Electricity Access Financing in Africa: How Côte d'Ivoire Connected 2.5 Million Households Without Government Debt.

Les Africanistes
Dec 1, 2025
4 min read

Most African countries borrow billions to finance electricity access. Côte d'Ivoire is changing this pattern by letting private investors step in, but only after proving that households would actually pay.

The bet is simple: if electricity reaches a household, they'll pay for it over time.

For nine years, Côte d'IvoireCôte d'Ivoire tested this assumption with over a million connections. The payment model worked. And now it is securitizing it - packaging these household payment agreements into bonds.

How Electricity Financing Typically Works?

Connecting a household to the electricity grid costs between $150-$500 in most African countries, depending on distance from existing infrastructure and local labor costs.

Most governments cover this upfront through one of three methods: direct budget allocation, loans from development banks (World Bank, AfDB), or utility company financing that's later recovered through connection fees and tariffs.

The challenge: low-income households can't afford $150-$500 upfront, so governments either subsidize connections (increasing debt) or leave millions unconnected. Even when connections happen, cost recovery is slow, and utilities wait years to recoup investments through monthly bills.

Côte d'Ivoire's approach is changing the equation:

A PEPT connection costs approximately $250 (150,000 FCFA). Households pay just $1.67 upfront, and the remaining $249 is embedded in their electricity bills over 2-10 years. CIE (the utility company) collects payments automatically as part of regular billing: no separate loan, no additional payment burden.

But Côte d'Ivoire didn't assume this would work. For the first nine years (2014-2023), CIE and government funding pre-financed these connections, building a track record of 565,000 connections by 2018 and 1.5 million household connections by 2022, with a 94.5% collection rate.

Only after proving the model worked did Côte d'Ivoire securitize it. Since October 2023, they've raised $200 million through two bond issuances, packaging these household payment agreements and selling them to private investors. The bonds are repaid directly from household electricity payments collected by CIE: no government budget required*.

*While the securitization bonds don't carry sovereign guarantees, PEPT's broader program includes a $300M World Bank loan approved in 2022

Why Investors Trust This Model (Despite 2008)

Securitization for electricity access financing in Africa triggers memories of 2008's mortgage crisis, when poorly underwritten loans nearly collapsed the global financial system. But PEPT's approach is fundamentally different:

Nine Years of Payment Data: Unlike 2008's predatory mortgages (where 54% didn't meet underwriting standards), PEPT securitized receivables only after nine years of validated payment behavior. By 2018, the program had achieved a 94.5% collection rate. These aren't theoretical cash flows, they're backed by nearly a decade of actual household payments.
Conservative Structure: For every 60 billion FCFA in bonds issued, there's 67 billion FCFA in receivables backing them meaning 94% overcollateralization. The IFC also provides a 30% guarantee on bond value. This is the opposite of 2008's high-leverage, minimal-cushion approach.
Precedent Exists: In March 2020, NEoT Offgrid Africa (a joint venture between EDF and Zola Electric) launched a similar securitization in Côte d'Ivoire for off-grid solar home systems, 100,000 households, €40M portfolio, backed by rent-to-own payment receivables. The loan of 11.8 billion FCFA ($18M) was guaranteed by AfDB and CACIB, proving energy receivables securitization could attract institutional capital.
Essential Service, Not Speculative Asset: Electricity is non-negotiable. Households that sign up for PEPT self-select because they want power. Payment is embedded in ongoing electricity consumption. This creates fundamentally more reliable cash flows than speculative housing markets.

What This Means for Electricity Access Financing Across Africa

Côte d'Ivoire's approach represents conservative financial innovation: prove the underlying business model works, build a multi-year track record, then package those proven cash flows for investors.

The bonds won't be fully repaid until 2038-2040, so the ultimate test of securitization success is still years away. But investors aren't betting on theory, they're backing a payment model validated since 2014, with nearly a decade of collection data showing households honor these obligations.

This is the opposite of 2008's reckless securitization. It's closer to how consumer credit securitizations work in developed markets, backed by historical payment data, structured conservatively, with clear collateral.

Africa needs an estimated $40-50 billion annually to achieve universal electricity access by 2030. What's your take: could receivables securitization unlock similar financing across Africa, or are the risks still too high?

Lecture complémentaire : Consultez notre carte des pannes de courant en Afrique pour comprendre l'ampleur du défi énergétique continental.

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