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Abstract

Rural electrification programmes take up significant proportions of energy investment expenditures in developing economies. Conventional economic criteria for judging investments are not always thought appropriate for rural electrification because of the largely non-quantifiable benefits that are thought to ensue, including its bias towards helping the poor, its catalytic role in stimulating rural development, its role in reducing the adverse consequences of rural-urban migration and the enabling of improved literacy rates and its general contribution to ‘political stability’. This paper looks at each of these benefits in turn and asks what evidence there is to substantiate them. The paper argues that conventional rate of return criteria should play a stronger role in determining rural electrification expenditures and that some of the non-monetary benefits appear neither to be widespread nor as strong as supporters of rural electricity suggest. While rural electrification is nonetheless important in the development process, it is more usefully integrated into wider rural energy development schemes.