Ghana’s National Electrification Scheme: a Blueprint for Powering Africa
Addison Egen
Electricity substation in Dzorwrulu, Ghana.
Household electricity is one of the keys to modern economic development. With connection to a national grid, individuals gain access to crucial education and information through digital media, along with modern health conveniences like refrigeration and fans. With improved health and more available time, people are able to reinvest their efforts into generating additional income through the labor force and creating new businesses, diversifying economies away from resource extraction. Despite an obvious demand for electrification, it cannot be achieved by merely setting the private sector loose. Some of electrification’s benefits, such as public security and information, partially exist outside of the market and thus cannot be properly integrated into the resource’s market price. Furthermore, private suppliers fall into a sort of collective action problem and lack the necessary incentive to individually invest in infrastructure projects on their own. Instead, intelligent policies merging public and private incentives must be instituted. Those seeking to build or invest in African power sectors should carefully study Ghana’s National Electrification Scheme (NES), a highly successful electrification plan on the continent, providing a unique framework to achieve greater prosperity in Africa.
After gaining independence in 1957, Ghana possessed a power sector that seems unrecognizable today. The market was fragmented, composed of self-serving industries and institutions. These institutions mostly utilized diesel generation plants only able to generate power on a highly localized basis. The nation had some technology capable of generating electricity, but without necessary public infrastructure investments, it was usually generated and consumed by individual entities in a self-sufficient manner. The government did begin to slowly involve itself in the power sector throughout the 1960s, creating the Volta River Authority (VRA), a governmental power monopoly, to construct dams on the nation’s largest river for hydropower production. However, the government rarely invested in the power line infrastructure needed to supply its citizenry with electricity. Instead, it sold electricity to neighboring countries and powered local schools and road construction projects.
Ghanaian citizens’ fortunes wouldn’t significantly change until 1989 when Jerry Rawlings, Ghana’s first president following a 1981 coup, instituted the National Electrification Scheme (NES) as a component of his broader economic reform. The NES was a multi-phased, decades-long strategy intended to provide universal electricity access to Ghanaian households. While the program has not quite met its lofty goals, it is arguably Africa’s most successful. Over the past 30 years, Ghana’s electricity access rate has climbed from 23 percent to 85 percent, far outpacing regional growth rates. Even more impressively, rural electricity access has skyrocketed from 3 percent to 79 percent, cementing Ghana’s rural electrification increase as the highest on the African continent over the time period.
The NES was an intricately assembled plan, laying out steps and phases towards achieving universal electricity access. Three central steps guided the Ghanaian government’s success in implementation. First, the government achieved great success in its initiative through a combination of strategic debt financing and relative political stability. After ousting his predecessor in a coup, former Ghanaian president Jerry Rawlings sought economic revolution against what he saw as a corrupt ruling class by executing officials, jailing corporate leaders, and instituting harsh price controls. His economic policy quickly backfired, however, as shortages became rampant and inflation rates jumped to 140 percent. Rawlings chose to significantly alter paths in 1983, opting instead for a relatively liberal Ghana which permitted foreign investment and promoted citizen welfare through public works projects and subsidies. Rawlings used foreign investment through the initiation stage of the NES, calling upon western donors to bankroll new projects to develop geothermal and fossil fuel resources. This funding helped Ghana to overcome the high costs of new resource development and end its dependency on hydroelectric energy, which proved unstable and incapable of providing long-term economic growth after several periods of drought. Risks associated with foreign debt financing were also better controlled after Rawlings chose to transition power peacefully in 1996, establishing a relatively democratic Ghana that could provide more consistent fiscal policy and reduce corruption.
Ghana’s second step was to partially divest power from central, governing bodies to local authorities and the private sector. The government provided funding to regional capitals and partnered with municipalities to form regional bases they would branch from in pursuit of universal electrification. This likely provided the government with more information on the needs of individual communities and the cost structure of projects. Ghana also partially disbanded the Volta River Authority, allowing private firms to enter the production side of operations, while maintaining government control over distribution. These steps ensured the advantages of competition and investment in production while maintaining a clear national directive in the distribution of power.
Finally, Ghana successfully revealed and capitalized on citizen demand through its Self-Help Electrification Programme, a subplan within the broader NES that prioritized the electrification of communities willing to provide low voltage poles for projects. Communities willing to pay for a portion of their area’s financing were able to jump ahead in the queue for electrification plans, minimizing cost and permitting communities heavily demanding electricity to receive it first. The self-help electrification programme avoided issues common with private sector investment into what is effectively a public service, all while ensuring those able and willing to pay for their electricity did not purely free-ride off of the government’s investment.
By increasing rural electrification at a faster rate than any other African country, Ghana made a significant stride towards alleviating poverty. Accessing the conveniences of electricity allowed countless Ghanaian households to drastically shift their consumption, labor, and time-spending habits. Ghanaian households supplied under the NES became 44 percent wealthier than previously financially equivalent households that were not supplied by the NES. School enrollment in NES-supplied zones increased by 26 percent, and non-agricultural business boomed as citizens gained access to the virtual tools of the knowledge economy. While the program still has its faults, it seems undeniable that Ghana’s National Electrification Scheme has been a dramatic success in powering the nation, lifting thousands out of extreme poverty and bringing Ghana closer to middle-income status.
Ghana’s electrification journey wasn’t an easy one. Nonetheless, the program’s rewards seem to have more than compensated for the political will and cost to electrify. Whether they are foreign governments seeking to spread their influence or African officials seeking the support of their people, stakeholders need to further fund electrification on the African continent using the Ghanaian model as a template. The Ghanian electrification model may not be a stairway to heaven. However, it can provide African people with dreams of modern technological convenience, granting them an escape from poverty and the prospect of economic diversification beyond resource extraction. Overall, It gives hope for a more prosperous way of life.
