The ILO STRENGTHEN2 project is conducting employment impact assessments of investments in sub-Saharan Africa to promote the creation of more and better jobs. This report presents an employment impact assessment (EmpIA) of the second phase of the Green Mini-Grid Facility Programme in Kenya. It follows on from a previous EmpIA on the short-term direct, indirect and induced employment outcomes conducted by the STRENGTHEN2 project (Oyuma, Game and Lieuw-Kie-Song 2023). To complement, this report focuses on the long-term employment and livelihood impacts from the productive use of energy (PUE) by businesses created as a result of access to the mini-grids’ electricity. It aims to uncover how mini-grids contribute to job creation in the long-term, including the types of jobs that are created and who benefitted from these the most. In addition, insights on contributing factors to employment outcomes, such as access to financial services, costing and satisfaction of services were collected to understand components that impact job outcomes and form the basis of recommendations for employment promotion.

Quantitative and qualitative data were collected from a survey of 94 small and medium-sized enterprises (SMEs) and from focus group discussions (FGDs) across twelve sites. The majority of SMEs fell within the agriculture sector and services sector, with business types varying between the different mini-grid site locations that spanned three counties in rural areas of Western Kenya. The gender balance of the sample[1] was 60 per cent male and 40 per cent female, with 44 per cent classified as youth (18—35 years).

The total headcount of workers in the overall sample was 195; 120 of these being paid workers. The estimated total full-time equivalent (FTE) of the paid workers sample was 118, which comes to an average of 9.8 FTE jobs created per site.[2] The distribution of workers in paid employment was 52 per cent male and 48 per cent female, indicating an almost equal distribution of men and women participating in paid employment. The majority of these jobs (52 per cent) were permanent jobs, with seasonal and casual workers making up the remaining 48 per cent.

The majority of contracts were informal, with 82 per cent of contracts among permanent workers being informal. However, 66 per cent of all enlisted workers in the overall sample were reported to be family members. About two thirds of the total workforce in the overall sample were also reported to be skilled labourers. Of these, females represented 41.8 per cent.

The results show a bias towards men in wages/compensation, which were better for men across all paid job categories. The average daily wage in the overall sample was about 350 Kenyan shillings (KES) for men and about KES 260 for women. Seasonal workers, both men and women, appear to earn relatively higher average daily wages than casual and permanent workers.

In the long-term, job creation increased, SME owners were asked how their situation had changed as a result of access to energy and starting their PUE business. 69 per cent stated that they were unemployed before but would now consider themselves employed. 84 per cent of SMEs reported that the revenue from their PUE business had increased in the two years. 40 per cent reported that their workers’ wages had increased compared to the period before they joined the PUE business; 80 per cent of the SMEs in the FGDs perceived that either their overall household incomes or income from their PUE business had increased compared to the previous two years.

Based on comparisons between different developers, it appears that the main driver of job creation is appropriate access to finance, which allows the setting up and expansion of PUE businesses. Token rates, connection fees and other costs also play a part, alongside reliability of the energy and service. Wages and employment appeared to be lower across developers’ sites that were engaged in more agricultural activities. Based on these findings, it is recommended that developers should offer tiers of PUE appliance financing or provide more appliances on credit. Connecting the developers with partners who can provide PUE appliances, such impact investors, could be a viable option. Furthermore, reducing mini-grid token rates through subsidies will increase energy consumption and enable further expansion. For developers’ however, there are barriers to implement these changes due to high operational costs. Donors would need to provide further incentives to increase sustainability of the business. This de-risking could attract more private investment within the sector which would lower costs for customers to further enable them to expand SMEs and spur job creation.

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1 In this study, the sample included only the owner, partner or top manager of the SME business.
2 This assumes that the number of SMEs and jobs created are similar across sites, but as observed, this is not always the case so should be interpreted with caution.