Targeting Subsidies for the Poor: Electricity in Cape Town, South Africa

The City of Cape Town has an ambitious climate target of net carbon neutrality by 2050. At the same time, the City distributes water and electricity to a growing population, around a quarter of which lives in poverty. The City therefore must balance equitable growth goals with demand for utilities, using the limited tools at its disposal. One of these tools is the allocation of nationally mandated “free basic electricity,” which represents an in-kind transfer, via subsidized electricity. Better targeting of these transfers could help the City of Cape Town achieve both its climate and its poverty alleviation goals.

This partnership will adapt evidence on targeting to the Cape Town setting and the utilities domain. We will use the existing evidence base on the targeting of social assistance to inform the targeting of utility subsidies and collect the necessary data to analyze the potential for alternative targeting strategies. The partnership will build upon an existing relationship between J-PAL Africa, the PI, and the City of Cape Town, will leverage new innovations in the sharing of administrative data, and will open up new opportunities, both for scaling new targeting policies and also for new research projects under K-CAI.