Study shows win-win opportunities for rural communities and electricity companies in Nigeria
Agricultural activities are the bedrock of most rural economies. As agricultural yields improve, so does community economic development.
In Nigeria, agriculture employs over two-thirds of the labor force, making it the largest sector of the Nigerian economy (accounting for 20 percent of GDP). While there is great potential for improving the agriculture sector in Nigeria, and ultimately improving livelihoods, access to electricity remains a major hurdle for food producers and rural communities.
A lack of electricity prevents farmers from converting produce to a form that can be stored and sold at a later date under favorable market conditions. Because of this, many farmers are forced to sell their crops before they perish, which also does not encourage farmers to take measures to increase farm yields. Availability of electricity has a catalytic effect on farmer incomes and productivity and can be transformational for rural economies
In the agriculture sector, the productive use of electricity can enhance income generating opportunities and boost production. Electrifying agricultural productive uses is critical to enable sustainable, commercially-led power service provisions in rural communities across Nigeria. Yet, agriculture and electricity actors rarely coordinate to understand which agricultural activities are viable to electrify or where to prioritize electrification along the value chain. Many commercial electricity providers lack the content knowledge and financial resources required to support productive uses. As a result, most investments in rural electrification do not yield significant income-generating activity.
To bridge the gap between agriculture and electricity actors in Nigeria, Power Africa conducted a comprehensive study through our Nigeria Power Sector Program to identify opportunities to electrify agricultural productive uses, how these opportunities can be developed through commercial business models, and strategies to overcome barriers to deployment.
The Agricultural Productive Use Stimulation in Nigeria: Value Chain and Mini-Grid Feasibility Study considered 12 crop value chains based on their importance and contribution to the Nigerian economy across Nigeria’s Kaduna and Cross River states, including more than 250 field interviews with farmers, processors, and traders in over 40 rural communities as well as an extensive literature review and interviews with sector experts.
Results show that even with geographic differences and a wide range of crops under cultivation, there are immediate opportunities to replace inefficient fossil-fueled and manual processing activities with mini-grid powered electricity for several agricultural value chains in rural Nigerian communities. These opportunities are commercially viable for processors, who can reduce costs and increase revenue, and are beneficial for mini-grid companies.
For example, the study found that there are three clear activities primed for electrification and implementation in Nigeria immediately: Cassava grating, rice milling, and flour milling (across several grains) all have strong fundamental characteristics indicating that electrifying them can be straightforward and successful. The study also presents these findings with information on how to develop commercial business models and strategies to overcome barriers to deployment.
Connecting the findings of the study with implementation is the next step in agricultural electrification activities in rural communities. Through the Productive Use Component under the African Development Bank (AfBD) Nigeria Electrification Project, and in close coordination with the Nigeria Rural Electrification Agency (REA), the findings of the study are being piloted in seven existing mini-grid sites to demonstrate the effectiveness of the productive use component in rural economies.
“We are excited that this study demonstrated a win-win opportunity for both agricultural activities and electricity providers. Improving livelihoods is at the core of USAID’s mission, so it is important that we find opportunities to support sustainable, cross-cutting development. We look forward to continuing our close work with REA and AfDB to pilot this study in local communities and hope that our findings can be referenced and replicated,” shared Narlene Egu, Power Africa Energy Advisor, USAID Nigeria.
Power Africa continues to gather feedback and convened a working group to coordinate and guide the activities required to achieve long-term commercial viability.
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