Empowering Rwanda's Economy: High-Potential Technologies for Sustainable Growth

The World Bank's report highlights Rwanda's progress in expanding energy access and identifies key technologies like solar water pumps, refrigerators, and electric motorcycles to boost productivity. However, affordability and awareness remain barriers, requiring targeted financial interventions and policy support for broader adoption of these technologies.

Rwanda is one of Africa’s fastest-growing economies, with annual GDP growth rates exceeding 8% in recent years, a figure almost double the average for Sub-Saharan Africa. This growth aligns with the government's vision of transitioning from an agricultural economy to one more driven by industry and services. As part of its strategy for economic transformation, Rwanda has made significant strides in expanding electricity access. By 2022, the electrification rate stood at around 61%, with 47% of connections grid-based and 14% off-grid. The government, alongside development partners like the World Bank, continues to focus on ensuring universal energy access, while increasingly recognizing the importance of leveraging electricity to stimulate productive use, economic growth, and job creation.

Assessing Rwanda’s Potential for Productive Energy Use

In this context, the World Bank, in collaboration with Sustainable Energy for All (SEforALL), conducted an in-depth study to assess Rwanda’s potential in promoting the productive use of energy (PUE). Productive use refers to the application of electricity and thermal energy to activities that enhance economic and social welfare, particularly in sectors like agriculture, manufacturing, ICT, and small enterprises. The study aimed to bridge gaps in knowledge about market actors, products, and the environment for PUE, offering recommendations to scale up the adoption of PUE technologies in the country. The report also explored the barriers hindering the uptake of these technologies and proposed a framework for addressing these challenges through financial and technical interventions.

The Affordability Challenge in Unlocking Productive Energy

Rwanda’s progress in expanding energy access is impressive, but affordability and awareness remain critical challenges for fully unlocking the potential of productive energy use. The research involved extensive primary and secondary data collection from key stakeholders, including government agencies, development partners, and technology suppliers. The study surveyed 315 out of 9,445 productive energy users listed by the Rwanda Energy Group (REG) and held eight focus group discussions with users of high-potential technologies. Findings revealed that 86% of the country’s productive energy users are connected to the national grid, while 8% rely on rooftop solar systems or solar home kits, and a small percentage use generators. Despite the progress in electrification, over half of the respondents reported relying on traditional thermal energy sources like firewood for cooking, highlighting the need for modern energy solutions.

High-Potential Technologies for Boosting Productivity

The study identified four high-potential PUE technologies that could significantly boost productivity and improve living standards across key sectors. These technologies include solar water pumps, refrigerators, electric motorcycles, and electric pressure cookers. Each of these technologies was selected based on its economic potential, sectoral reach, and scalability. For instance, solar water pumps can help farmers reduce their reliance on costly fuel-powered pumps, allowing them to increase crop yields and incomes. Similarly, electric motorcycles, which are cheaper to operate and maintain than traditional internal combustion engine vehicles, offer a promising solution for Rwanda’s growing transport sector. Electric pressure cookers and refrigerators, especially for small businesses and households, present opportunities to enhance efficiency and reduce food waste, which can translate into higher incomes for users.

Targeted Interventions to Overcome Market Barriers

The study showed that the adoption of these technologies could unlock significant electricity demand, particularly if price barriers are addressed. For example, reducing electricity tariffs could increase electricity consumption by as much as 62%, suggesting that affordability is a key factor in encouraging the use of energy-intensive appliances. However, the report also highlighted several barriers to widespread adoption of PUE technologies. The high upfront cost of appliances, limited access to supply chain financing for technology providers, and a lack of consumer awareness about the benefits of these technologies are some of the major challenges that need to be overcome. Furthermore, the availability of locally manufactured PUE technologies in Rwanda is limited, with most appliances being imported, exposing prices to fluctuations in global markets and increasing delivery times.

To address these challenges, the report recommends targeted interventions, including financial incentives such as concessional financing and results-based financing (RBF) models to lower the upfront costs of PUE technologies for end-users. Additionally, expanding access to working capital for technology suppliers, particularly in rural areas, could help improve the availability of these appliances and reduce the long lead times associated with imports. Raising consumer awareness through nationwide campaigns and providing after-sales support for PUE technologies are also seen as critical steps to boost adoption. The government’s role in this process is crucial, particularly in creating an enabling policy environment. The report suggests reviewing the tax structure to reduce or eliminate import duties on high-potential PUE technologies and exploring the possibility of PUE-specific tariffs to make energy-intensive appliances more affordable for small businesses.

The report also calls for greater cross-sector coordination to ensure that efforts to promote productive energy use are aligned with broader national strategies. By including representatives from sectors like agriculture, trade, and industry in the planning process, Rwanda could create a more integrated approach to scaling up PUE technologies. Ultimately, the study concludes that unlocking the full potential of productive energy use in Rwanda will require a combination of financial, technical, and policy interventions. With the right support, PUE technologies can play a transformative role in boosting economic productivity, enhancing job creation, and improving living standards across the country. By focusing on these high-potential technologies and addressing the barriers to their adoption, Rwanda can catalyze further economic development and ensure that its energy transition benefits all sectors of society.