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What is the link between power and jobs?

november 2, 2016

In a study for CDC plc, the UK’s development finance institution, we explore the pathways through which improvements in the availability, affordability and reliability of electricity supply impact businesses and households.

Specifically, our research evaluates whether more and better power helped create jobs and improve livelihoods in Uganda.

We employ a mix of macro and micro analysis to derive the specific private sector job creation effects of better, cheaper, and more reliable power. Our approach includes modelling these pathways based on available industry and macro-economic data, as well as data collected during an energy-specific survey of more than 100 companies carried out in Uganda by our local partners Research Solutions Africa. We also analyse the broader development impact of power on livelihoods through household surveys in communities at different stages of electrification.

We estimate that the elimination of load shedding and reduction of power outages time led to an increase in GDP by 2.6% and the creation of some 201,600 jobs, of which an estimated 44% were for women. We also find out that the causality between electrification and household income generation is not straightforward: areas with higher incomes tend to get electricity faster than poorer ones and electrification then only modestly increases already higher incomes. Therefore we conclude that to increase employment creation, power sector investments should primarily be aimed at increasing the productive use of (national grid and/or mini-grid) power in the private sector. Nevertheless, electricity access has a number of non-financial benefits for households, such as improved quality of education and healthcare. Therefore, rural electrification projects should be focused on education and healthcare institutions.

The study reveals the broader (forward) effects of power investments. In our view these insights will enable international finance institutions to integrate the development impact perspective in their decision making.

The study can be found here: what_is_the_link_between_power_and_jobs_in_uganda_1.pdf