Abstract
BackgroundGhana is bedeviled with the lack of 24-h supply of electricity. This holds back economic growth and sustainable development prospects. Several studies have investigated varied factors that account for household’s willingness-to-pay (WTP) for improved electricity services. However, not much is known about the role of trust as a proxy for social capital and household’s WTP for improved electricity services. We hypothesize that trust (social capital) is a key factor in determining households WTP for a 24-h supply of electricity in Ghana, a service which is largely controlled by the government.MethodsThis study uses primary data collected in a survey of households and applies the well-known and widely used Contingent Valuation Method (CVM) to estimate how much households who trust and those who do not trust in the government are willing to pay for a 24-h supply of electricity.ResultsWe have evidence that trust in the government is statistically significant and varies negatively with WTP for improved electricity supply. In line with our hypothesis and the few existing studies on trust-WTP relationship, we conclude that trust plays a key role in determining WTP for improved electricity services in Ghana. Our estimates which are downward biased constitute 15–17% of household’s income.ConclusionsTo advance the course of generating funds to sustain the supply of a 24-h supply of electricity, this study argues based on the evidence from the trust-WTP relationship that most households do not trust the government in the provision of efficient electricity services. Those who trust the government are currently not willing to pay more for an improved electricity service because they believed the promises made to them by politicians that they would be provided with an improved service without them having to pay more. We recommend that government (politicians) should not trivialize anything that bothers on trust as it is not without its associated consequences on consumer’s WTP behaviour. Secondly, for efficient provision of improved electricity supply, policymakers should commence educating citizens on the unsustainability of government’s provision given its limited budget and explore private sector options.
Highlights
Ghana is bedeviled with the lack of 24-h supply of electricity
The Ghana Living Standards Survey which measures the living conditions and well-being of the population quoted the average income in the Greater Accra Region in 2008 at Ghana cedis (GHS) 544
Given that the per capita income of Ghana increases by 5.7% over the period 2008 to 2015 from $1266.1 to $1340.4, the increase in average income in the region from 2008 to 2016 does not deviate considerably from what has been reported in the GLSS
Summary
Ghana is bedeviled with the lack of 24-h supply of electricity This holds back economic growth and sustainable development prospects. We hypothesize that trust (social capital) is a key factor in determining households WTP for a 24-h supply of electricity in Ghana, a service which is largely controlled by the government. Lack of access to basic utilities or social services such as electricity and water which are largely controlled by the government inhibits growth and development and perpetuate millions in extreme poverty. In most African countries, citizens largely depend on the government for the provision of the majority of social services. This over dependency has been attributed to household’s low levels of income and standard of living. Apart from presenting a high level of uncertainty and risk to businesses and household planning needs, this puts doubts on Ghana’s ability to meet the Sustainable Development Goal 7[1] by 2030
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