What Explains the Allocation of Aid and Private Investment for Electrification?

This paper aims to inform policy looking to step up investment in the electricity sector of developing countries and align it to other development goals such as universal access to energy or sustainability. Three questions guide the analysis: (1) How and why has private and donor finance for electrification changed across time? (2) What are the different motivations of private investors and donors as regards who and what gets financed? (3) Are sustainability and equitable access priorities for private and donor investment? These questions are addressed by describing finance flows during the period 1990–2010 and performing an econometric analysis to explain inter-country allocation.