Rural communities have been found to bear the economic brunt more than urban areas as a result of power outages.
A study conducted by Tanele Magongo, Associate Researcher at the Swaziland Economic Policy Analysis and Reseach Centre (SEPARC) gives a glimpse on why rural communities in Swaziland are lagging behind in terms of economic development compared to their urban counterparts.
“The study sought to quantify the economic costs of power interruptions on both residential and business sectors, in a bid to provide possible policy solutions to curb electricity unreliability. This assessment could give policymakers an idea on what the country stands to lose from an unstable and unreliable power system,” she said.
Presenting her study at the Swaziland Economic Conference 2017, Magongo noted that the Energy Policy states that rural households face many challenges which include the unreliability of electricity supply due to power outages. The study reveals that power outages cost each household about E118.96 per month, which could total to about 1.67% of gross domestic product (GDP).
“The rural sector is the most affected amongst location areas, and the Lubombo region is the worst affected of all regions,” she said, adding that this has an adverse implication on development for the country.
The study interviewed about 83 businesses (21 major customers and 62 small commercial customers), and 453 households. Magongo revealed that rural households had the highest level of costs that were incurred by the residential sector which accounted for 57.5% of the total costs incurred by the residential sector. The Lubombo region also had the highest level of costs incurred by the residential sector.
In terms of the business sector, the industrial sector reported the highest level of costs incurred, which accounted for 70.91 percent. Magongo emphasised that the industrial sector contributes about 32% to the country’s GDP, hence such costs to the sector reduce company profits and the output loss reduces total output produced and that means that GDP does not grow as expected.
“This also becomes a deterrence to Foreign Direct Investment (FDI) because companies could be forced to relocate to countries with stable energy supply,” said Magongo. “If not addressed, the problems of the electricity sector will severely undermine the government’s effort to improve the development of the country. In essence, the benefits of increased access to the electricity grid will not be realised if the power continues to be unreliable the way it is now.”
The study recommends that Swaziland explores the possibility of establishing mini-grids in the rural areas in order to alleviate the problems experienced by the affected location areas in terms of electric power. It also recommends that the utility supplier sets up customer compensation schemes whereby a customer is compensated for facing a prolonged power interruption than the certain acceptable period (this could be determined by the regulatory authority) in order to increase standards of service for electricity customers.
Another recommendation is that the country should explore the possibility of using own generation of electricity through renewable resources such as solar energy, and accelerate the implementation of a tariff differentiation strategy between low income and high income groups.
