Rice For Light: Cash-Strapped Villagers Barter Produce For Electricity
9 March 2012
In late 2009, a small, private electricity supplier in Guinea, West Africa, launched its service in the remote rural village of Goyola. Similar efforts had been made in other parts of the country, but Goyola has proven unique; 100 percent of the villagers have signed up for the service, and all of them pay their electricity bills on time.
What set this service apart from others? An innovative payment model which allowed local people to connect to and benefit from electricity in exchange for the produce they grow, instead of cash, which they did not have.
Put simply, it was rice for light.
One villager, Mme Péléora Koivogui, praised this simple formula, which takes into account the socio-economic realities of a rural community where cash is scarce.
“This payment method is easier for us because we pay directly with rice, palm oil or coffee - so we don’t have to worry about finding money,” she said. “Now, our children can study at night and watch films or TV locally. And we have cold water and drinks.”
Goyola’s public-private partnership (PPP) model for scaling up rural access was the winner in a Call for Papers on innovative solutions to Africa’s electrification challenges organized by the World Bank’s African Electrification Initiative (AEI).
Nava Touré, director of the Bureau for Decentralized Rural Electrification (BERD) government agency, shared the Goyola story to 230 representatives of African rural energy agencies and funds (REAs and REFs), ministries, utilities and regulatory agencies when they met in Dakar in November 2011. The presentation was warmly received, prompting a lively discussion about how it could be replicated.
“The results speak for themselves,’ Touré said. “Harmony reigns between the electricity company and its clientele. Based on the reassuring financial results so far, we can estimate that the chances of this becoming a sustainable service, with opportunity for replication, are significantly better than elsewhere.”
A Socially Sensitive Solution
Goyola is rich in agriculture: producing rice, maize, peanuts, coffee, bananas and palm oil, at different times of the year. But to sell their produce for money, local farmers must first walk to a market 6km away, carrying the goods on their heads. It is not a journey people make regularly, so the flow of cash into the village is limited. This, in turn, makes residents reluctant to commit to services that require regular monetary payments.
The produce-based payment model was the outcome of discussions between the small private operator, La Société Électricité Nakoloma De Goyola (ENDG) and BERD. Once villagers were told that both the connection charge and tariff obligations could be met by payment in-kind, at market value, they signed up straight away. ENDG then stored the produce, typically for three months, before selling it in the off-season at the closest market.
The World Bank’s Lucio Monari, sector manager for the Africa Energy Unit, said the Bank would continue to encourage private sector-led initiatives in Guinea and elsewhere across Sub Saharan Africa (SSA) to increase poor people’s access to electricity. The World Bank supports government’s efforts to build PPPs through enabling policy and regulatory frameworks, devising financing instruments and business models, capacity building and knowledge sharing
“It is heartening to hear that the creative solution found in Goyola is welcomed by the people whose lives it is changing,” Monari remarked. “The challenge of harnessing the private sector to scale up electricity access remains an important objective for the Bank in Sub-Saharan Africa.”
Moving The PPP Discussion Forward
The conversation now continues in Washington, as part of the World Bank’s Energy Day (Feb 23), with a panel discussion entitled "Can the Private Sector Enable the Acceleration of Universal Access?" Organized by the AEI in cooperation with ESMAP, the session will discuss private sector led electrification case studies from India, Guinea, Burkina Faso and Mali.
Led by Lucio Monari, the discussion will illustrate typical challenges faced by private sector players trying to increase access to electricity in Least Developed Countries (LDCs) and review approaches that governments and private sector can use to leverage each other’s comparative advantages.
“There is a huge market opportunity for energy services in Africa, and great potential for enterprise-based approaches to help improve the lives of the poor,” Monari said. “However, further innovations are always needed to make business models truly scalable and replicable. I’m looking forward to a lively exchange of ideas on how private sector, policymakers, financiers and donors can do much more to catalyze these developments.”
For Touré, who is in Washington for the conference, sharing Guinea’s lessons learned from private sector engagement is exciting.
“So much more can be achieved when we take into account the basic social realities of poor communities and of women like Péléora Koivogui,” he said. “I hope I can show that small private companies, working in partnership with governments, can make a defining contribution if they are encouraged to adapt and the have appropriate support.”
SOURCE: The World Bank
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