Business Networks and Small and Medium Enterprise Growth in Rwanda

Abstract

The United Nations Sustainable Development Goals 7 highlights the need to achieve universal access to clean and affordable energy, however, sub-Saharan African (SSA) countries have serious limitations with access to clean and affordable energy. Most households in SSA, especially those in rural areas, remain decidedly dependent on using polluting fuels, such as kerosene, wood and charcoal as their main household energy use. In this study, we explore how income and other household attributes explain the variations in energy use in Rwanda. Using robust methods that account for possible outliers and measured errors, we estimate the Engel curves of four energy types: electricity, charcoal, biomass and other energy types in the country. We notice two striking results. First, the income elasticity from electricity is elastic for urban households, an indication that electricity is treated as luxury for urban household. Second, the energy consumption patterns show significant heterogeneity between rural and urban households. The heterogeneities observed in the energy use patterns between rural and urban dwellers suggest that the framers of national energy policy should take cognisance of this fact. Further, there is the need to intensify efforts that decarbonize energy sector by availing affordable alternative energy sources, including LPG especially in rural areas to reduce the biomass consumption.