Energy and Economic Growth

The economic growth of any country depends on energy access as a fundamental factor that enables activities like industrialization and transportation. In addition, energy access provides for the availability of basic amenities, including food supply, healthcare and education, all of which enable development and wealth. Hence, this article will explore the relationship between energy and economic growth, focusing on the importance of electrification in developing countries.

The eighth United Nations Sustainable Development Goal (SDG 8) is to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. However, how can these be achieved, especially in developing countries, without access to energy?

Globally, access to energy and economic growth go hand-in-hand. According to the International Energy Agency (IEA), access to modern energy services is crucial for economic development. This is because energy access enables the provision of essential services. These essential services, in turn, create job opportunities, especially in the manufacturing and service sectors. Thus, the more service that can be provided, the more jobs are created and vice versa.

Also, access to reliable and affordable energy is crucial for agricultural productivity, which is a key driver of economic growth in developing countries.

Inadequate access to energy is a significant barrier to economic growth, particularly in Sub-Saharan Africa. The region has the lowest electrification rate in the world, with over 600 million people lacking access to electricity. This lack of access to energy has contributed to the region’s underdevelopment, as it hinders the provision of essential services such as healthcare and education.

However, improving the continent’s electrification through alternative sources, such as renewable energy, can help unlock economic growth. For instance, Nigeria’s Energising Education Programme (EEP) aims to electrify 37 federal universities and seven teaching hospitals nationwide. The programme, which is currently ongoing, is part of the Rural Electrification Agency’s (REA) Nigerian Electrification Project (NEP).

Upon its successful implementation, the programme is expected to boost the country’s economic growth by improving the quality of education and healthcare services.

Another example is the Africa Clean Energy (ACE) programme led by Power Africa. The programme focuses on promoting the use of off-grid renewable energy solutions, such as solar home systems and microgrids, to provide energy access to households and small businesses in rural and peri-urban areas. So far, the programme has supported the installation of over 2 million off-grid solar home systems and helped establish over 200 renewable energy businesses in Africa.

There is also the Scaling Up Renewable Energy Programme (SREP) led by the World Bank to scale up the deployment of renewable energy solutions in developing countries, including in Africa. In Africa, the SREP has supported the deployment of several renewable energy projects, including a 300 MW wind power project in Lake Turkana, Kenya, and a 50 MW solar power plant in Egypt.

These examples illustrate how deploying renewable energy solutions in Africa improves access to energy and economic growth. In conclusion, energy is an essential factor in economic growth, and access to modern energy services is crucial for the development of any nation. The electrification of businesses and households can significantly impact the quality of life and affect the economic development of countries. Additionally, energy access can enhance countries’ efforts to achieve SDG 8.