Policy Research Reports
Empowering Households in Fragile States: Leveraging MSMEs for Decentralized Electrification
No.
PRR 64
Publisher
ERF
Date
September, 2026
Summary
More than 600 million people in Sub-Saharan Africa still lack access to electricity, and the deficit is most acute in fragile and conflict-affected states, where political risk, insecurity and weak utilities make grid expansion slow, costly and vulnerable. The falling cost of decentralized renewable energy, such as solar home systems, mini-grids and solar water pumps, offers a faster alternative, but only if there is a delivery model that can work in volatile, resource-scarce settings. This paper argues that, for immediate and short-term access, that model is a bottom-up one built on local micro, small and medium enterprises (MSMEs). It proposes an analytical framework and research agenda to inform the World Bank’s Mission 300 initiative, which aims to connect 300 million people in Sub-Saharan Africa to electricity by 2030.
Sudan is used as the illustrative case. Since April 2023 the conflict has caused real GDP to contract by an estimated 29.4 percent in 2023 and a further 13.5 percent in 2024, while inflation reached 216 percent by December 2024 and the Sudanese pound fell to its lowest value against the US dollar in a decade. Before the war, national electrification stood at roughly 45 to 65 percent, with rural access often below 20 percent, and the grid (about 3,600 MW, concentrated along the Nile) has since suffered heavy damage. Following the removal of fuel subsidies in 2020 and 2021, and again in response to the conflict, households and businesses have turned to small-scale solar supplied by an informal, largely unregulated import market. Trade data show surges in solar PV imports in 2021 and again from 2024, with import prices falling by 73 to 85 percent between 2017 and 2025. Survey data from 2022, however, show that pre-war solar adoption was low and uneven: just over 7 percent of households in Khartoum, the highest of any region, and just over 0.5 percent of businesses.
Qualitative evidence from eight states, together with a 2024 IFPRI enterprise survey, shows that most MSMEs were operating at less than half their capacity by the end of 2024 because of power outages, fuel scarcity, broken supply chains and the collapse of bank lending. Micro and small enterprises, many of them women-owned, proved more resilient than medium-sized firms. Many MSMEs are shifting to solar, but adoption is held back by high upfront costs, expensive short-term credit (20 to 35 percent interest), concerns about equipment quality and warranties, a shortage of trained technicians, low awareness and limited government support.
The paper concludes that MSMEs, embedded in local trust and credit networks and able to handle distribution, installation and after-sales service where formal institutions fail, are the most credible last-mile delivery channel in fragile settings. It recommends that Mission 300 measure success by the resilience of this local delivery channel rather than by megawatts installed, and that it prioritize productive uses of energy by bundling income-generating appliances, such as solar water pumps and milling units, with decentralized systems so that customers can afford to pay. It identifies priority research areas (household demand and willingness to pay, MSME capacity mapping, energy gap analysis, regulatory and institutional reform, financing mechanisms, delivery-model scalability, productive use of energy and socio-economic impact) and positions Sudan as a pilot whose lessons could extend to other fragile states such as South Sudan, Yemen and the Democratic Republic of Congo.
Speakers
Muez Ali
Research and Policy Lead at Earthna, Center...