The missing middle of productive use of energy: Why electricity access is not the same as economic power

The transformer is energised on a Tuesday morning. Engineers make a final check, close the switch, and the lines hum to life. In the village below, bulbs flicker on for the first time. Phones charge without a generator’s diesel cough. A shopkeeper plugs in a refrigerator she has kept unused for two years, a monument to a promise finally kept. There is applause, a speech, a new chapter declared.

The next morning, the sun rises on the same village, and almost nothing about its economy has changed. The farmer at the edge of town still has no irrigation pump. The miller still owns no processing equipment, so grain will leave raw and return, weeks later, as flour bought at a markup from somewhere else. The tailor still sews by foot pedal, one garment at a time. The cold-room that was meant to preserve tomatoes and fish before they rot in transit still does not exist, because no one financed the compressor to run it. Electricity has arrived. The economy has not yet followed.

The electrification myth

The dominant narrative around energy access is one of connection. Every electrification strategy, donor facility and national target is built around the same headline figure: how many people have been connected to the grid. It is measurable, comparable across countries, and politically satisfying, a rising connection rate looks like unambiguous progress.

This framing is not wrong so much as incomplete, and the incompleteness has consequences. It allows institutions to measure success in transformers energised rather than economic activity created. It treats electricity as though the delivery of the kilowatt-hour were itself the developmental achievement, rather than the precondition for one. And it obscures a more uncomfortable truth: a community can clear the connection threshold entirely and remain exactly as poor as it was before the switch was closed.

This is the distinction between energy access and energy productivity, and it is the distinction electrification strategy has largely failed to make. Access asks whether electricity can reach a household. Productivity asks what that household, farm or business can now do because it does. Billions have been spent narrowing the first gap. Almost nothing has been spent narrowing the second.

The productive use gap

The reason is not mysterious to anyone who has watched a rural mini-grid commission successfully and then struggle, within eighteen months, to cover its own operating costs. It is, however, largely invisible to the public debate, because the failure occurs in a stage of economic development that produces no ribbon-cutting and no photo opportunity.

Consider what stands between a connection and a productive enterprise. Machinery and appliances the household or business can actually afford, whether through outright purchase, lease or pay-as-you-go financing. Working capital to buy inputs, hold inventory, and survive the gap between production and payment. Technical skill to operate equipment profitably rather than merely switch it on. Maintenance networks close enough that a single burnt-out motor does not end a business permanently. Tariffs structured around the economics of a motor running eight hours a day, not a household lightbulb. And a market, beyond the village itself, willing to buy whatever additional output results.

None of this is exotic. It is the ordinary machinery of enterprise, and it exists in mature economies largely as a matter of course, embedded so deeply in ordinary commercial life that it becomes invisible: the equipment dealer offering financing terms, the maintenance contract bundled with a sale, the cooperative aggregating smallholder output for a formal buyer. What is striking about newly electrified communities across Africa is not that these requirements are unusual, but that the systems needed to satisfy them are frequently absent, underfunded, or simply never built alongside the energy asset itself.

The result is electrification that looks complete at the connection stage and stalls at every stage after it. Villages arrive at “100 percent electrified” with wiring intact and economies untransformed, and the gap between the two is treated as a slow, generalised development problem rather than what it actually is: a structural failure in the systems responsible for converting electrons into income.

The missing middle of productive use

This is the Missing Middle of Productive Use; the commercial and institutional architecture that sits between a live connection and an income-generating enterprise, and whose absence explains far more about stalled rural economies than any shortfall in generation capacity.

It consists of financing structures for productive-use equipment sized to informal, seasonal cash flows. Leasing and energy-as-a-service models that bundle power, machinery and maintenance into one predictable cost. Working capital facilities for the enterprises that will operate the equipment. Demand-aggregation mechanisms that give dispersed small users the purchasing power of a single anchor customer. Value-chain and market linkages so additional output has somewhere to go. And coordination across ministries of energy, agriculture and trade, robust enough that a technically sound mini-grid is not left stranded without the agricultural or industrial policy needed to give it a paying customer base.

Productive use, in other words, is not a quality a connection either has or lacks from the moment the switch is closed. It is built, deliberately, through the same kind of unglamorous commercial and financial work that turns a road into trade or a credit line into a business. Developers who have understood this are beginning to design productive demand into a project from the outset, rather than hoping it appears afterward.

Why Africa matters

Africa is where this gap is most visible, and consequently where closing it carries the largest return. The continent’s electrification need is enormous and well documented. Less understood is that Africa’s productivity shortfall is disproportionately a systems shortfall rather than an electricity shortfall. Nigerian mini-grids, off-grid solar deployments and even some grid-connected rural clusters have repeatedly demonstrated the same pattern: individual technical success without the surrounding commercial architecture to convert that success into enterprise, jobs or income. The pattern recurs, with local variation, across much of the continent, wherever connection has outpaced the financing, skills and market access needed to use it.

This need not remain the case. Where productive-use financing, equipment leasing and demand-aggregation have been deliberately built alongside the energy asset rather than left to emerge on their own, connected communities have converted electrification into agro-processing, cold chains and light manufacturing at a measurably faster rate. The lesson is transferable. Africa does not need a new theory of electrification; it needs the deliberate construction of the commercial middle that mature economies built gradually, and largely invisibly, over generations.

Investment implications

For capital allocators, this reframing carries a specific strategic implication: the more valuable opportunity over the next decade may not be financing generation alone, but financing the equipment, working capital and enterprise platforms that convert generation into revenue. Equipment leasing, pay-as-you-go productive appliances, cold-chain and irrigation-as-a-service platforms, and SME energy-finance products are not merely supporting infrastructure for the energy transition. They are increasingly investable in their own right, closer in underwriting logic to enterprise and value-chain finance than to conventional power infrastructure. Investors who evaluate an energy asset purely on generation economics, without assessing the productive demand behind it, will keep meeting the same ceiling on returns.

Policy implications

For governments and development finance institutions, the implication is a shift in priority from counting connections to measuring economic outcomes: productive electricity consumption, enterprises formed, agricultural output enabled, jobs created, equipment financed. It means integrating energy planning with agricultural and SME policy from the design stage, not as a follow-on programme. It means financing the ecosystem around an energy asset, not merely the asset itself. None of this is as politically visible as a connection target. All of it is more consequential for whether connections become income.

Strategic recommendations

Governments should design electrification strategy around anticipated productive demand, not connection counts alone, and should measure success in enterprises formed as much as households wired.

Energy developers should identify anchor productive loads and build demand-aggregation capability into a project at the design stage, rather than assuming productive use will emerge organically after commissioning.

Financial institutions should develop lending and leasing products specifically for productive-use equipment, recognising this gap sits adjacent to, but distinct from, conventional energy-infrastructure finance.

Development finance institutions should finance the ecosystem around the energy asset, coordinating energy investment with enterprise development and market-access programming as a single intervention rather than parallel, disconnected ones.

History is unlikely to remember this era for how many transformers it energised. It will remember whether those transformers became farms that irrigate, workshops that produce, and households that earn. The electrons have already arrived in a great many places. The unanswered question is whether our institutions can build the economies worthy of them.

. Nwafor is founder and lead strategist at De-Lazuli Consult, an advisory practice focused on energy transition, project finance, DFI engagement, and carbon market strategy. His work supports developers, investors, development finance institutions, and public-sector stakeholders in project preparation, transaction structuring, stakeholder engagement, and capital mobilisation. He writes from Lagos and Abuja. [email protected], +2348094561290

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