African Development Bank (AfDB) has initiated feasibility studies to evaluate the potential of implementing electricity cooperative business models in Nigeria and Ethiopia.
After finding that power shortages diminish the region’s Gross Domestic Product by between two to four percent per year, and thereby impeding job creation and poverty alleviation efforts, the bank has aimed to achieve universal electrification access across the African continent by 2025.
“This study is timely and aligned with the bank’s New Deal for Energy in Africa. We look forward to working with the National Rural Electric Cooperative Association (NRECA) International to execute the study, and to leverage its extensive experience in electricity cooperative business models to pave the way for the implementation of transformational projects across Africa,” said Batchi Baldeh, Director of the AfDB’s Power System Development.
Requiring three months, the study will be funded by the South-South Cooperation Trust Fund and conducted by NRECA International and will examine regulatory, legal, technical and socioeconomic factors that impact the creation of electrification cooperatives in the two countries.
The bank selected Nigeria and Ethiopia following a dialogue that was held with their respective ministers of energy during the bank’s Africa Energy Market Place in July 2018, in which the ministers expressed their governments’ commitment to improving rural access to electricity through established models.
Utilized in many parts of the world to provide last mile connections to rural areas through grid extensions and cooperative enterprises, electricity cooperatives are tax-exempt businesses created and operated by the consumers who benefit from the services provided in electricity generation, transmission and distribution.
Successful cooperatives necessitate strong partnerships among governments, local communities, and development partners, and have the capacity to both improve rural electrification and create sustainable businesses.