Creating employment for the poor via technology transfers: Experimental evidence on a solar microenterprise program

Despite progress, the number of Sub-Saharan Africans living in extreme poverty continues to rise: the continent contains the largest concentration of extreme poor in the world at almost 400 million. This is associated with severe consequences for human welfare. As an example, chronic malnutrition in children under five is 39%. Furthermore, 600 million live without electricity in Africa and this is expected to rise given grid expansion is not predicted to keep pace with population growth. This too has dire consequences: almost 6 million children under 5 die each year from preventable diseases, the main cause being respiratory infections, and smoke from traditional lighting sources has been found to be a key risk factor. Finally, climate change continues unabated and strategies to provide modern energy without raising emissions are more important than ever.

We evaluate a new low-cost program designed to help address these challenges. It aims to create employment in East Africa through technology transfers to both increase incomes and distribute renewable lighting to the rural poor. The program provides groups of individuals with solar panels and lights in order to form village microenterprises which sell lights and provide light and phone charging to their communities. This is an innovative approach because it potentially creates a sustainable source of income, lowers the operating costs per light, and is also a natural pay-as-you-go model in that payments are directly related to use. The for-profit social program has rolled out to over 1500 villages in rural Rwanda.

Here we study the formation of 272 new microenterprises consisting of 4 individuals each in 272 villages. 136 villages were randomly assigned to treatment and 136 to control. We collect data on a sample of 5000 people from 1088 entrepreneur households.