Despite its high hydro potential, Uganda remains one of the poverty-stricken countries characterized by low access of its population to modern energy services like electricity. Power shortage remains one of the greatest obstacles to the country’s economic growth. On average, only 20% of the country’s population has access to electricity. That number drops to an estimated 7% in rural areas. To address this challenge and in full recognition of the strategic role that can be played by electricity in socio-economic development, the Government has during the last ten years pursued comprehensive power sector reforms.
The investments in the distribution infrastructure have so far not resulted in a significant uptake in electricity connections, especially among poor households. Investments in the distribution infrastructure alone are not sufficient in promoting electrification. One key factor in the electrification equation is the connection cost, i.e. the actual cost charged by distribution companies to connect a customer, as well as the cost for house wiring. These costs are currently prohibitively high for most Ugandan households.
The absolute minimum wiring costs for households is estimated at about USD 90 for a small house and connection costs at USD 200. These expenditures are well beyond the average monthly income of a household which is less than USD 50. These households will remain unconnected to the electricity grid, irrespective of its availability in their neighbourhood.
The results of different surveys across the country reveal that only around 25% of the households connect initially after a grid reaches their area. This number increases over the next years but only seldom reaches the original projections. Clearly, a key reason for the low connection rates is that the households are not able to pay the connection fees.