NextBillion - A WDI Publication

Africa’s energy access debate is evolving, as the conversation moves beyond the need to increase the number of electricity connections and toward a deeper question: What kind of electrification drives social and economic transformation?

There is broad agreement on the goal: Africa needs electricity not just to connect households, but to power jobs, industry and long-term growth. The real debate — which has unfolded on NextBillion and at other publications and events across the sector — is about how to get there.

Some argue that, given limited public resources and grid constraints, electrification efforts should prioritize industrial clusters first, with household access following later. Others push back against the idea of this sort of trade-off, emphasizing the importance of reaching underserved populations.

In many ways, both sides are right. But both also miss a critical point: The challenge is not simply whether to prioritize households or industry, or whether to pursue both. It is about understanding how electrification, electricity demand, income generation and productivity actually evolve in practice — and determining how best to balance the different technologies, delivery models, financing structures and timelines involved in boosting energy access across the continent.

The Risk of “Trickle-Down Electronomics”

At the heart of the “industry-first” argument is an implicit assumption that investing in higher-tier electricity for industry will generate jobs and income, enabling governments to expand electricity grids to unserved areas and allowing households to afford electricity over time.

We might call this “trickle-down electronomics.” It’s a contention that echoes “trickle-down economics,” the idea that policies or investments that benefit those at the top of an economy will eventually benefit those at the bottom.

It is an appealing idea in theory, for both economies and electrons, but evidence and experience suggest that it rarely works in practice.

Some advocates argue that electrification efforts should target a “Modern Energy Minimum” to drive the continent’s economic growth agenda. This minimum level of electricity consumption is often understood as Tier 4 or greater in the World Bank’s Multi-Tier Framework, which refers to electricity capable of powering refrigerators, machinery and enterprises.

That ambition matters, but it overlooks a basic constraint: Most rural African households today cannot afford or meaningfully use that level of service, even when it is available. Across sub-Saharan Africa, even when rural households are connected to the grid, most consume electricity at Tier 1 or Tier 2 levels. In Ethiopia, three-quarters of rural grid-connected households use only Tier 1 appliances. In Liberia, even grid- and mini-grid-connected households primarily use electricity for basic services such as lighting, televisions and fans, consistent with Tier 1 levels of access.

Further, recent research in Rwanda, published in “Nature,” finds that grid electrification alone does not automatically drive large increases in electricity use or income, particularly where affordability constraints persist.

Focusing too narrowly on electricity consumption as a measure of success also risks missing an important shift. Appliances and devices are becoming more efficient, meaning smaller systems can now support greater productivity. Slower growth in consumption does not necessarily imply slower economic progress. It may just be that people can do more with less energy — a topic we’ll explore later in this article.

Why This Is Not Just a Sequencing Debate

It would be easy to frame this as a disagreement about sequencing: whether households should come before industry, or vice versa. But that framing is too narrow.

Electricity systems are not homogenous, and they are not constructed in a linear manner. They are built piece by piece, with the sequence and type of delivery model determined by geographic and spatial factors, energy sources, cost structures and financing models.

Transmission and distribution grids are one such delivery model. Grid infrastructure is capital-intensive, reliant on public sector financing and often slow to expand. As a result, it makes sense to concentrate grid investments where they have the highest off-take (i.e., the most buyers of the most electrons the power lines can carry), and where they can deliver the highest economic returns — such as industrial clusters, urban centers, and the productive corridors through which freight is transported and stored.

Decentralized solutions — including standalone off-grid solar, mini-grids or emerging technologies like mesh grids — are alternate and viable delivery models. They are modular, faster to deploy, and often represent the least-cost option for reaching underserved communities, particularly in hard-to-reach areas. They also rely heavily on private capital, reducing the burden on constrained public budgets.

The question, then, is not which priority comes first, but how to optimize different delivery models, technologies, markets and financing structures at the same time.

Productive Use Starts Earlier Than We Think

The same logic applies to productive use of energy. Electricity is a necessary enabler for all economic or income-generating activity that drives development. The case for prioritizing industry rests on its potential to produce economic impact. But this risks getting into trickle-down territory, and it under-values the vibrant economic activity happening at the micro- and small-enterprise levels.

Productive use of energy does not begin only at the factory gate. It starts with farmers using solar irrigation pumps, traders extending business hours thanks to solar lights, small shops keeping cola cold and fish fresh, and anyone with a laptop connecting to digital sources of income. These activities may not resemble large-scale industry, but they are the backbone of most African economies and the primary sources of income for millions. In sub-Saharan Africa, the vast majority of jobs are in the informal economy, meaning productive use of energy is already happening at the household and microenterprise level. Sometimes, these activities occur in places that could or should be connected to the grid, but are not, as in the case of this neighborhood in Nairobi.

Tier 1 and Tier 2 access, often dismissed as “basic,” enable these forms of productivity. They support human capital development, digital inclusion and microenterprise growth. They help build the workforce and demand base that larger industrial systems ultimately rely on.

Additionally, today’s Tier 1 systems are not what they were 10 years ago. Advances in solar efficiency, battery durability and appliance design are transforming what small systems can deliver — while also lowering costs. Lithium-ion batteries, driven by the global electric vehicle revolution, now dominate the off-grid market and can last eight to 10 years. Battery prices have fallen by more than 90% since 2010, and they continue to decline, reaching record lows in 2025. Meanwhile, the VeraSol certification process, initially launched by the World Bank, has established an internationally recognized measure for product quality and truth in advertising, with Verasol-certified systems offering improved durability and safety.

At GOGLA, we’ve seen many member companies extending warranties, building repair networks, and introducing second-life battery programs that create local jobs and reduce waste. These innovations mean today’s Tier 1 systems are future-ready, capable of powering homes, microbusinesses, farms and digital devices. The next decade could see entry-level kits that irrigate crops, cool produce and provide internet access in even the most remote communities. Advances in technology are enabling physically small systems to outperform their size and reshape the perception what solar energy kits can do.

In that sense, early-stage energy access is not downstream of economic transformation. It is part of how that transformation begins and grows.

At the macro level, the benefits of this access are equally significant. The off-grid and distributed renewable energy sector already supports hundreds of thousands of jobs and could create more than 400,000 additional positions by 2030. It strengthens energy security, reduces reliance on imported fuels, improves human capital through better health and education, and contributes to climate resilience. Plus, scaling off-grid solar could lead to climate-positive growth.

Unlike premature grid expansion — which can strain already stretched utilities when revenues from low-demand customers fail to cover costs — off-grid solar leverages the potential to tap much needed investment from the private sector while expanding access sustainably.

Addressing the Resource Constraint

A central question in this debate is whether pursuing both household and industrial electrification is realistic given limited public resources. This concern is valid.

But the question is not whether public resources should be used, it’s how they can be used most effectively.

Grid expansion for industrial use requires significant public investment, long timelines and complex coordination along the generation-transmission-distribution value chain. These infrastructure investments should be targeted at the industrial clusters, urban centers and economic corridors where they can deliver the greatest economic returns.

Decentralized solutions also require public support, albeit with a different mix of capital. Targeted subsidies, results-based financing, and value-added tax (VAT) and tariff exemptions are essential to close affordability gaps and enable broad-based energy access.

The key difference is that off-grid investments are often lower-cost, faster to deploy, quicker to benefit end users and better able to leverage private capital. Public funding in these markets plays a catalytic role, crowding in private investment and extending access to populations that would otherwise remain unserved.

This distinction matters. It means that supporting household access is not a diversion of scarce resources, but an efficient and high-impact use of them. Ensuring all citizens have access to electricity regardless of where one lives remains a public sector mandate.

Therefore, we do not need to choose between “households first” or “industry first.” We need to allocate public funding and tap private capital strategically across both: grid investment to power industrial growth, and decentralized solutions to expand access, build demand, and strengthen the workforce and economic base that growth depends on.

Moving Beyond False Trade-Offs

The debate around which electrification strategies Africa should pursue is an important one — and it has deep implications for the continent’s ambitious Mission 300 electrification initiative. It is right to question whether connection targets alone are sufficient, and to push for outcomes that include jobs, productivity and economic growth.

But we should be cautious about replacing one oversimplification with another.

The risk of trickle-down electronomics is not that it prioritizes industry too highly: It’s that it assumes development will unfold in a neat, linear sequence, where benefits automatically diffuse from large-scale investments to households over time. The reality is more complex.

Electricity access, economic growth and productivity evolve together, often unevenly. Policies and investments must reflect that complexity.

Africa’s energy future will be built through a combination of grid expansion, mini-grids and off-grid solar. It will be financed through a mix of public and private capital. And it will depend on both industrial growth and the ability of households and small businesses to participate in the energy economy.

But it will decidedly not be delivered by trickle-down electronomics. It will be built by powering people and economies in parallel, not waiting for one to catch up with the other.

Ryan Kilpatrick is Director of Strategic Communications and Advocacy, and Patrick K. Tonui is the Head of Policy and Regional Strategy at GOGLA.

Photo credit: inkoly