Despite having one of the fastest-growing economies in Africa, the nation of Burkina Faso struggles with significant developmental challenges. One such challenge is a lack of adequate access to affordable electricity across the country, which the Burkina Faso Compact II will combat.
Electricity and the Economy
A lack of access to electricity ties to a lack of economic opportunity. When a country or area receives proper access to electrical grids and services, new businesses can open, existing businesses can operate on a higher level and jobs can emerge.
The Millennium Challenge Corporation’s (MCC) Burkina Faso Compact II is a program intended to address the nation’s electricity challenges to promote a healthy economy and lift 8 million people out of poverty.
Burkina Faso Compact II
Burkina Faso is one of the most impoverished nations in the world. In 2017, the Gross National Income per capita was $610. The majority of the impoverished also live in rural areas, with approximately 90% of impoverished households in Burkina Faso in rural parts of the country.
Although the nation has a high rate of poverty, it is home to one of Africa’s fastest-growing economies. In 2019, Burkina Faso’s GDP was growing at a rate of 6%. Experts believe the high concentration of poverty in rural areas is due to low rates of agricultural productivity, social isolation, underemployment and inadequate access to electricity. The recent improvement in the GDP growth rate is a result of the positive performances of the agricultural and mining sectors.
The Millenium Change Corporation’s Burkina Faso Compact II was signed on August 13, 2020. The Burkina Faso Compact II dedicates itself to connecting more of the country to electrical grids. The MCC has dedicated $450 million in grants and funding to the goal of widespread electricity.
MCC’s Compact Projects
In addition to MCC’s contribution, the Burkinabe government agreed to contribute $50 million to the compact projects. The program focuses on three smaller electricity projects: The Strengthening Electricity Sector Effectiveness Project, the Cost-Effective and Reliable Energy Supply Project and the Grid Development and Access Project. These projects will work together in order to help Burkina Faso increase access to electrical grids for all citizens.
Of the $450 million that will go toward improving addressing the issue of electricity, $210.7 million is for the Grid Development and Access Project alone. This project is particularly important to reaching the goal of widespread and accessible electricity nationwide. In the Grid Development and Access Project, the MCC hopes to aid in reducing power outages and increasing access to electrical services.
The Strengthening Electricity Sector Effectiveness Project and The Cost-Effective and Reliable Energy Supply Project received $46.9 million and $99.5 million respectively. The goal of the Strengthening Electricity Sector Effectiveness Project is to strengthen the electricity sector through important reforms, including building up the capacity of national utilities, the Ministry of Energy and regulators. The Cost-Effective Energy Supply Project aims to implement lower energy costs by introducing solar power, battery storage and improving electricity dispatch centers.
Burkina Faso Compact II Long-Term
This compact is the second project MCC has taken on in Burkina Faso. The first Burkina Faso Compact included $480 million to improve infrastructure, agriculture, girls’ education and water management. Since the completion of the project in 2014, Burkinabe government ministries have been maintaining what the project implemented. This shows great promise for the Burkina Faso Compact II.
In the long term, the Burkina Faso Compact II will ultimately improve living conditions and economic stability for more than 8 million people across Burkina Faso, leading to lower rates of poverty. Improving access and affordability of electricity is a positive step toward improving Burkina Faso’s economy.
– Maddi Miller