Affordability of Electricity to Rural Consumers in Tanzania: An Elephant in the Room?

Abstract

Affordability of electricity in rural areas has received negligible concern, yet with equivocal information. Thus, this paper extrapolates this disregarded aspect by raising empirical debates on the affordability of electricity connection and consumption while also predicting the factors of domestic electrical appliances among rural consumers. Affordability of electricity connection was measured by a catastrophic approach through the index of utility Price Income Ratio (PIR) at a threshold of 10%. Consumption affordability was estimated through PIR at a 5% share of household income, coupled with a monthly basic electricity consumption of 30 kWh per household. A multiple regression model was adopted to determine electrical appliance ownership in the household. The paper reveals that electricity connection was not affordable to consumers in the lowest income quintile (61.76%), who spent up to 33% of their income. On consumption, electricity was affordable as consumers spent no more than 5% of their household income. Moreover, the paper explains that electricity affordability and the desire for wellbeing motivate consumers to use domestic electrical appliances. Measuring the affordability of energy has a paucity in the energy literature. Thus, the paper provides insight into the present debate regarding affordability measures. Although the paper uniquely uncovers the affordability of electricity connection and consumption as prime factors for policy consideration, energy policy should also consider that affordability does not end at connection; rather, it extends to consumption. Energy policy must prioritise free technical services for rural power connection and subsidise consumption costs for the economically disadvantaged.