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Rural Electrification: An Effective Way for Poverty Relief in Zimbabwe

A rural electrification program in Zimbabwe, using income-generating activities carried out by local small and medium-sized enterprises (SMEs), has been approved as effective in reducing poverty in the country, said Maxwell Mapako, a senior energy specialist from CSIR Natural Resources and the Environment of South Africa, in an interview with China Development Gateway yesterday.

In many developing countries, the level of electrification is generally seen as one of the key indicators of development. However, contradictions always exist between using expensive high technology solutions and putting it into practice for the poor.

According to Mr. Mapako, in Zimbabwe, about 60-70 percent of the population still lives in rural areas where the economy is much slower. The urban-rural gap is quite large, with an average annual income of US$600 nationwide but only US$60 or even less in rural areas.

Electricity costs in Zimbabwe are about 1 or 2 US cents per kilowatt-hour. Although the Zimbabwean government subsidizes the construction of an electricity infrastructure in rural centers where local government infrastructure such as police stations, agricultural extension and health services are located, the households still must pay grid extension fees from the centers to their homes. This means that only those who are rich can afford electricity and this is why the electricity coverage in rural areas is only 20 percent; a large proportion of the rural people have no connection with electricity. The returns from the electricity supply are far less than the investments made in grid extensions due to low levels of power consumption in rural areas.

To cope with this problem, Mr. Mapako said, Zimbabwe has adopted the Expanded Rural Electrification Program (EREP), a new initiative that was implemented by the Rural Electrification Agency (REA) as a result of government ratification of the Rural Electrification Fund Act in January 2002. It targets income-generating activities, mainly the SMEs in the areas where the electricity grid extends. The services provided by these SMEs include automotive, electrical, electronic, and general repairs, welding and spray-painting, milling, carpentry, secretarial services and general retail sales.

A six-percent electricity tariff goes directly to the REA, instead of the treasury via a government department in a normal way. The agency, using this fund, provides loans to businesspeople and delivers to the site electrical machinery, grinding mills, irrigation equipment and welding machines, anything that local entrepreneurs may order.