The straining effects of energy poverty on the economy:
@Macro-level
@Micro-level
@Macro-level
- It is crucial for a strong manufacturing sector and local industry to get constant and reliable power input. In order to be productive most companies rely on energy nowadays. For instance, tea and tobacco factories need power to dry and roll leaves, hardware manufactures use heat to form their materials and dairy farmers should refrigerate their products to prevent them from going bad. However, energy generation capacity in Malawi is low and has often been cited as one of the major constraints to industrial development.[10]
- When a blackout hits a company that normally runs on energy from the grid it will either pause its production or switch to an alternative power source. In order to keep the production going in many cases the only option is to use diesel generators to produce the needed electricity. These are not only more expensive but also contribute to a vicious cycle. The heavy burden of importing diesel leads to an increased demand for foreign currency what usually increases the inflation rate and weakens the economy even more. Additionally, a dependency on certain other countries and their price regimes arises.
- On the long run many companies aren´t able or willing to afford the additional costs due to power outages. They might take measures like scaling down their production or sizing down their labour force. This harms the common people as it leads to shortages on the market, higher prices and unemployment.
- Much needed investments that could expand the export base and hence forex surplus and partly reduce the needs of importation of goods are hardly taking place.[11] A market of which the productivity is threatened by an unstable energy situation at any time is not really attractive to investors.
@Micro-level
- As already mentioned everyday tasks that need doing to make a living are very physically demanding and time-consuming if you don´t have access to electricity. Therefor most people have neither energy nor time to invest in their future and in the future of their country by generating income, attending training programmes, starting-up a business etc. This also manifests in the fact that only 27% of Malawian households operate a non-agricultural enterprise of which not even 10% engage someone who doesn´t belong to the household.[12]
- Small-scale businesses are severely effected by power cuts as they can´t afford generators for the most part. Thus, they are left without an opportunity to work over several hours per day.
- Poor households spend much of their already little income on recurring expenditure on small amounts of inefficient energy fuels, e.g. buying candles, one-way batteries, paraffin, firewood and/or charcoal. This largely decreases their available income spent on other, long-lasting consumer goods.