Africa’s last-mile electricity problem cannot be solved by markets alone

This article is based on a conversation from Voices & Visions, a podcast produced through a partnership between Tutto Passa Agency and TechCabal, which explores the people and ideas shaping Africa’s innovation economy.

Africa’s electricity problem becomes harder, not easier, as the number of people without power reduces.

The first households are relatively straightforward to connect. They live close enough to existing distribution infrastructure, consume enough electricity to justify the investment, and often have predictable incomes that allow utilities or solar companies to recover their costs.

The people left behind tend to be different. They may live hundreds of kilometres from major transmission lines, move with livestock, live in refugee settlements, or survive on incomes too irregular to qualify for conventional financing. Extending a power line to them can cost more than the electricity they are likely to consume over the next few years.

Benjamin Gitonga, a director at climate finance platform Nithio, argues that reaching these customers will require governments and development financiers to accept something markets are designed to avoid: funding customers before they are economically attractive.

“There has to be concessional funding for these projects to actually be successful,” Gitonga said on the latest episode of Voices & Visions.

The problem is circular. People need electricity to generate income, but energy companies need customers with income before they can justify supplying electricity.

Breaking that loop may be one of the hardest parts of Africa’s energy transition.

The economics gets worse

Kenya illustrates the problem. Successive governments have spent years extending the national grid, including through the Last Mile Connectivity and rural electrification…