Electricity is crucial for development

26 February 2016

Avatar Technologies can provide solutions to help governments raise revenues to finance electrification.

One of the areas which is crucially important for economic and social development in any country is the energy supply sector. However, economic growth is only possible when the power sector is in line with the national development plans of the country concerned.

 Securing affordable green energy

Sub-Saharan Africa is facing the trilemma of security of power supply that has a low carbon footprint (sustainability) and is affordable. The challenge is aging infrastructures that are unable to meet current power demands. Two key aspects will be:

  • upgrading, refurbishing, and process optimisation for existing generation assets
  • building new generation assets

This is an expensive but imperative development process for the economic development of any emerging or developing country and an ideal area for innovative financing for development to provide the necessary revenue.

Pre-paid meters—only half the solution

Installing pre-paid meters is a big part of the solution and will protect the revenues of electricity suppliers. These meters are already having an impact in a number of countries including Kenya, Nigeria, Uganda, Zambia and Zimbabwe. The growth potential is immense.

Very soon, however, infrastructure will not be the biggest obstacle— payment will. Making payment points widely available for people to purchase prepaid electricity vouchers is important when people live in very remote areas.

 Cash is still king in many areas

In Africa, people have high levels of mobile access compared to other basic services. Mobile may be the best way to distribute prepaid vouchers. Cash, however, is still king in a lot of informal markets. Perhaps the best solution to Africa’s electricity payment challenge is to empower informal vendors such as taxi drivers, local shop owners and micro businesses to use mobile technology to buy prepaid electricity vouchers. They can then sell these for cash.

 Governments can fund power plants through innovative financing for development

The African continent needs power plants and a reliable, large-scale power supply for factories, mines and mills. Governments can fund the electrification of their countries through innovative financing for development—micro-contributions on incoming international telephone calls, mobile credit top-ups, remittances, tourist arrivals—this list is not exhaustive as there are a whole range of funding sources appropriate for any specific country. This will allow the country’s government to fund power developments without incurring additional debt or relying on Official Donor Assistance (ODA).

A ready-made financing mechanism

Global Voice Group’s technological partner Avatar Technologies can assist tax authorities to improve fiscal compliance and increase national revenues to fund green energy through real-time VAT invoicing.

Tax compliance—a worldwide issue, is particularly problematic in developing and emerging countries. The Avatar solution provides the government of countries that adopt its solution with a ready-made innovative financing mechanism enabling it to secure funds for development while compensating for dwindling foreign aid.