AfDB mulls establishment of electricity cooperatives in Nigeria and Ethiopia

21 Feb 2019
Financial Nigeria


Successful electricity cooperatives improve rural electrification while creating sustainable businesses.

Africa Development Bank President, Akinwumi Adesina

The National Rural Electric Cooperative Association (NRECA) – an organisation representing over 900 electric cooperatives in the United States – has been commissioned by the African Development Bank (AfDB) to conduct a feasibility study on the potential of electric cooperative business models in Nigeria and Ethiopia. NRECA’s mandate is to consider the regulatory, legal, technical and socio-economic factors that can impact the creation of electric cooperatives in the two countries.

Electricity cooperatives, according to the AfDB, are tax-exempt businesses set up and owned by the consumers. Used in many parts of the world, these consumer-owned utilities purchase electricity at wholesale and deliver it directly to the consumers. This is considered a more reliable and affordable model for electricity distribution in rural areas where investors in the power sector do not think there is enough incentive to extend grid electricity.

According to a statement released by AfDB on Wednesday, the study will be funded by the South-South Cooperation Trust Fund (SSCTF) – established by the AfDB and Brazil in 2011 – and will run for three months. Thus, the findings of the study are expected to be delivered in May.

“This study is timely and aligned with the Bank’s New Deal for Energy in Africa,” said Batchi Baldeh, Director of Power Systems Development at the AfDB. “We look forward to working with NRECA International to execute the study, and to leverage its extensive experience in electricity business models to pave the way for the implementation of transformational projects across Africa.”

Currently, power shortages diminish Africa’s GDP growth by 2-4 per cent per year, holding back job creation and poverty reduction efforts. This effort is part of AfDB’s goal of achieving universal electricity access across Africa by 2025. Successful electricity cooperatives improve rural electrification while creating sustainable businesses.

“We selected Nigeria and Ethiopia following a dialogue with their respective ministers of energy during the Bank’s Africa Energy Market Place in July 2018,” Baldeh said. “The ministers expressed their governments’ commitment to improving rural access through established models. We rely on this cooperation to explore this innovative model of delivering our High 5 to light up and power Africa.”

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