The objective of this study is to identify means of associating the private sector to finance rural electrification projects in Sub-Saharan Africa and other ACP countries.

A number of barriers and impediments to increased private participation in rural power supply have been identified, including unclear or untried legal frameworks, institutional inertia in utilities and among authorities, lack of apprehension of opportunities, scarcity of local entrepreneurs, unwillingness of local financing institutions to go into the sector, mismatch of external capital flows and local project sizes, lack of links between entrepreneurs and financiers, lack of technical capacity, etc. While the obvious underlying barrier is poverty and lack of development, overcoming the others could substantially assist in reducing the latter.

The countries have been rated regarding capacity, contract risk rating, liberalisation, private sector performance, security and political stability and market volume. Based on these ratings they have been classified into three categories.

Category A includes countries with a genuine scope for private financing of rural electrification. The prospects for success should be good, and need for support to create the conducive conditions transient only.

The B category includes a number of countries with a good scope for specific niche markets (e.g. small hydro, biomass, cogeneration), but lacking in several aspects of market formation.

The countries in category C contend with several structural and economic problems and have only limited prospects for private participation in rural electrification.