An Investigation of Multidimensional Energy Poverty among South African Low‐income Households

• Date: 01 December 2018
• DOI: http://doi.org/10.1111/saje.12207
• Author: Jeanette Snowball,Sylvia Olawumi Israel‐Akinbo,Gavin Fraser
• Published date: 01 December 2018

© 2018 Economic Society of Sout h Africa. doi : 10.1111/ saje .122 07

468

South African Journal of Economics Vol. 86:4 December 2018

AN INVESTIGATION OF MULTIDIMENSIONAL ENERGY

POVERTY AMONG SOUTH AFRICA N LOW-INCOME

HOUSEHOLDS

SYLVIA OL AWUMI ISRA EL-AKI NBO*, JEANE TTE SNOWBAL L† AND GAVIN FRA SER†

Abstract

This paper empirically assesses multidimensional energy poverty for low-income households in

South Africa using the four waves of the National Income Dynamics Study. The study adopts the

Nussbaumer et al. (Measuring Energy Poverty, 2011) methodology, the multidimensional energy

poverty index (MEPI), to estimate energy poverty on 10,801 low-income households. The results

indicate that low-income households in rural areas are more energy deprived than those in the

urban areas. The MEPI score across the years in low-income urban and rural households depicts a

moderate state of energy poverty. Furthermore, low-income households in both the urban and the

rural areas are mostly deprived in the dimension of heating fuel. The study recommends that

suitable measures to combat energy poverty be rural–urban specific.

JEL Classificati on : C21, H31

Keywords: Energ y poverty, multidimensional ener gy poverty index, low -income, South Africa

1. INTRODUC TION

Most definitions of energy poverty for developing countries emphasise accessibility to

electricity or electrif ication of low-income households in the rural or urban settlements

(Dinkelman, 2011; Pachauri and Spreng, 2011). The World Economic Forum, WEF

(2010) defined energy poverty a s the lack of access to sustainable modern energy service s

and products. Another definition described energy poverty as a descriptor of problems

of households’ energy consumption in the face of lack of households’ access to electricity

and clean cooking facilities (Sovacool, 2012; Li et al., 2014). In developing countries,

having no access to electricity, or not being able to afford it, and relying on traditional

fuels, constitutes energ y poverty.

Energy poverty pervades many, if not all elements of poverty and it is one of the big-

gest social problems of the twenty-first centu ry (Srivastava et al., 2012). The state of elec-

tricity access, par ticularly in developing countries in Af rica, is critically low. The report

from International Energy Agency, (IEA , 2016) shows around 634 million (two in every

three people) in Sub-Saharan A frica have no access to electricity. At the country level, in

2014, only 1% of the population in South Sudan had access to electricity while Nigeria

and Ethiopia records 32% and 16% access rate, respectively (IEA and World Bank,

2017). Lack of access to electricity is a par ticular problem in rural area s than in urban

* Corresponding author: R hodes University, Grahamstown, 6139, South Africa.

E-ma il: ak inboso@ yahoo.co.uk

† Rhodes University, Graham stown, South Africa.

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of Economics

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© 2018 Economic Society of Sout h Africa.

South African Journal of Economics Vol. 86:4 December 2018

areas. Around 63% of the population in Sub-Saha ran Africa is rural, of which only 19%

has access to electricity, compared to 37% of the urban population (IEA , 2016).

In South Africa, energ y poverty is a challenge even though its boasts higher rates

of electricity access (86%) than most of its neighbours, for example, Malawi (10%),

Mozambique (20%), Swaziland (65%), Tanzania (36%) and Zimbabwe (42%). A report

from Integrated Energy Plan (2013) states that there are approximately 1.5 million rural

and urban households in the country not connected to the national electricity grid, in

addition to the millions that are connected to the grid but are not able to pay for elec-

tricity. With a high electrif ication rate, households at the low-income level cannot afford

sufficient electricity to improve their welfare (Ismail and Khembo, 2015).

One of the objectives of the government of South Africa is to increase accessibility to

modern energy (especially electricity). Electrifying rural and urba n low-income houses,

which had been deprived of access to electricity during apartheid became an important

issue of policy focus. The national electrification program was to encourage the house-

holds that just got their houses connected to the national electricity grid to shift from

using wood, paraf fin, candles and batteries to electricity for their household needs (Swart

and Bredenkamp, 2012; Department of Energy (DOE) 2015). It is necessary to have an

understanding of the state of low-income households in both rural and urba n areas with

respect to energy povert y.

Attempts have been made to measure the energy povert y in South Africa. This study

employ the use of a new metric, which can be used to quantif y and assess energy pov-

erty. The multidimensional energy poverty index (ME PI), proposed by Nussbaumer et al.

(2011), and captures the set of energy deprivations that may a ffect an individual or house-

hold. One of its unique advantage, as opposed to previous approaches that have been used

to measure energy poverty in South A frica is that it allows for decomposability. Using

the MEPI approach, this study aims to investig ate if the low-income households in South

Africa are in a state of energy poverty and the energy dimension in which the deprivation

is experienced. In addition, the unique advantage of the MEPI wi ll be explored to identify

which group of low-income households are in a state of energy poverty. The advantage of

using a panel dataset is t hat it enables the tracking of individua ls/households at a point in

time so that one can control for individual/household level f ixed effects.

The rest of the study is organised as follows. Section 2 provides some definitions and

a brief overview of the related literature. The data and methods are presented in section

3. Section 4 has a discussion of the results and the final section gives conclusion and

recommendations.

2. A BRIEF LITER ATURE R EVIEW

2.1 Definitions

Energy poor/non-poor households are define d as households that cannot /can meet their basic

energy needs by esti mating a minimum limit of energy consumpt ion (Pereira et al., 2011).

The incidence of multidimensional energ y poverty i s the percenta ge of people/house-

holds who are energy poor.

Intensity of energy deprivation is the percentage of dimensions in which energy poor

household are deprived (Alkire and Foster, 2011).