Informal electricity re-selling — Entrepreneurship or exploitation?

Abstract

People in informal settlements are among the poorest in South Africa. They live in overcrowded and badly constructed shack; many have no access to electricity, water or sanitation. The Integrated National Electrification Programme has connected some parts of informal settlements, but houses constructed on unproclaimed land did not - and will not under present regulations - receive an electricity connection from the municipality. They will remain in the dark. Enterprising shack dwellers with electricity connections use extension cords to supply current to nearby dwellings without access. Buyer and seller agree on a price, establishing a business of informal electricity re-selling. Households with meters connect up to three other households from three sockets of a “ready box.” Informal selling comes at a cost to both seller and buyer as the shared meter group can no longer benefit from subsidies such as Free Basic Electricity. This paper examines who benefits and who loses in the shared meter group and analyses the modalities and the cost of informal selling electricity to buyers and the benefit to sellers.