Poverty Reduction Strategy Process(PRSP) and Energy

How can PRSP Support Pro-Poor Energy Interventions?

Stephen Karekezi, Lugard Majoro and Waeni Kithyoma

AFREPREN/FWDAfrican Energy Policy Research Network/Foundation for Woodstove Dissemination

Email: afrepren@africaonline.co.keWebsite: www.afrepren.org

The Challenge

What are pro-poor energy interventions?

• Millennium Development Goal (MDG) compatible Increased electricity access for all rural & peri-

urban institutions and enterprises

° Tunisia’s rural electrification level is now estimated to

be over 90%

° Estimated cost from MDG Review – of the order of

$2 $10/capita/year

Improved and cleaner cooking stoves & fuels

° Over 90% of urban households in Senegal use LPG

° MDG Review – of the order of $5 to $10/capita

What are pro-poor energy interventions?

• Millennium Development Goal (MDG) compatible

Access to motive power

° Treadle pumps, gensets, windpumps &

micro/pico hydro

° 40,000 households using treadle irrigation

pumps in Kenya

° Treadle pump – $25 to $50

How can Poverty Reduction Strategy Process (PRSP) support pro-poor energy interventions ?

What is Poverty Reduction Process (PRSP)

• Main tool used for policy & national budget priorities and economic planning

• Basis for donor coordination – aid resources aligned to PRSP priorities Linked to EC-led Country

Strategy Papers (CSPs) Other donor-led development

strategies

Macro-Economic Policy & Budget Priorities

Sector Budget Priorities

What is Poverty Reduction Process (PRSP)

• Designed to be consultative process involving all country’s major sectors and stakeholders

• Guides Central Government budgetary allocations to sectors such as energy, health, education and agriculture

Macro-Economic Policy & Budget Priorities

Sector Budget Priorities

Impact of PRSP

Macro-EconomicPolicy & Budget Priorities

Health, Education & Water: Big Winners but not Energy

Sector Budget Priorities

• PRSP process increased financing for health, education and water but not energy sector – macro-economic rationale

• Health, education and water analysts able to demonstrate: Investment in health,

education and water = poverty reduction

Impact of PRSP

Macro-EconomicPolicy & Budget Priorities

Health, Education & Water: Big Winners but not Energy

Sector Budget Priorities

• Consensus on priority activities and institutional approach Education – Primary

education Health – Primary health

care, HIV

• Need similar approach for energy

• $10 oil price increase = 1.5% drop in GDP)

Energy & Per Capita Income

• Plus project-level evidence but still not as persuasive as evidence from health, education and water sectors - UNEP/Riso COOPENER initiative addressing this issue

100

1,000

10,000

100 1,000 10,000 100,000

Per Capita GDP in PPP terms US$ (log scale)

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PRSP & Energy - Country Status

• In some countries, energy sector does not feature prominently in PRSP

• Compounded by limited attention to energy in MDGs (Millennium Development Goals)

Strong Modest

Mozambique

Ethiopia

Zambia

Kenya

Tanzania

Eritrea

Uganda

Malawi

Ensuring PRSP Addresses Energy Sector

• Initial formulation stage

• Review (approximately every 3 years)

Macro-Economic Policy & Budget Priorities

Sector Budget Priorities

1st Priority: Ensure Energy is Mentioned in PRSP

Macro-Economic Policy & Budget Priorities

EUEI 1: Enabling Environment for Energy Sector Development

Sector Budget Priorities

EUEI 2: Facilitate Large Scale Energy Investments

& EUEI 3: Energy Service Delivery

2nd Priority: Ensure PRSP Supports Pro-Poor Energy Services

Macro-Economic Policy & Budget Priorities

EUEI 1: Create Enabling Environment for Pro-Poor Energy Initiatives

Sector Budget Priorities

EUEI 2: Facilitate Large Scale Energy Investments

& EUEI 3: Influence Delivery of Pro-Poor Energy Services

Examples

EUEI: Create Enabling Environment for Pro-Poor Energy Initiatives

EUEI 2: Facilitate Large Scale Energy Investment

EUEI 3: Influence Delivery of Pro-Poor Energy Services

Policy study on electrification targets and how best to use energy subsidies

-Connection fund -Low-cost electrification options- Kerosene, LPG stoves- Improved biofuel stoves- Diesel sets - Micro, pico hydro & windpumps- Solar and biofuel dryers

Country Preparatory Meetings - Priorities

Create Enabling Environment for Pro-Poor Energy Initiatives

Facitate Large Scale Energy

Influence Delivery of Pro-Poor Energy Services

- National electrification targets - Energy subsidies studies - Impact of oil price increases $10 increase = 1.5% of GDP)

- Rural energy or electrification fund-LPG & Kerosene- Gensets- Solar dryers & Solar PV-Treadle pumps-Small credit schemes-Community micro hydro - Improved cookstoves,

Key Actors to be Identified

Create Enabling Environment For Pro-poor energy interventions

Facilitate Large Scale Energy Investment

Influence Delivery of Pro-Poor Energy Services

Ministry of Finance and/or Planning, Independent policy institutes

-Ministries of Energy-Utilities and mini-grid operators-Ministries of agriculture & health- Small credit institutions- SMEs-Municipalities- Local governments- Rural institutions (NGOs, CBOs, religious institutions)-Universities