[Stoves] Affordability perceptions

[Paul Arveson]

While in Ghana in 2015 I was told (by Ellen Seldenhuis) that in rural Ghana, per capita income is about 2 cedis per day, or 50c US per day.

Could this be right?  I checked; an official Ghana report from 2008 stated:
"Average annual household income in Ghana is about GH¢1,217.00 whilst the average per capita income is almost GH¢400. With an average exchange rate of GH¢0.92 (¢9,176.48) to the US dollar prevailing in June 2006, the average annual household income is US$1,327 and the average per capita income is US$433 (Section 9.8). There are regional differences with Greater Accra region recording the highest of GH¢544.00 whilst Upper West and Upper East regions had less than GH¢130.00. Urban localities had higher per capita income than rural localities."
http://www.statsghana.gov.gh/docfiles/glss5_report.pdf  [link no longer exists].

The 2015 exchange rate was 3.7 cedis per US dollar, down from .92 cedis per dollar.   Ghana was then experiencing about 40% inflation, but it is now down to about 8%.

Taking the average per capita income number quoted, and adjusting to the exchange rate, gives about $1 US per day per capita income.  This is averaged over the whole country, whereas Ellen was probably giving a value in the rural part of the country where she lives.  So for this region, Ellen is right.

This difference in incomes is breathtaking.

The average purchasing power per day per capita in the US is around $137 (or $50,000 per year) -- about 274 times the 50c/day income in rural Ghana.  No wonder Americans cannot relate to this level of poverty.

To help understand this, I arranged prices in a scale of psychologically perceived costs as follows:

Level:
1 - Free, with no hidden costs
2 - Incidental; no significant impact on bank account; no need to budget
3 - OK if it is needed and fits within budget; no financing needed
4 – Needs financing - significant expense but can be financed over time
5 – Very difficult - even with financing, would be a painful sacrifice to our lifestyle
6 - Out of the question; irrelevant to us

I translated prices to get a feel for the perceptions in rural Ghana:

Perception in US                               Perception in Ghana
Free       Free                       Free       Free
1c            Incidental                            $2.74     Incidental
10c         Incidental                            $27         OK if needed
$1           Incidental                            $274       Needs financing
$10         OK if needed     $2740    Needs financing
$20         OK if needed     $5480    Needs financing
$50         OK if needed     $13,700                 Very difficult
$100       OK if needed     $27,400                 Very difficult
$300       OK if needed     $82,200                 Out of the question
$1000    Needs financing $274,000              Out of the question
$3000    Needs financing $822,000              Out of the question
$10,000                 Needs financing $2,740,000           Out of the question
$100,000              Very difficult      $27,400,000        Out of the question

For instance, a dinner entree in a Chinese restaurant in Accra cost me 30 cedis.  This is equivalent to about $7.50 US.  In rural Ghana it is psychologically equivalent to about $2000.

I think this difference in perceptions is one of the reasons why some of the products being promoted for developing countries will never be accepted.   It also explains why people seek to obtain fuel for free, even if it requires using their own hard labor, rather than pay anything for it.   "Free" means the same thing in both cultures.

It is true that people in poor countries are often are accused of being unwilling to change and adapt to the new products that the developed world wants to provide.  However, I think the affordability perceptions are so out of alignment that this amounts to blaming the victim.  (Affordability is not within the scope of the ISO cookstove standard being developed, but it is implicit in the context of the sponsors to focus on the cooking needs of the developing world.)

In light of this situation, I am interested in getting fuel cost data to estimate affordability in other places.  If you have references, please let me know.

Thanks,

Paul Arveson
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.bioenergylists.org/pipermail/stoves_lists.bioenergylists.org/attachments/20200115/bef4f9c9/attachment.html>