The Kenyan government has reduced the cost of electricity connections for rural areas by more than half, it was reported today.

These charges are effective immediately and will see changes to the charges as follows:

Rural businesses:
Deposit: Sh5 000 ($74.00)
Balance of Sh10 000 ($149) – down from Sh15 000 ($223) – in 10 monthly instalments.

Domestic consumers:
Deposit: Sh15 000
Balance of Sh19 980 ($297) – down from Sh34 980 ($520) – in 12 monthly instalments.

This price reduction is expected to create increased demand for access to electricity in rural and peri-rural areas. Energy minister, Kiraitu Murungi confirmed that this initiative was part of a broader plan to electrify at least half of the country and accelerate economic growth. Vision 2030, the government’s long term development plan, calls for 20 percent electrification within the next three years and 40 percent by 2020.

"This programme aims at enhancing economic growth in the rural areas since the beginning of all development is light," he said.

Kenya has one of the lowest electrification rates in the world – only 10 percent of the population has access to electricity – lower then countries such as Ecuador (37 percent) and Jamaica (46 percent).

In rural areas, electrification rates are around 2 percent, despite accounting for 75 percent of the countries population.

"With increased electricity coverage, we expect a boom in the small and micro enterprises that forms a good base for employment generation," Mr Jacob Omolo, a research fellow at the Institute of Policy Analysis and Research (IPAR)- a local think tank, said.

This initiative is a boost for the Kenya Power and Lighting Company (KPLC). Don Priestman, chief executive office of KPLC said in an interview "Our strategy is to boost our sales volumes by connecting more Kenyans to the grid in a convenient manner."

The company has committed itself to 120 000 new connections per year over the next three years.