Impacts of Grid Electricity Access on Rural Non-Farm Entrepreneurship and Employment in Ethiopia and Nigeria

Pelz, S. ORCID: https://orcid.org/0000-0002-3528-8679 (2020). Impacts of Grid Electricity Access on Rural Non-Farm Entrepreneurship and Employment in Ethiopia and Nigeria. IIASA YSSP Report. Laxenburg, Austria: IIASA

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Abstract

Rural electricity supply is broadly considered a key driver of the structural transformation away from a dependence on agricultural livelihoods. Nevertheless, the causal effect of improving electricity access on the diversification of rural livelihoods away from agricultural incomes remains poorly understood. Recent systematic syntheses of electrification impacts in literature confirm that there remains limited quasi-experimental quantitative evidence describing the effects of electrification on non-farm entrepreneurship and labor market outcomes in Sub-Saharan African countries. In this report, we investigate the causal effects of household-level electrification on household non-farm entrepreneurship and employment trends in rural Ethiopia and Nigeria, contributing to the literature in terms of the geographical region of analysis and through the application of modern quasi-experimental methods. We analyze household-level observational panel datasets collected under the World Bank’s Living Standards Measurement Survey (LSMS) program, between 2010 and 2015. Our analysis indicates that rural household electrification alone was insufficient to trigger shifts in household non-farm entrepreneurship and labour market outcomes in the 2-4 years following grid connection. These findings are aligned with contemporary rural electrification impact literature urging caution in the interpretation of descriptive and potentially biased analyses that are unable to effectively disentangle the many co-determinants of non-farm entrepreneurship and labour market outcomes with respect to electrification.

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