If one gain from sustainable energy is the reduction of poverty, then we must
understand how these virtuous circles of prosperity work, just as the poverty
cycle itself. What sets off the spark for households, communities, societies to
advance? Nutrition, schooling, charisma, water, market access, finance or, what?
The energy dimension is in there somewhere. Because we know what fails for a
household and an economy, when there is no energy to count on.
“space in time, light and livelihood”
Less Poverty, More Profits
Poverty hates the light
Poverty is. According to the Sri Lankan microfinance change agency SEEDS (see
page 26), poverty is a state of not having the following basis needs
fulfilled: a clean and beautiful environment, basic health care, modest
housing, adequate supply of food, spiritual and cultural needs, minimum
of clothing requirements, basic communication, adequate supply of clean
water, total education and energy requirements.
From the perspective of an institution which is – speaking bluntly –
anti-poverty in spirit and economic and financial in nature, then any
investment in sustainable energy has to embrace the elimination of
‘energy poverty’ amongst its goals. This is the stuff of profound
debate, a process which may be served by the examples in this book.
Poor households spend an inordinate share of their monthly budget on
energy. SEEDS estimates that for its clientele of the rural poor, food
consumes 75% of their expenses, and energy 19%, with variables dependent
on the source of energy, be it a generator, replaceable batteries,
chargeable batteries, dry batteries, fuelwood, kerosene … Whatever can
be done to introduce cheaper, cleaner, more reliable energy into this
scenario is going to pare down several elements in the poverty cycle. It
will also create space and opportunity in households’ budgets of time,
light, clean air, livelihood and learning.
In 2002 in Bangladesh, a
detailed survey was conducted to assess the
economic and social impact of the country’s Rural Electrification Programme. Its scope and its findings make it perhaps the
most detailed publicly available evaluation of such impact in rural
electrification in Asia and the Pacific, if not more widely.
Poverty is less light
The expansion of household connections through
rural electrification in the two decades before the survey had been
1,200 fold; from 2852 in 1983 to 3,413,825 in 2002, bringing direct
benefits to 20.5 million people. A sample of 2,491 households was
surveyed in 24 of the country’s 67 BPS rural electrification boards.
Parallel surveys were held amongst users of irrigation equipment, in
industry and in commerce.
The survey reports that “the direct impacts on households are mostly
economic. These are reflected in enhanced income, and employment, and
optimized expenditure pattern, surpluses, savings, and asset building.
Most indirect impacts are related to the social and cultural aspects of
life, which include, among others, such areas as education, health,
women's status, modernization etc. These direct and indirect benefits
together produce synergy in economic growth, poverty reduction, and
human development.”
Having been held on the basis of ‘with/without electricity’
(households in villages having had electricity for five or more years,
and off-grid villages), the survey provides many insights in the levels
of electricity use and the likely direct effect on household livelihood
and quality of life.
Poverty is less quality time
In financial terms (Table 1), the average annual income of a
connected household, at 92,963 Taka (US$ 1,591) has become 2.26 times
greater than that of an unconnected household in an electrified village,
and 65% times greater than that of an average household in an unelectrified village. Surplus income at 20,287 Taka (US$ 47) is 85
times more than the average household surplus in an unelectrified
village. Household savings, a crucial indicator for household security
and investment potential, are on average
28,893 Taka (US$ 495), are
three times higher than the savings of an unconnected household, and
twice the volume of a household in an unelectrified village.Table 1. Energy and income
In a fine expression of the difference just a few minutes can
make in micro- and ultimately macro-terms, the amount of time spent by
female heads of households or seniors on sewing in the hours of dark is
more than six times higher in connected households than in unconnected
households, and 12 times more than in households in an unelectrified
village. The proportion of households living below the national poverty
level is 21% lower amongst the connected group than unconnected
households, and 9% lower than the proportion of all households in
unelectrified villages.
Poverty is less schooling, less health
Levels of education, both in terms of performance and attendance, are
significantly higher in connected households (which have a literacy rate
of 70.8% and a school enrolment rate of 64%) than in unconnected
households (54.3% and 55% respectively) and in households in an unelectrified village (56.4% literacy). This differentiation (see Table
2) is also found in school dropout rates – 1 in 5 students in a
connected household 1 in 4 in an unconnected household, and 28% in unelectrified villages. And students in connected households spend 126
minutes each day on study after sunset -- a perhaps critical extra few
minutes than their peers in unconnected households (23 minutes more) and
in unelectrified villages (17 minutes more).
Similar improvements are to be seen in household health (see Table
3). The surveyed measured the general level of awareness of households
on what it calls ‘crucial public health issues’, such as where to go for
child vaccinations, understanding of HIV/AIDS and its avoidance, danger
signs in pregnancy, prevention of goitre or avoidance of arsenic in
water. Of 20 such issues, connected households had much higher
awareness: 12.8 issues were familiar to them, compared to 8.8 in
unconnected households and 8.2 in unelectrified villages. Equally, the
level of infant mortality was significantly better among connected
households (42.7 per 1,000 live births) than in unconnected households
(53.8/1000) and in unelectrified villages (57.80)*.
“synergy in economic growth and poverty reduction”
Lightbulbs and investment climates
Those extra minutes invested on sewing each week by female leaders
and seniors of connected households in Bangladesh express, in a
nutshell, the key elements of the entrepreneurial opportunities which a
lightbulb can open up. They represent the chance to organize productive
and leisure time more freely, to generate a bit more income, to increase
savings for a rainy day or – dreams do come true – for an installment on
a new sewing machine.
This change in a household investment climate underscores a comment
in the ‘World Development Report 2005:A Better Investment Climate for
Everybody’, the World Bank’s major annual publication. Addressing the
issue of poverty reduction, it says: “A good investment climate also
helps to reduce the costs of goods consumed by poor people, and improves
the living conditions of poor people directly.” True enough, and it
could have included ‘helps to reduce the cost of energy, and enhance its
benefits’ too.
The availability of energy and energy services is a critical
component of the toolkit of positive investment. This was underlined in
some key comparative studies of China and India undertaken during a
series of Investment Climate Surveys (ICS) by the Asian Development Bank
and the World Bank Group. The surveys looked at three sectors: garments
and leather goods, electronics and electricals and autocomponents.
In the two largest economies, the differences are startling indeed.
The Chinese companies surveyed lose on average approximately 1% of their
output due to power outages. Their Indian counterparts lose
approximately 9.5% – the smaller SMEs, with between 20 and 49 employees
an extra 0.2% to 1.3% more.
There are some differences in the geographical distribution of these
frequencies, but the overall distinction between China and India remains
stark. Three Chinese cities – Shanghai, Chengdu and Tianjin -- report
losses from outages between 0.4% and 1.3%, with a fourth city, Beijing,
reporting losses of 4.7%. Five Indian cities – Pune, Chennai, Kolkota,
Delhi and Bangalore – report losses of between 7.4% and 15.2%, with
Mumbai a much lower level, at 4%.
More generators, less competition
The levels of lost output are reflected largely in the back-up
measures taken by SMEs, in the form of operating generators. In China,
in Shanghai and Beijing, there are no back-up facilities; in Tianjin
about 4%. In India, about one in four of the SMEs surveyed in the cities
of Kolkota, Pune and Mumbai had generators.
“unreliable
power ties up
capital”
In Bangalore, Chennai and
Delhi, there were back-up systems in 70% to 80% of the SMEs in question.
The ICS report notes, icily, that the enterprises had “responded to the
unreliability of power supply from the public grid by running their own
generators, tying up significant capital that could otherwise have
deployed in lines of core competence.”
There will be other factors than power availability and investment
idling in generators that have affected the competitivity of the sectors
concerned in the two countries. These include energy prices and
associated transportation costs. In all, reports the ICS, energy related
costs reduced the Total Factor Productivity of Indian companies in
general by 20.4% compared with Chinese enterprises. In the garments and
leather sectors, they did so by 22.8% and in the autocomponents sector
actually by 25.6%.
Energy is a central factor for economic growth and competitivity is
key to this, however it may be organized. As was noted at the World
Summit on Sustainable Development in
Johannesburg in 2002, where the
energy-poverty nexus became a platform for a good few of the 200-plus publicprivate partnerships established there, ‘poverty reduction cannot
happen without growth’. ■
Poverty is less schooling, less health
startling indeed.
The Chinese companies surveyed lose on average approximately 1% of their
output due to power outages. Their Indian counterparts lose
approximately 9.5% – the smaller SMEs, with between 20 and 49 employees
an extra 0.2% to 1.3% more. 
Three Chinese cities – Shanghai, Chengdu and Tianjin -- report
losses from outages between 0.4% and 1.3%, with a fourth city, Beijing,
reporting losses of 4.7%. Five Indian cities – Pune, Chennai, Kolkota,
Delhi and Bangalore – report losses of between 7.4% and 15.2%, with
Mumbai a much lower level, at 4%.