AN ECONOMETRIC ANALYSIS OF ENERGY POVERTY AND SUSTAINABLE DEVELOPMENT IN BLANTYRE (MALAWI) BY Betchani Henry Mbuyampungatete Tchereni Thesis submitted in fulfilment of the requirements for the degree PHILOSOPHIAE DOCTOR in Economics at the NORTH-WEST UNIVERSITY Promoters : Prof. Wynand Grobler : Dr. Joseph T. Sekhampu Vanderbilpark April, 2013 “As sorrowful, yet always rejoicing; as poor, yet making many rich; as having nothing, and yet possessing many things” – (Holy Bible, 1611 - King James Version). Energy Poverty and Sustainable Development Page ii ACKNOWLEDGEMENTS This thesis could not have been possible if it were not for the following individuals and institutions that, undoubtedly, deserve their earned word of thank you: • First, is the creator of heavens and earth and all that is in it, the Lord Jesus Christ. That death at Calvary and your never ending fulfilment of promises has seen me through thick and thin. • My promoters, Prof Wynand Grobler and Dr Joseph Sekhampu, your guidance and patience with my anxiety cannot be priced. The NWU PhD bursary is also acknowledged. Dr Diana Viljoen for language editing. • Management of the University of Malawi for the research fund and the study leave. • Ministry of Energy, Blantyre City Council, National Statistical Office. • My best friend and companion in all seasons, Rebecca, my wife and the girls, Soloti and Tsanzayiso. Thank you guys for energising me every time I felt like giving up. I now promise to be available to you full time for Ring around the Roses, we all fall down! • To my spiritual and natural parents, Henry and Violet, your prayers and words of encouragement cannot be forgotten. My parents in-law Dan and Maria, thank you for your availability. • My brothers and sisters for filling in the gap at all times; be blessed. • Brother Hannes, Sister Lizzie, the Country Tabernacle community, and all brethren of like precious faith; thank you for standing with me in prayer and providing encouraging words of faith. • Machinjiri Church, the night vigils at the mountain bear fruit and I am a living testimony to this. Pastor and Sister Mukuya, Mukuya brothers and Chitungwiza Church in Harare, many thanks for a fruitful and profitable friendship. • Study partners, Dora and Ismael, your checks on me were important. • Lastly, Alfred, Steve, Charles, Pius, Edister, Badnock, Jayi-Murima, Patrick, Collins, Marrion, Harold, Chipiliro, and many friends too numerous to mention, the moral support was very important. Energy Poverty and Sustainable Development Page iii DEDICATION I dedicate this project to: Chief Saulosi Fulukwa Tchereni (Third King of Tchereni Kingdom), Petulo Fulukwa Tchereni, Chief Michael Nkhandwe (King of Meke Kingdom), Finias Michael Nkhandwe, Dex Chonzi, Martha and Precious Nasho, Mirriam Chikoti, Unathi Albetina Mumba and Gogo Enelesi Sandram; You all went on to be with the Lord while I was buried in this project. Energy Poverty and Sustainable Development Page iv DECLARATION I declare that this thesis entitled AN ECONOMETRIC ANALYSIS OF ENERGY POVERTY AND SUSTAINABLE DEVELOPMENT IN BLANTYRE, MALAWI, is my own original work and that all resources that were used or quoted as background or otherwise were duly acknowledged by way of in-text citations and complete references at the end, and that it has not been submitted to this or another university or institution of higher learning for an award of a Degree or Diploma Betchani Henry Mbuyampugatete Tchereni Energy Poverty and Sustainable Development Page v ABSTRACT Key Words: Energy Poverty, Sustainable Development, Logit, Engel Function, Renewable Energy, South Lunzu, Biomass. Energy is the driver of activity in every economy and, therefore, its importance cannot be overemphasised. However, Sub-Saharan Africa (SSA) faces general problems of access to modern energy. Most households and industry in SSA use traditional and unclean energy resources for activities such as cooking, lighting and drying of farm produce. Many households in less developed countries have very limited choices with regard to alternatives to traditional energy supplies. Energy poverty is overt in many poor countries, particularly in the Sub-Saharan region where 700 million people are deprived of access to modern energy facilities. In Malawi, less than 6 percent of the population have access to electricity. There are, therefore, many questions regarding the state of energy poverty still to be answered, not only in Malawi, but also the entirety of the SSA region. Questions such as what is the level of energy poverty in these regions? What determines this level of poverty? Why are people not adopting renewable energy facilities for their household needs? Are some energy facilities inferior to others? Such questions were the centre of the present study. These questions are important because, with energy poverty, nearly all the Millennium Development Goals are unachievable and sustainable development could not be a success story where the dominant source of energy for both households and industry is biomass. This study was based on a survey conducted in South Lunzu Township (SLT), which is a low income area to the east of Ndirande Mountain in the city of Blantyre, Malawi. The survey administered a standard questionnaire through face-to-face interviews with heads of households. Data was collected from 319 respondents who were selected through random sampling techniques. The descriptive statistics suggest that the average household size for South Lunzu Township is 5 people. The average age of the sampled respondents was about 38. Energy Poverty and Sustainable Development Page vi The findings of the thesis suggest that over 90 percent of the households sampled were energy poor with energy expenditure exceeding 10 percent of total household expenditure. In terms of energy resources used in SLT, 2.9 percent used electricity for cooking meals. Only 2 households, representing 0.63 percent, use liquefied petroleum Gas (LPG) and just 1 household, representing 0.31 percent, depended mostly on solar power. On the other hand, energy facilities that are considered dirty, inefficient and a danger to the heath of people seem to be popular. For instance charcoal and firewood were used by 25 percent and 4.7 percent of the total sample respectively. Most households use a combination of energy facilities; however, those that are considered inferior are preferred. Of the sample, 42 percent use both charcoal and firewood to cook their meals. Further, the results of the Engel functions suggest that charcoal and wood were not regarded as inferior products for the cooking needs of households despite improvements in income. Electricity, which was also regarded as a normal energy resource, had positive income elasticity. To improve access to modern energy facilities at the household level, the thesis recommends that a flexible trade and tax regime, one that will improve the availability and affordability of renewable energy to the majority, should be adopted. The Logit model of energy poverty reveals that household expenditure on transport, income level, age, and education level of the head of household; household size; and home size, are important factors in explaining the level of energy poverty in South Lunzu Township. Further, the results revealed that expenditure on housing and marital status could not be relied upon as important predictors of the probability of energy poverty in South Lunzu. Expenditure on education was associated with lower levels of energy poverty. Households who spent more on schooling also spent more on food items and their expenditure on energy resources was less than 10 percent of the total expenditure per month. In addition, those households that spent more on food were also likely to be energy well-off. Energy Poverty and Sustainable Development Page vii Results of the multinomial logit (MNL) model suggest that most socioeconomic variables under study were inelastic in influencing the probability for the outcomes, at the household level, to be used for the purposes of cooking. Statistically, age, income and education level of the head of household, together with household size, were important factors that influenced the choice of most of the outcomes for cooking purposes, including electricity, charcoal, firewood and LP gas. The major recommendation of this study is that campaigns emphasising the abilities of renewable energy be developed and disseminated. That renewable energy is relegated to poor and uncivilised societies is a notion that must be rooted out of the mindset of the average, civilised urban dweller. Also, the use of LP gas for cooking purposes must be encouraged. Import tax regimes that discourage international trade of renewable energy resources must be removed to encourage lower prices on such facilities. These policies would ensure sustainable development by reducing reliance on biomass, which is depleting at a faster rate than it is regenerating. Energy Poverty and Sustainable Development Page viii OPSOMMING Sleutelwoorde: Energie-armoede, Volhoubare ontwikkeling, Logit, Engel-funksie, Hernubare energie, Suid-Lunzu, Biomassa. Energie is die dryfveer van aktiwiteit in elke ekonomie en die belang daarvan kan nie genoeg beklemtoon word nie. Afrika suid van die Sahara (ASS) staar egter algemene probleme van toegang tot moderne energie in die gesig. Die meeste huishoudings en nywerhede in ASS gebruik tradisionele en onsuiwer energiebronne vir aktiwiteite soos kosmaak, beligting en die droging van landbouprodukte. In minder