top of page
Search
Stephen Nash

The impact of the global recession on reaching SDG 7

As increasing amounts of data become available, the effects of the Covid-19 pandemic on efforts to improve energy access in less developed countries are becoming clearer. Several surveys and reports have been published in recent weeks that help build up the picture. The data are sobering.

The IMF’s latest World Economic Outlook update illustrates the macro impact and the reduction in economic growth that is expected as a result of the recession triggered by policy responses to Covid-19. The map below shows the cumulative reduction in GDP expected by the end of 2021 based on the IMF’s latest figures, compared against projections from last October’s World Economic Outlook. The map is focused on the IMF’s “Sub-Saharan Africa” and “Emerging and Developing Asia” groupings. In many of the countries shown, GDP is expected to be at least 10% lower than previously expected, even by the end of 2021. India and the Philippines are shown to be particularly badly hit, but countries in Africa, including Ethiopia, Zimbabwe, and Botswana are also badly affected.

Source: IMF World Economic Outlook, Kuungana analysis

The economic fallout is not evenly spread, but this dramatic fall in growth expectations will surely impact the ability to pay of both actual and potential energy consumers. It is also likely to impact the credit-worthiness of consumers and the ability of companies deploying energy access solutions to raise capital.

The Global Off-Grid Lighting Association (GOGLA) has also just released its latest sales numbers for off-grid solar kits, as reported by its members. Globally, GOGLA reports a 26% reduction in sales volumes during the first half of 2020 when compared against the same period last year. GOGLA’s analysis shows that sales of entry-level products were particularly hard hit. The chart below combines the IMF GDP reduction data on the x-axis with the GOGLA sales data year-on-year movement on the y-axis. The size of the bubbles indicates the size of the population that remains without access to electricity for each country.

The figure shows how some of the countries accounting for the largest remaining energy access gaps (in absolute terms) are those that might be worst affected by the economic contraction. Progress in India and Ethiopia could be particularly exposed to the effects of a recession. India in particular has made rapid progress in addressing the energy access gap in recent years; sustaining this will be challenging with the economy expected to shrink by more than 10% in 2020.

Source: IMF World Economic Outlook, GOGLA, ESMAP Tracking SDG 7 data, Kuungana analysis

These findings resonate with analysis included in the IEA’s recent World Energy Outlook 2020 publication. The IEA analysis suggests that more than 25 million people in developing Asia and Africa could lose the ability to pay for an essential bundle of electricity services, with a further 85 million unable to afford an extended bundle. The IEA also highlights India, Ethiopia, and DRC as being particularly exposed, but also mentions DRC, Niger, and South Africa as being countries where >5% of the population could lose access to basic energy services.

The potential for recent progress on energy access to be reversed as a result of the economic contraction is clear. But Covid-19 and its impact on communities also highlights the need for energy access. Households reverting to traditional fuels may be at greater risk from respiratory illnesses. Households without modern energy access may have less opportunities to learn or to access alternative income-earning activities. Meeting SDG 7 is both more challenging and more urgent than it was at the start of the year.

Comments


bottom of page