Electricity Affordability and Economic Development in Somalia: An Empirical Assessment

Abstract

This study examines the effects of electricity affordability on business performance and economic development in Somalia. Using a quantitative design, data were collected from 420 businesses across eight major cities and analysed through descriptive statistics. The findings show that electricity tariffs ranged from US$0.41 to US$1.00 per kWh across the selected Somali cities, with an average of US$0.68 per kWh. Nearly half of the businesses considered electricity unaffordable, while 47.1% spent more than 20% of their operating expenses on electricity. High electricity costs reduced profitability, limited production, discouraged investment, and delayed business expansion. However, 94.8% of respondents believed that affordable electricity would improve business performance, and 77.6% were willing to invest in solar energy if affordable financing were available. The study concludes that improving electricity affordability through renewable energy investment, affordable financing, stronger regulation, and integrated electricity networks could promote business growth, employment, and economic development in Somalia.