Affordable Power, Bankable Systems: Africa’s New Route to Universal Electricity Access for All

Sub-Saharan Africa can achieve universal electricity access by combining grid, mini-grid and solar expansion with affordable tariffs, transparent subsidies and reliable financing. Governments, development partners and private investors must coordinate their efforts to ensure new connections remain financially viable and deliver dependable long-term service.

Universal electricity access in Sub-Saharan Africa is possible without imposing unaffordable tariffs on poor households or relying permanently on donor grants, according to a World Bank Policy Research Working Paper prepared with researchers from the Massachusetts Institute of Technology and Comillas Pontifical University. However, governments must stop treating electrification as a series of separate construction projects and instead coordinate technology choices, tariffs, subsidies and financing within one national programme.

Drawing on Uganda, Zambia and Madagascar, the study finds that the main challenge is not deciding where to use grids, mini-grids or solar home systems. Modern planning tools can already identify the least-cost option for individual communities. The real difficulty is creating reliable rules that determine who provides electricity, how costs are recovered and how affordable service is maintained.

Africa's Power Gap Is Bigger Than Infrastructure

Nearly 600 million people remain without electricity, predominantly in Sub-Saharan Africa. Under existing policies, around 645 million people worldwide could still lack access in 2030, with Africa accounting for more than 85 percent.

Universal access would require connecting about 90 million Africans annually, three times the historical rate, and mobilising approximately $25 billion every year. Although this is less than 1 percent of global energy investment, current commitments remain inadequate. African power projects also face borrowing costs and risk premiums two to three times those in advanced economies.

Many electrification plans fail because they calculate technologies and investment needs but do not define long-term responsibilities. A household may receive a solar system or mini-grid connection, but the plan often provides no reliable funding for repairs, battery replacement, network expansion or customer support.

Affordable Electricity Needs Smarter Subsidies

The report challenges the assumption that every consumer must pay the full cost of electricity. Rural households frequently consume small amounts of power and live far from existing networks. Charging them the actual cost of service could make electricity unaffordable and exclude the poorest communities.

Instead, providers should receive enough total revenue to cover efficient operating expenses, depreciation and a reasonable return on investment. Consumers would pay an affordable regulated tariff, while public subsidies, sector levies or cross-subsidies cover the difference.

The study distinguishes between two financial problems. The "viability gap" is the recurring difference between affordable payments and the cost of service. It requires predictable subsidies. The "financing needs gap" arises because infrastructure must be paid for upfront while revenues are collected gradually. It should be addressed through grants, equity and long-term concessional or commercial loans.

Using debt to cover permanent operating losses can push utilities towards insolvency. Using grants for temporary financing needs can waste donor resources and displace private capital.

Uganda and Zambia Reveal the Cost of Ambition

Uganda needs approximately $4.7 billion to provide 10.4 million new connections. Around 53 percent of currently unserved people would receive stand-alone solar systems, 45 percent would be connected through grid expansion, and 2 percent would be connected through mini-grids. However, grid expansion would absorb about 83 percent of investment.

Achieving universal access by 2030 would require average annual distribution investment of $809.8 million between 2026 and 2030. Moving the target to 2040 would reduce this requirement to $269.9 million. Initial financing needs would fall from about $3 billion to $700 million, required grants from $600 million to $200 million and concessional debt from $2 billion to $370 million.

The slower pathway would be easier to finance and implement but would force many households to wait longer. Governments must therefore balance urgency with fiscal space, procurement capacity and institutional readiness.

Zambia requires about $1.52 billion to deliver approximately 2.5 million connections and systems by 2030. These include 739,560 grid connections, 328,304 mini-grid connections and 1.44 million stand-alone solar systems.

A proposed 3 percent Rural Electrification Levy would use contributions from existing consumers, especially mining and urban customers, to support rural service. The donor requirement is estimated at $1.096 billion, including $851 million for capital investment and $245 million for early operating shortfalls. Donor grants could fall to nearly zero from 2037 as tariff and levy revenues increase.

Zambia must also keep ZESCO's historical liabilities separate from the access programme. The utility has approximately $2.245 billion in unpaid supplier invoices and $3.524 billion in existing debt. Using electrification funds to cover these obligations would inflate the apparent cost of rural access and divert resources from new connections.

Turning Electricity Access into Lasting Development

Madagascar demonstrates why decentralised solutions are essential. Only about 36 percent of its population has electricity, leaving approximately 19 million people unconnected. Its limited transmission network means district-level plans must combine solar and hydro generation with mini-grids, nano-grids, stand-alone systems and selective grid expansion.

Governments should convert access targets into enforceable obligations covering connections, reliability, maintenance, asset replacement and consumer protection. They should also create protected financing mechanisms that guarantee timely subsidy payments.

Development partners should move beyond financing isolated infrastructure and support national portfolios, regulatory institutions and long-term payment systems. Grants should address genuine affordability gaps and early risks, while concessional loans should help attract private capital.

Private companies can participate through grid concessions, mini-grid operations, solar service contracts, metering and maintenance. Their main risks include delayed subsidies, weak rural demand, currency depreciation, political interference and unclear treatment when the national grid reaches existing mini-grids.

The report concludes that subsidies are not evidence of policy failure; unpredictable and unfunded subsidies are. Universal access becomes sustainable when consumers pay affordable tariffs, governments transparently cover the remaining gap and providers receive reliable revenue to maintain service.