The Impact of rural electrification on non-agricultural enterprises creation: Evidence from rural Ethiopia

This research has the aim to examine the impact of rural electrification on enterprise creation in Ethiopia. In addition to the impact of rural electrification on business creation, this project will also study the determinants of households living in the grid covered areas non-connection to electricity and their choice for lighting sources.

Ethiopia has been undertaking remarkable development in its electric sector since 2000. Through the country’s Universal Electricity Access Program, several off-grid villages and regions have been connected to the national electricity grid through public investment. The national grid coverage to rural towns has increased from 13% in 2002 to 55% in 2016 and the percentages of households who actually connect to grid electricity also increased from 7% in 2002 to 30% in 2016.

Given this background of increasing in the rate of rural electrification, it is vital to obtain empirical evidence on the impact of rural electrification on development outcomes. Therefore, this research project has the following objectives:

  1. To examine the causal effect of rural electrification on opening non-agricultural business environment;
  2. To investigate whether there is gender difference in the impact of electrification on the creation of non-agricultural business enterprises;
  3. To examine the dynamics of households under grid cover areas non-connection to grid electricity and identify the determinant factors for non-connection;
  4. To examine the dynamics of households’ choice for lighting sources and identify the determinant factors for their choice;
  5. To inform policy makers on these impacts of rural electrification and highlights the mechanism for intervention to expand nonfarm enterprises, which is one of the main strategies of the government in improving rural livelihoods.
Project status
Financed by
Environment for Development initiative
Project | 23 February 2018