Vouchers of light.

Author:Monadjem, Vahid
Position:GUEST COLUMN - Column

Perhaps the biggest obstacle to Africa's growth revolves around providing energy to the continent's often widely dispersed populations. One of the issues is finding a method of allowing poor people to be able to pay for--power when and where they need it and within their means. Guest Columnist, Vahid Monadjem offers a solution.

The International Energy Agency (IEA) recently reported that approximately half of Africa's growing population lives in poverty. The biggest impediment to growth is a lack of electricity infrastructure, which is caused by a severe lack of funding.

But it's not all doom and gloom forever. In the very same report, the IEA predicts that two out of three future investment dollars will produce energy for sub-Saharan consumers. The prediction is that by 2040, close to a billion people would have gained access to electricity. Add to this the fact that the US recently renewed its commitment to Power Africa, with President Barack Obama pledging to create 30,000 MW of energy (triple last year's goal of 10,000 MW) and new connections for at least 60m households and businesses, and it looks as if real progress is finally being made.

Energy suppliers need to reach as many households and businesses as possible, as reliably as possible. At the same time, they need to invest in costly but imperative research and development projects.

To achieve all this, it's vital to ensure that all power consumed is paid for, that corruption is stamped out and that workforces are properly trained. None of these are small tasks, but we have found a solution to at least one of the challenges--making sure that the electricity consumed is paid for.

Prepaid meters have been around for some time, refined and improved upon over time, and now widely used across the continent. The potential for growth is huge--in Nigeria alone, the prepaid electricity market is worth an estimated N150bn ($900m), with 50% of the market yet to receive meters.

Prepayment helps providers protect their revenues, while helping consumers protect their budgets and monitor their consumption of electricity.

But the real power of prepaid for Africa lies in the fact that it enables people to spend small amounts of money as frequently as they need to, which, for people battling poverty, removes the fear of big bills arriving at the end of each month. You need only consider the proliferation of prepaid cell phones on the continent to see the power of prepaid.

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