Ruhr Economic Papers

Ruhr Economic Papers #635

The Market-Based Dissemination of Modern-Energy Products as a Business Model for Rural Entrepreneurs – Evidence from Kenya

by Gunther Bensch, Jochen Kluve and Jonathan Stöterau

RWI, 09/2016, 38 S./p., 8 Euro, ISBN 978-3-86788-739-7 DOI: 10.4419/86788739

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Abstract

This paper provides evidence on a key factor for the success of market-based approaches to disseminate modern-energy products in rural areas of developing countries: the employment and income perspectives of entrepreneurs in the related value chains. We assess the impact of a large-scale energy-access intervention in Kenya that supports individuals in starting a business in improved cookstoves or small solar products. To identify the causal effect of the intervention, the analysis is based on a staggered implementation evaluation design that takes advantage of sequential roll-out of the programme. The results demonstrate how active entrepreneurs use the new business opportunity to intensify and diversify their income-generating activities, often by shifting away from subsistence farming as a main source of income. This goes along with sizeable improvements in individual and household incomes as well as perceived economic well-being. Impacts significantly differ between the two technologies and across sub-groups, most notably gender. The findings support that market-based approaches can successfully establish sustainable local businesses to foster modern energy access in rural areas.

JEL-Classification: O13, O33, H43, L26

Keywords: Energy-access interventions; cookstoves; pico-solar; value chain; impact evaluation; entrepreneurship training; entropy balancing

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