor households pay less for lighting than the rich households, for example in Thailand. This is attributed to the fact that the poor pay a lifeline tariff. In countries with low electrification, on the other hand, the poor households pay more for lighting than the richer households. For example, the study cites lighting costs in Cape Verde where the poorest households pay about US$1.40 per kilolumen hour compared to US$0.85 for the highest-income households. A similar pattern emerges with respect to the cost of cooking energy. For example, in Philippines the urban poor paid US$1.79 per kgoe while the rich paid US$0.66 per kgoe. This is explained by the use of low-quality fuels such as wood, where 10–15 per cent of the energy is utilized. By contrast, LPG and electric cookers, commonly used by the high-income households, deliver energy efficiencies of the order of 50–65 per cent.
A case study carried out in Nairobi by Gitonga (1999) showed that the main fuels the urban poor households use were, in order of importance, charcoal, kerosene and fuelwood. A notable aspect of the survey is that all households visited that had a charcoal stove also possessed a kerosene stove. The reason was that kerosene is used mostly in the morning for breakfast, while charcoal is used for the 'hard foods' that take long to cook. A similar pattern is found in most countries of the region. In some countries such as Zimbabwe, however, electricity is the main fuel for cooking, reflecting improved access (Table 2.6). In the cases of both Kenya and Zimbabwe, kerosene is still an important fuel and is ranked second for its ease of use, affordability and suitability for both cooking and lighting.
The use of kerosene, wood and charcoal seems to predominate in areas without adequate access to electricity. Introduction of electricity tends to change the energy consumption pattern, as demonstrated in a Zambia case study (Table 2.7). After connection to electricity, the use of kerosene, wood and charcoal decreased, the largest drop being in the use of kerosene because it is principally used for lighting and cooking of 'light' foods. However, there is a marked increase (about 7 times) in the use of candles. This could be explained by the fact that the candles are used as back-up lighting during blackouts.
LPG — one of the most efficient, convenient and clean fuels — is used in many urban areas of Africa. The major users are households, government institutions and the commerce/industrial and manufacturing sectors. Because of its relatively high upfront cost, it is mainly used for cooking in high-income urban households and small and medium-scale enterprises/ institutions.
(Continues...)
Excerpted from Energy Services for the Urban Poor in Africa by Bereket Kebede, Ikhupuleng Dube. Copyright © 2004 African Energy Policy Research Network (AFREPREN). Excerpted by permission of Zed Books Ltd.
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Table of Contents
1: Introduction - Bereket Kebede and Ikhupuleng Dube 2: Regional Report - Stephen Karekezi and Lugard Majoro 3: Research Methodology and Approach - Bereket Kebede and Ikhupuleng Dube 4: Zambia - Oscar Kalumiana 5: Zimbabwe - Ikhupuleng Dube 6: Ethiopia - Bereket Kebede 7: Tanzania - Maneno Katyega (with Norbert Kahyoza) 8: Uganda - Joan Kyokutamba Notes and references Appendices Index