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Access to electricity plays a vital role in promoting economic growth and reducing poverty in developing nations specifically in operation and performance of small and medium rural enterprises, in addition to individual capabilities, household characteristics, infrastructure and other institutional factors (Olugbireet et al., 2012; Nagler & Naudé 2013, 2014; Bongole, 2016; Mondal, 2013; Akpan, Essien & Isihak, 2013; Mensah, 2018). A literature review on productive uses of electricity suggests that most studies, while examining the role of electricity in rural entrepreneurship, have focused on firm level indicators such as profits, productivity and revenues (Peters et al. 2011; Kooijman-van Dijk 2012; Bose, Uddin and Mondal, 2013). However, there is a gap in the existing literature on how electricity plays a role in encouraging households to take up entrepreneurial activities in rural areas. Based on the theoretical framework of ‘Occupational Choice Model,’ this thesis attempts to explore the role of electricity in supporting rural non-farm household enterprises in six nations, namely, India, Kenya, Nepal, Niger, Nigeria and Zambia. The study expands its scope by using World-Bank’s Multi-Tier framework (MTF) of energy access which acknowledges that access to electricity is not just a binary entity; rather a complex measurement that takes into account various dimensions of access such as capacity, reliability, affordability, duration, legality and safety. The MTF has been used to understand how a multi-dimensional access of electricity can impact the occurrence of rural non-farm household enterprises. Finally, these themes are explored in the context of self-employment opportunities for rural women.
Three different household level survey datasets have been used to achieve the research objectives. This study uses first of its kind World-Bank Multi-Tier Framework Surveys to assess the role of electricity access in occurrence of home-based non-farm entrepreneurial activities; to assess the role of a ‘secure’ electricity access in affecting the likeliness of non-farm entrepreneurial activities occurrence and; to assess whether electricity plays a role in occurrence of rural women led non-farm entrepreneurial activities in rural areas of Kenya, Nepal, Niger, Nigeria and Zambia. For the Indian context, Indian Human Development Survey data has been studied, to assess the role of electricity access in the occurrence of home-based non-farm entrepreneurial activities in rural India. Moreover, because IHDS data had its own limitations that restricted the measurement of electricity access beyond its binary entity, in a more comprehensive way, we transitioned to CEEW dataset to assess the role of a reliable and good quality electricity access in the occurrence of non-farm entrepreneurial activities in rural India. However, CEEW has the limitation in terms of missing information on the location of the enterprise i.e., whether its inside of house premise or outside, hence the regression results have been extrapolation using the percentage suggested by nationally representative dataset - NSSO for the same time frame. Several econometric techniques, including Fixed Effects Logit Models, Panel Fixed Effects Logit Regression Models, Heckman Sample Selection Model, and Seemingly Unrelated Regression Models, have been employed to investigate the research questions.
The results of this study suggest that household participation in non-farm entrepreneurial activities in India, Kenya, and Zambia is positively impacted by the availability of electricity, implying a new electrical connection may allow households without access to electricity to commence or operate a business. Further, according to our findings, running a non-farm business is more likely in India, Kenya, Nepal, and Niger with a higher MTF score. Additionally, findings indicate that electricity access promotes female entrepreneurship for the World Bank MTF survey dataset.
The findings of this study can be instructive for decision-makers whose priorities include improving rural lives, electrifying rural areas, and raising rural incomes. Further, by incorporating a gender perspective, policymakers can identify populations that require targeted support to achieve these goals. By considering how energy access strategies can be optimally designed and implemented to reach both women and men, policymakers can identify potential risks and opportunities for accelerating progress and surpassing existing timelines. The provision of electrification to rural areas of developing nations, with a focus on utilising it to drive self-employment, has the potential to significantly advance these nations towards the attainment of the Sustainable Development Goals, specifically by fostering sustained and inclusive economic growth, promoting full and productive employment, and ensuring access to decent work for all. This study is also relevant for goals of inclusive industrialization, fostering innovation, poverty alleviation and reduction of inequality (UN General Assembly, 2015).
Keywords of the Research: Rural non-farm enterprises (RNFEs), home-based businesses, electricity, Multi-Tier Framework (MTF)
