Community-Based Electric Micro-Grids Can Contribute to Rural Development: Evidence from Kenya

In this paper we clarify the mechanisms through which rural electrification can contribute to rural development. Through a
detailed case study analysis of a community-based electric micro-grid in rural Kenya, we demonstrate that access to electricity enables
the use of electric equipment and tools by small and micro enterprises, resulting in significant improvement in productivity per worker
(100–200% depending on the task at hand) and in a corresponding growth in income levels in the order of 20–70%, depending on the
product made. Access to electricity simultaneously enables and improves the delivery of social and business services from a wide range of
village-level infrastructure (e.g., schools, markets, and water pumps) while improving the productivity of agricultural activities. We find
that increased productivity and growth in revenues within the context of better delivery of social and business support services contribute
to achieving higher social and economic benefits for rural communities. We also demonstrate that when local electricity users have an
ability to charge and enforce cost-reflectivetariffsandwhenelectricityconsumptioniscloselylinkedtoproductiveusesthatgenerateincomes, cost recovery is feasible.