Does Electricity Use and Cost in Global South Countries Affect the Productivity of Informal Sectors?

This study examines how electricity use, reliability, and cost influence the productivity of informal firms in the Global South, particularly in sub-Saharan Africa, South Asia, and Latin America. Using a dataset of more than 41,371 informal firms in 16 countries, we use quantile regression to highlight the variable effects by the distribution of productivity. The results indicate that access to electricity alone is not enough to ensure productivity gains; Reliability and quality of supply are essential. Outages significantly reduce productivity, especially for firms in the lower quantiles, while electricity costs have a mixed effect depending on the size of the firm and the regional context. In South Asia, off-grid and subsidized solutions have greater positive impacts, while in sub-Saharan Africa, weak governance and infrastructure gaps reduce their effectiveness. Latin America shows intermediate results, with wider access but persistent cost costs. The findings suggest that energy policies need to go beyond expanding access to focus on reliability, smart subsidies, and complementary institutional reforms. By addressing these aspects, governments can strengthen the role of electricity in promoting the growth, resilience and structural transformation of informal enterprises in low- and middle-income countries.