Poverty is a complex socio-economic phenomenon, but a key reason why people in the developing world remain trapped in a cycle of poverty is they lack access to essential goods and services (energy, water, healthcare, education, etc.). Without this fundamental infrastructure, the cost of meeting ones basic needs is high. Time and resources spent meeting those needs are diverted from other more productive activities.
If you’ve ever traveled to a developing country, then you have probably felt the effects of weak infrastructure. Poof! The power suddenly goes out in your hotel room. Moments later a diesel generator roars to life and the lights flicker back on. You approach the tap in your bathroom but hesitate to brush your teeth. You remember your guidebook warned you to “boil, peel, cook or forget” local produce. For the rest of your stay, you are religious about drinking bottled water.
We take for granted basic services in the developed world because they are provided by regulated, grid-based utilities. We only appreciate them when a storm knocks out the power, or a water main breaks. For a day or two you are annoyed, but life quickly returns to normal. The lack of reliable services may be an inconvenience when you visit a developing country, but imagine everyday life for the locals. The daily inconveniences and indignities caused by weak infrastructure impose an enormous burden on those who live there. And once you venture outside the main urban centers, the quality and availability of such services either deteriorates or disappears entirely.
Utility grids cost billions to construct and maintain. Developing countries can’t always afford to undertake such large scale projects due to an insufficient tax base, or because there is corruption and poor governance. Enter the vicious circle. Poor infrastructure engenders a lack of trust, which leads to tax evasion, and hence a lack of funding for investment. If public services are unreliable or of poor quality, what incentive is there to pay for them? This is why multilateral development banks often focus on financing infrastructure. However, the design and implementation of these projects are critical for their success, otherwise they can exacerbate the problem and leave the developing country in debt.
Where the public sector fails, the private sector steps in. Diesel generators and bottled water are examples of private sector solutions to the problems of electricity and potable tap water, but are these solutions affordable and sustainable? Can the average person who lives on a few dollars a day afford bottled water or a diesel generator, or are these solutions beyond their means? Diesel generators pollute the air, bottled water generates plastic waste.
Does all this mean developing countries will be forever stuck in a vicious circle? If the only solution is to build expensive utility grids, then perhaps yes. What if, however, there were a smarter, less expensive approach? Much in the same way cellular telephone networks have leapfrogged expensive landlines, technological advances are producing solutions to basic problems that are completely “off-grid.” In fact, many social enterprises are harnessing technology to deliver basic services in this manner.
For example, improvements in the reliability and efficiency of white LED lighting, lithium-ion batteries and photo-voltaic cells have given rise to highly-affordable “off-grid” energy and lighting solutions for low-income populations. A portable, solar-powered lamp costs $25 and can generate brighter, cleaner light than burning kerosene, which is what many poor people in Africa and South Asia currently rely on. The money saved on buying kerosene means the payback period for a $25 solar lamp is typically less than 4 months.
The off-grid solar energy and lighting sector is rapidly scaling and giving rise to innovative impact businesses that are attracting hundreds of millions in capital and providing affordable, sustainable energy and lighting solutions to millions of people. There are many examples of successful off-grid solar companies and products (more on this in later blogs) but you need only visit the GOGLA website (“Global Off-Grid Lighting Association”) to see what’s happening in the sector.
Addressing the need for basic services in the developing world does not necessarily require the construction and maintenance of expensive utility grids. There are more affordable and sustainable private sector driven solutions that can replace incumbent technologies, like diesel generators.
