The Utilization of Informal Financing to Accelerate Off-Grid Energy Adoption in Kenya's Rural Areas

Abstract

The research paper provides a literature review and analysis on the role of informal financing in the adoption of renewable off-grid technologies and the electrification of Kenya’s rural areas. The country is facing a growing demand for electricity and the national grid is not meeting the demands of every region in the country. On the country level, close to 40% of the population do not have access to electricity, as of 2015. In the rural region, the electricity access is much lower with only about 13% of the population having electricity, as of 2015. Kenya has been making tremendous effort in growing the connection rate, as the economy continues to grow as the needs of the population also increase. In 2018, the Government of Kenya introduced the Kenya National Electrification Strategy to accelerate the national electricity access to 100% by 2022. New innovations in the informal financial sector have increasingly enabled rural dwellers to access affordable capital to invest in renewable and other off-grid technologies. The utilization of mobile-based technologies has accelerated economic development of the country and the ability for many rural dwellers to enhance their standard of living. These innovations are giving users the ability to obtain loans, save money, transfer and receive payments, and pay for products and services. The integration of informal financing and off-grid technology innovations is proving to be a tremendous opportunity and mechanism for rural dwellers to gain access to electricity that allows suppliers to be reliably paid, and help the country reach the goal of 100% electrification.