Understanding Financing for Electricity Access in Senegal

  • April 19, 2021

  • Dakar, Senegal

Sabine Mensah

Regional Manager Inclusive Digital Economies

Ousmane Drabo

Media and Communications Specialist


Senegal is actively working to expand the electricity grid to connect more people

The United Nations Capital Development Fund (UNCDF) is launching a study to analyze the intersection between access to finance and access to electricity in Senegal.

The objective of this study is to better understand the barriers that women and youth face when accessing finance after being connected to the electricity grid, specifically in rural areas across five regions in Senegal. Because wiring your home is costly and equipping your business is another big investment that requires financing, in particular for poor and low-income households in Senegal.

More than 5.1 million Senegalese live without access to the grid. The electricity gap is significantly prominent between rural and urban areas, at 53 percent versus 94 percent respectively, disproportionately affecting low-income and rural households. As a result, those in the rural area spend an average of 13 percent of their monthly income on traditional energy sources such as fuels and kerosene lamps, energy sources which are both expensive and harmful to their health and safety. 48 percent of MSMEs in Senegal declare that the lack of access to electricity is a high challenge for their business, while 52 percent share that accessing finance is a major concern (Survey 2017 by ASEPEX).

Senegal is actively working to expand the electricity grid to connect more people, particularly in rural areas within its strategy of Universal Access to Electricity by 2026. However, where a grid connection is available, some households may not have access due to the initial cost of interior wiring. The Millennium Challenge Corporation, which is supporting the Government of Senegal’s electricity access plan through the Power of Senegal Compact, estimates connection costs can range between US$110 to US$180. For rural residents, this represents a large portion of their annual income. But connection and interior wiring costs are not the only expenses related to electricity. People also need other expensive equipment and appliances to grow their businesses or reduce time spent on tasks like milling grain.

Sabine MENSAH, Regional Manager, Inclusive Digital Economies, West and Central Africa says, “At UNCDF, we understand how access to electricity can help households improve their standard of living. There is a need to better understand how financing for electricity access and electric equipment can appropriately meet the needs of customers. UNCDF is particularly focused on understanding the barriers for women and youth to access finance, as they are often more vulnerable and lack funds.”

Harnessing the potential of women and youth in newly connected areas in Senegal

UNCDF is conducting a study that will map the current use of and barriers to accessing financial services for electricity related services - looking at both the demand and supply sides; what customers need as well as what financial service providers offer.

The study includes an in-depth quantitative survey in rural areas to identify the needs of women and youth in terms of financing. Approximately 2,000 people (men, women and youth) in rural areas will be surveyed. Specifically, the study will examine rural populations’ needs and willingness or ability to pay and save over time for electricity grid costs (connection and interior wiring) and electric equipment. The survey will also seek to better understand the challenges people face by using human-centered design approaches for in-depth interviews and focus groups. UNCDF will then present the study findings generated on consumer behavior and needs in a webinar to inform financial service providers and electricity access stakeholders.

On the supply side, the assessment will seek to understand the challenges and opportunities of financial service providers, electricity suppliers and equipment manufacturers and other key stakeholders in extending financing. UNCDF will determine the accessibility of electric equipment in rural areas and provide an overview of access points of financial services providers vis-a-vis rural areas (such as banks, micro-finance institutions (MFIs) or mobile money). The findings from this study will provide stakeholders a better understanding of the opportunities available to help expand access to electricity financing in Senegal.

This study is co-funded by UNCDF and the Millennium Challenge Corporation of the United States.