JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT CASE STUDY Job Creation Potential of the Clean Energy Transition JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 1 JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT CASE STUDY Job Creation Potential of the Clean Energy Transition ABOUT ESMAP The Energy Sector Management Assistance Program (ESMAP) is a partnership between the World Bank and over 20 partners to help low- and middle-income countries reduce poverty and boost growth through sus- tainable energy solutions. ESMAP’s analytical and advisory services are fully integrated within the World Bank’s country financing and policy dialogue in the energy sector. Through the World Bank, ESMAP works to acceler- ate the energy transition required to achieve Sustainable Development Goal 7 (SDG7), which ensures access to affordable, reliable, sustainable, and modern energy for all. It helps shape World Bank strategies and programs to achieve the World Bank’s Climate Change Action Plan targets. Learn more at: https://www.esmap.org. © November 2023 | International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the World Bank, with contributions given by the staff and consultants listed in the acknowledgments. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Cover Image | ©Nigeria Electrification Project - Nigerian Rural Electrification Agency (NEP-NREA) Photos | p. 4, p. 14, p. 18, p. 32, p. 36 ©Nigeria Electrification Project - Nigerian Rural Electrification Agency (NEP-NREA), p. x ©Dasan Bobo/World Bank, p. 10 ©Egbane All images remain the sole property of their source and may not be used for any purpose without written permission from the source. Contents Acknowledgments v About this Report vi Acronyms vii Key Findings viii 1. Introduction 1 2. Summary of Relevant Energy Interventions 5 3. Overview of the Labor Market 11 4. Identification and Quantification of Jobs 15 5. Results 19 6. Enablers of and Barriers to Mini Grid Use and Expansion 31 7. Conclusion 35 References 39 Appendix A. Synergies with Other World Bank Energy Interventions in Nigeria 41 JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT iii List of Tables and Figures List of Tables  elected Indicators and Targets for Component 1 of the Nigeria Table 1. S Electrification Project 6 Table 2. Summary of Interviews 16 Table 3. NEP Mini Grid Sites Selected for this Case Study 16 Table 4. Number and Types of Direct Jobs Created, by Mini Grid Developer 20 Table 5. Job-Years by Job Type and Site 28 List of Figure Figure 1. Theory of Change for Component 1 of the Nigeria Electrification Project 38 iv  ONTENTS C Acknowledgments This work was made possible by the Energy Sector Management Assistance Program (ESMAP) with financial support from the Royal Ministry of Foreign Affairs of Denmark. ESMAP is a partnership between the World Bank and 19 donors to help low- and middle-income countries reduce poverty and boost growth through sustainable energy solutions. The report was prepared by a team coordinated by Zuzana Dobrotková (Senior Energy Specialist) and comprising of Sheoli Pargal (Lead Energy Economist), Anna Aghababyan (Senior Operations Officer) and Anders Pedersen (Senior Energy Specialist). The work was initiated under the guidance of Rohit Khanna (Practice Manager, ESMAP) and completed under Gabriela Elizondo Azuela (Practice Manager, ESMAP), with overall strategic direction provided by Demetrios Papathanasiou (Global Director, Energy and Extractives Global Practice). A team from the consulting company Mathematica, consisting of Faraz Usmani, Duncan Chaplin, Patricia Costa, Sarah Leser, and Sara Bryk, collected background material and conducted upstream research for this case study. The team acknowledges the important inputs, insights and assistance received from Arsh Sharma (Senior Energy Specialist), Tatia Lemondzhava (Energy Specialist) and Ashish Shrestha (Energy Specialist) and World Bank consultants Stephanie Pinnington, Nicolas Fichaux and Kavita Rai. Editor: Fayre Makeig. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT v About this Report This report presents the findings and conclusions of a case study undertaken under a program of analytical work that investigates the impacts of the global transition to clean energy on the quantity and quality of jobs in low- and middle-income countries. Under the program, entitled “Estimating the Job Creation Potential of the Clean Energy Transition,” the World Bank’s Energy Sector Management Assistance Program (ESMAP) undertook multiple streams of analysis: • A review of the literature and commonly used methodologies of investigation • Modeling of economywide job impacts of policies supporting the clean energy transition in selected countries in Sub-Saharan Africa • Case studies of the effects on employment of selected World Bank clean energy projects • Deep dives into the impact on jobs of closure of coal-fired power plants; of productive uses of electricity associated with mini grids in Nigeria; and of the Rusumo Falls Hydropower Project. Building on the above-mentioned steams of analysis, the program has also produced a high-level report summarizing its findings and conclusions “Jobs for a Livable Planet: Job Creation Potential of the Clean Energy Transition” and a discussion paper to support project design “Tracking Jobs in Projects Focused on Clean Energy and Productive Uses of Electricity”, providing strategies for tracking and enhancing job creation that can be used in the clean energy projects. The reports developed under this program together aim to support low- and middle-income countries in reaping greater socioeconomic benefits from the energy transition by supporting them in increasing the number and quality of local jobs generated while implementing clean energy projects. Realizing the benefits of the jobs created by clean energy interventions will depend on effective planning and preparation in the early stages of projects and sustained support during their implementation. The reports target multiple audiences, from policy makers to development practitioners and academics. They also aim to familiarize energy specialists with the effects of energy projects on jobs and give them tools that enable them to take account of—and, where possible, maximize—the socioeconomic benefits of the clean energy transition. The reports can be found at https://www.esmap.org/publications. vi  ABOUT THIS REPORT Acronyms FGN Federal Government of Nigeria GDP gross domestic product ILO International Labour Organization MSMEs micro, small, and medium enterprises NEP Nigeria Electrification Project NERC Nigerian Electricity Regulatory Commission O&M operation and maintenance PV photovoltaics REA Nigerian Rural Electrification Agency TOC theory of change All currency is in United States dollars (US$, USD), unless otherwise indicated. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT vii Key Findings The Solar Hybrid Mini Grids for Rural Economic Development component of the Nigeria Electrification Project created direct and indirect employment opportunities across various skill levels in Nigeria. The project contributed to local economic growth, gender diversity, and the expansion of small businesses in newly electrified areas. Key findings from the case study were: Direct Employment: The mini grid projects generated direct jobs across various phases, including design, construction, and operations and maintenance. These jobs covered a range of roles, including skilled (management, engineering, technical design), semi-skilled (customer relations, technicians, operators), and unskilled (manual laborers, security personnel). In total, 191.8 person-years of direct jobs were created, with 118 being domestic. Local Recruitment: Developers recruited unskilled and semi-skilled workers from nearby areas, as they were familiar with the host communities. This approach supported local economic growth and community awareness, aligning with project goals. Skilled workers were often brought in on formal contracts, with some difficulty in sourcing skilled labor in Northern regions. Gender Diversity: While there were no specific policies to promote female employment, female participation in the projects was in line with global averages for the renewable energy sector, which is approximately 32 percent female. Indirect Job Creation: The demand for equipment and building materials led to indirect job creation. Approximately 30 percent of materials used in mini grid construction were domestically sourced, while others were imported due to availability or quality. An estimated 206 job-years (foreign and domestic) of indirect jobs were created through the supply chain. Induced Jobs: Newly electrified areas may witness induced jobs as electricity enables productive activities and new businesses. While the study did not find evidence of improved employment rates, it identified the emergence of new commercial activities, including grocery stores, restaurants, and barber shops in electrified areas. viii  KEY FINDINGS ONE INTRODUCTION This case study seeks to shed light on the employment outcomes associated with the World Bank’s investments in mini grids made as part of the Nigeria Electrification Project (NEP), which was approved in 2018 and is expected to close in 2023. It does so using insights from interviews (with the developers and beneficiaries of mini grid projects across six mini grid sites) complemented by data from various secondary and documentary sources. Following the passage of the Electric Power Sector Reform Act in 2005, Nigeria carried out significant power sector reforms to unbundle and privatize electricity generation and distribution. Yet the transition from a publicly owned to a largely privately managed power sector, which was completed by 2013, did not result in the expected outcomes. For example, high losses, low collections, and a lack of cost-recovery tariffs gave rise to an annual financial deficit of approximately $1 billion to the sector—along with the second- largest absolute energy access deficit in the world (with approximately 95 million people lacking access to electricity in 2015) (Advisory Power Team 2015; World Bank 2018). Disparities in access based on rural-urban status, gender, and wealth also remained pervasive. For example, 86 percent of urban Nigerians, but only 34 percent of those in rural areas had access to electricity in 2016 (World Bank 2020). Similarly, over 40 percent of those with electricity in 2015–16 were concentrated in the highest wealth quintile, and male-headed households were between 8 and 40 percent more likely to have access (World Bank 2016, 2018). Recognizing the urgency of the country’s energy access situation, the Federal Government of Nigeria (FGN) approved the Rural Electrification Strategy and Implementation Plan in 2016, aiming to “expand access to electricity as rapidly as possible in a cost-effective manner . . . [using] both grid and off-grid approaches” (REA 2016). Mini grids and stand- alone solar photovoltaics (PV) systems were expected to play a key role in achieving this objective. For example, following the findings of a study by the Ministry of Power, Works and Housing that identified approximately 8,000 potential load centers around the country that could be suitable for mini grids and power 14 percent of the population, the Nigerian Electricity Regulatory Commission issued a regulatory framework in 2016 that aimed to address barriers to the development of the country’s mini grid market (World Bank 2018). In support of this objective, the World Bank approved the NEP in 2018 to increase access to electricity services for households; public educational institutions; and underserved micro, small, and medium enterprises (MSMEs) (World Bank 2018).1 In particular, the NEP was designed to incentivize and leverage private sector investments and activities in the construction and operation of mini grids, as well as in the sales of stand-alone solar home systems. In so doing, it sought to foster the growth of a vibrant market for mini grid and off-grid energy solutions, while supporting the FGN’s goal of increasing electricity access. Section 2 of this case study provides a detailed overview of the NEP and related power sector investments, followed by an overview of the Nigerian labor market in section 3. Section 4 provides an overview of the methodology. Section 5 presents a discussion of the findings JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 1 from a series of key informant interviews conducted with the project stakeholders and beneficiaries. Section 6 summarizes key barriers and enablers as reported during the interviews. Section 7 concludes the case study. Endnote Additional information on the NEP is available at: https://projects.worldbank.org/en/ 1.  projects-operations/project-detail/P161885. 2 Introduction TWO SUMMARY OF RELEVANT ENERGY INTERVENTIONS In addition to the Rural Electrification Strategy and Implementation Plan, in the years since the passage of the 2005 Electric Power Sector Reform Act, the FGN has launched a series of initiatives and programs to expand electricity access and strengthen the sustainability of the power sector. These programs have sought to drive progress toward the FGN’s ambitious dual goals of ensuring that by 2030: (1) 90 percent of the population has access to electricity; and (2) 30 percent of the total energy is derived from renewable sources (Signify Foundation and Intellecap 2020). They have also sought to address the barriers to scaling up mini grids (such as the absence of adequate viability gap financing and of credible market data, which have deterred international investors) as well as stand-alone PV systems (such as high import duties and taxes on imported components) (World Bank 2018). For example, the National Renewable Energy and Energy Efficiency Policy and the National Renewable Energy Action Plan (2015–2030)—adopted in 2015 and 2016, respectively—outlined renewable energy and energy efficiency targets and action plans to promote the development and financing of off-grid renewables. These efforts also provided recommendations for additional regulations and economic instruments to create an enabling environment for the off-grid sector, and supported research and development and training (Signify Foundation and Intellecap 2020). They also complemented the launch of the Rural Electrification Fund by Nigeria’s Rural Electrification Agency (REA) to help finance rural electrification expansion, including through mini grid and off-grid electrification solutions (World Bank 2018). Similarly, the Power Sector Recovery Program, approved in 2017, aimed to “improve the financial viability of sector companies, increase power supply, and strengthen sector governance and contract enforcement, de-risking the sector for private investment and putting it on a path to long-term sustainability” (World Bank 2018). It established data-driven processes for decision- making within the sector (e.g., through the launch of the NESISTATS online portal, which was set up to increase access to vital statistics on the power sector, such as on the performance of specific distribution companies, for consumers and other relevant stakeholders). In addition, it developed and implemented a sector-specific foreign exchange policy and promoted the adoption of cost-reflective tariffs. In so doing, it sought to support the country’s off-grid market and drive electricity access via off-grid renewables (Signify Foundation and Intellecap 2020). Overview of the NEP The NEP was initiated in 2018 with the REA as the primary implementing agency.1 Its development objective (to increase access to electricity services for households, public educational institutions, and underserved MSMEs) was designed to build on and complement the FGN’s prior and ongoing power sector reform and expansion efforts.2 Specifically, the NEP was broken down into four components: 1. Solar hybrid mini grids for rural economic development ($330 million, of which $150 million is from the World Bank and $180 million from private sector funding): This JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 5 component, which is the focus of this case study, aimed to support the development of private sector mini grids in unserved and underserved areas with high economic growth potential (World Bank 2018). It was expected that the activities under this component would be implemented under a market-based approach, whereby the construction, operation, and maintenance of approximately 850 economically viable mini grids would largely be led by the private sector through support via the provision of market intelligence (to lower the costs of identifying prospective sites and conducting necessary financial and social impact assessments) and subsidies (to reduce initial capital outlays). The new mini grids (expected to be primarily solar generation, with battery storage and diesel-based backup generation) were expected to be built in line with Nigeria’s grid code standard to enable future integration into the national grid network. Two investment subcomponents were envisioned to be conducted in parallel: i. A minimum subsidy tender for mini grids, which aimed to initiate implementation by having the REA select 250 prospective mini grid sites and inviting bids from private sector developers for the minimum capital cost subsidies required to provide electricity to these sites. For a subset of sites located in areas that developers consider too risky, the REA also considered a fully public-financed approach, with the private sector’s role limited to construction and operation. ii. A performance-based grants program, which aimed to use performance-based grants (initially set at $350 per connected end user) to incentivize mini grid operators to deliver electricity services to new customers. Table 1 summarizes selected indicators and targets for Component I of the NEP. Its main beneficiaries are expected to be households and MSMEs that receive new or improved access to electricity as a result of the project. 2. Stand-alone solar systems for homes and MSMEs ($305 million, of which $75 million is from the World Bank and $230 million from private sector funding): The objective of this component was to support the expansion of the market for stand-alone solar systems TABLE 1 Selected Indicators and Targets for Component 1 of the Nigeria Electrification Project COMPONENT INDICATOR TARGET Solar hybrid mini grids for rural Households provided with electricity access by mini grids 300,000 economic development MSMEs provided with electricity access by mini grids 30,000 Volume of result-based financing channeled to private sector mini grid developers $150 million New generation capacity of renewable energy (solar) installed 85 megawatts Source: World Bank 2018. Note: MSME = micro, small, and medium enterprise. 6 Summary of relevant energy interventions in Nigeria, with the aim of providing access to over a million Nigerian households and MSMEs at lower costs than current available options (e.g., diesel generators). In addition, it sought to support the distribution of 1 million solar lanterns over the course of the project. A market-based approach was expected to be followed to guide activities under two subcomponents: i. Market scale-up challenge grants, a catalytic fund that would offer performance grants to qualified, large-scale providers to accelerate sales to households and MSMEs in order to reduce risk for private sector investors and help mobilize capital for new and established firms looking to scale rapidly. ii. Performance-based grants, which would include grants of up to 20 percent of the system cost to grantees for each eligible system installed and verified by the private sector. This was expected to allow firms to finance the necessary investments in the human resources, advertising, and logistics required to reach potential customers. 3. Energizing Education Programme: Phase II ($105 million from the World Bank): This component aimed to provide reliable, affordable, and sustainable power to a total of seven federal universities and two associated teaching hospitals through the installation of dedicated solar-hybrid power generation systems (ranging in capacity from 1 to 14 megawatts). The component is a part of a larger program by the FGN that is aimed at electrifying 37 federal universities and seven university teaching hospitals across the country. Phase I of the program, which is funded solely by the FGN and implemented by the REA, has already been concluded, with power systems installed at nine federal universities and one teaching hospital. Phase III of the program is funded by the African Development Bank under the parallel Nigeria Electrification Project3, and targets eight federal universities (African Development Bank Group 2023). Unreliable and poor-quality power supply means that these institutions often relied on expensive on-site diesel generators. However, grid performance was expected to improve in the future. For this reason, the installed power systems were designed to build and improve upon the existing grid connection without cutting it off entirely (the existing grid supply is expected to continue to supply power at certain hours to noncritical loads across the university campuses). 4. Technical assistance ($25 million, of which $20 million is from the World Bank and $5 million from counterpart funding): This component aimed to build the capacity of key institutions (such as the REA) for the upscaling of rural electrification, support, and project implementation. It sought to support various activities, for example, strengthening key institutions’ capacity for implementing environmental and social safeguards, development of strategies and studies, technical assistance to assess the potential of different financing instruments, and mapping of the supply chain for the Nigerian mini grid industry. Endnotes The REA is also the implementing agency for a separate project—also called the Nigeria 1.  Electrification Project—that was approved by the African Development Bank (AfDB) in JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 7 2018. The AfDB project’s objective and component structure (including its focus on supporting mini grid development in the country through the provision of capital subsidies) closely mirror those of the World Bank project. Additional information about the AfDB project is available at: https://projectsportal.afdb.org/dataportal/VProject/ show/P-NG-F00-020. Appendix A provides an overview of other proposed and ongoing World Bank projects 2.  with which the NEP was designed to have synergies. https://projectsportal.afdb.org/dataportal/VProject/show/P-NG-F00-020. 3.  8 Summary of relevant energy interventions THREE OVERVIEW OF THE LABOR MARKET In 2014, Nigeria overtook South Africa to become the continent’s largest economy based on nominal gross domestic product (GDP) (Deloitte 2014). This was a significant achievement for the country, which was already the most populous in Africa. Yet Nigeria has struggled with widespread socioeconomic challenges, including poverty and unemployment. In 2018, as the NEP was launched, for instance, nearly 40 percent of the population lived on less than $1.90 a day (the international poverty line), a rate that masks considerable rural-urban as well as state-level disparities (World Bank 2020; African Development Bank Group 2020). High rates of poverty in 2018 made Nigeria home to the largest number of people living in extreme poverty in the world—ahead of considerably more populous India (Kharas, Hamel, and Hofer 2018). Unemployment at the same time stood at approximately 23 percent, with youth unemployment especially high (at nearly 30 percent); high rates of informal employment among educated youth suggest that underemployment was also pervasive (African Development Bank Group 2020). In addition, job creation in Nigeria has not always kept pace with population, labor force, or economic growth. For example, although the Nigerian economy grew rapidly between 2005 and 2013, this growth did not translate into sufficient job creation (a trend characterized as “jobless growth”) partly due to a mismatch in skills between new graduates and available jobs, a freeze in employment in many public and private sector institutions, and continued job losses in the manufacturing and oil sectors (ILO 2018a). The agriculture sector accounted for nearly half of employment in 2017. However, other sectors had been steadily growing in importance, reflecting broader growth and development patterns. For example, between 2007 and 2016, the employment share in agriculture decreased by nearly 9 percentage points, whereas it grew in manufacturing (+3.3 percentage points), trade (+2.5 percentage points), and construction (+1.3 percentage points).1 Nevertheless, the agriculture sector remained of key importance for livelihoods, underscoring the need to rapidly enhance productivity in the sector. At the same time, increases in productivity in agriculture may result in a decrease in employment in this sector, which implies a need to foster the growth of nonfarm economic activities (such as agricultural processing) as a way of addressing underlying employment-related challenges (Takeshima, Amare, and Mavrotas 2018). Nearly 93 percent of all employment in 2013 was informal, with roughly half of the informal workers working independently (primarily as own-account workers with no paid employees) and half employed in mostly small or medium informal enterprises (ILO 2018b).2 Large gender-based disparities also existed in the Nigerian labor market. For example, the rates of informal employment were higher among females (95 percent) than males (91 percent) in 2013 (ILO 2018b). More broadly, females constituted approximately 45 percent of the labor force in 2017—the lowest level since at least 1990, and a figure lower than the regional average for Sub-Saharan Africa (World Bank 2020). The overall labor force participation (about 55 percent in 2017) obscured large differences between males (over 60 percent) and females (49 percent) (World Bank 2020). Similarly, about 23 percent of male youth were not in employment, education, or training in 2017, whereas this share for female youth was nearly 40 percent, a particularly striking disparity given that Nigeria has one of the largest youth populations in the world (Federal Ministry of Youth and Sports Development 2021). JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 11 Given relatively high rates of unemployment (particularly among youths) as well as the substantial share of the overall labor force engaged in the agricultural sector, the NEP’s goal of increasing household- and MSME-level access to electricity from mini grids in underserved areas had the potential to foster domestic job creation over the short, medium, and long terms as a result of NEP-related investments in relatively rural, underserved areas and help reduce local unemployment and promote structural transformation (i.e., a shift away from agriculture into other income-generating activities). Endnotes The employment shares in industry and services were 7 and 45 percent, respectively, 1.  in 2017 (Federal Ministry of Youth and Sports Development 2021). Informal workers are often poorer than formal workers, and work in vulnerable working 2.  conditions with limited access to legal and regulatory frameworks providing work-based social protections (ILO 2019). 12 Overview of the labor market FOUR IDENTIFICATION AND QUANTIFICATION OF JOBS Objectives and Overall Methodology This case study aims to assess employment associated with the World Bank’s support to Component 1 of the NEP. Specifically, it estimates the numbers of direct, indirect, and induced jobs associated with project investments in electricity infrastructure, the resulting increase in electricity access, and the promotion of productive uses of electricity by drawing on insights from a series of interviews with professionals involved in the construction and rollout of the project as well as with the beneficiaries located in the project areas: • Direct jobs are those jobs that were created by contractors and subcontractors who hired workers to design, implement, operate, and maintain the mini grids. Professionals representing these organizations were interviewed to assess direct impacts. • Indirect jobs are those jobs that resulted from the demand for the inputs required for setting up the mini grids. Indirect jobs are estimated by multiplying data on direct jobs (collected during interviews with stakeholders) by an indirect–direct job ratio found in relevant literature. Specifically, in the absence of analyses that shed light on the magnitude of this ratio in the context of the Nigerian economy, this adjustment uses the indirect– direct job ratio found in the literature for solar projects in India, which has a similar GDP per capita (Pollin and Chakraborty 2015).1 Similar results were not available for Nigeria.2 • Induced jobs are those jobs that are created due to new productive uses of electricity in the areas that received mini grids and also on account of the increase in general economic activity in the project areas due to the project itself. This case study provides insights on the nature and types of these new employment opportunities created due to the project. The insights are based on interviews conducted with 10 households and small businesses that were connected to mini grids through the project. In addition, the case study draws on the findings from a separate study that used survey data to estimate the effects of mini grids on induced jobs. Data Collection Approach Data from the project’s stakeholders, implementers, and beneficiaries were collected using a “cascade approach,” whereby project officers were interviewed first. These respondents then helped identify staff from the relevant mini grid developers, who in turn identified beneficiaries in the selected target communities.3 Contacting the program’s beneficiaries was relatively more challenging. Of the 36 potential beneficiaries (6 beneficiaries associated with each of the 6 target communities) who were contacted, 26 did not respond to requests for interviews. The final interview sample included 4 mini grid developers and 10 beneficiaries (across four target communities), as summarized in table 2. Table 3 details the mini grid sites featured in the case study. Six mini grid sites, which were constructed by four different developers (three domestic and one foreign) across four states, JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 15 were selected. Only those sites that had been identified as both commissioned and successfully completed were selected, so as to ensure that the qualitative evidence provided on jobs by respondents reflected the effects of access to mini grid–based electricity in the project areas, not the effects of other potential electricity sources.4 All projects were solar PV–based hybrid systems (comprising solar PV modules with a battery bank). Two sites also had a diesel backup generator. TABLE 2 Summary of Interviews SOURCE DIRECT INDIRECT INDUCED Entities interviewed (number of interviews) Developers—mini grid companies (4)   Beneficiaries—MSMEs (5), households (5, including 2 community heads)  Source: Based on completed qualitative interviews. MSME interviews were conducted with a barber shop owner, a dispensary/grocery store owner, a restaurant/bar, and two grocery/provision stores. Note: MSME = micro, small, and medium enterprise. TABLE 3 NEP Mini Grid Sites Selected for this Case Study SITE STATE GEOPOLITICAL DEVELOPER PROJECT TOTAL CAPACITY ZONE EXPECTED (KW) MINI GRID CONNECTIONS 1 Ondo South West A4&T Power Solutions Ugbo Nla 360 30.15 2 Ondo South West A4&T Power Solutions Lomileju MG 120 12.00 3 Plateau North Central GVE Projects Ltd. GVE Shimankar Mini Grid 2,269 234.00 (NEP-PBG) 4 Niger North Central PowerGen RE Rokota 326 64.00 5 Bayelsa South South Renewvia Oloibiri Community of Ogbia Local 364 67.32 Government 6 Bayelsa South South Renewvia Akipelai Community of Ogbia Local 364 67.32 Government Source: Nigeria Electrification Project, Rural Electrification Agency. Note: Total mini grid connections are per the site-specific performance-based grant agreement with developers, whereby developers received a fixed payment per connected customer. These are intended connections rather than actual connections. kW = kilowatt. 16 Identification and Quantification of Jobs Endnotes These results may not hold for Nigeria, especially if the types of solar systems covered by 1.  Pollin and Chakraborty (2015) differed substantially from the solar systems covered in this case study. The similarity in GDP per capita between India and Nigeria suggests that wage rates may 2.  be similar, which provides a justification for the use of parameters from the Indian context to estimate indirect jobs in Nigeria. Given the “cascade approach” used for sampling, the final sample of beneficiaries is 3.  unlikely to be representative; this can lead to biased findings. Some sites were indicated as commissioned but not completed in mini grid rosters. It is 4.  possible that such sites are expected to be completed in stages. This might enable developers to commission a site (to provide electricity to the parts of the site that were completed) while work continued on the remaining elements. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 17 FIVE RESULTS Direct Jobs Direct v under the NEP were created in the mini grid companies and their subcontractors.1 Table 4 documents the number and types of NEP-related jobs, along with their associated characteristics, at each of the four mini grid companies profiled. Skilled jobs (such as in management, engineering, and technical design) were formal. Semiskilled jobs included a mix of formal and informal labor depending on the nature of the task. For example, local personnel recruited to scout potential mini grid sites or conduct community engagement were hired informally. However, those responsible for operation and maintenance (O&M), customer care, and compliance-related tasks had formal contracts.2 Finally, unskilled jobs (including manual laborers, security personnel, and “haulers,” who move materials and/or clear construction sites) were informal. Note that mini grid companies and their subcontractors played dual roles as project developers and mini grid operators. Given the layers of subcontracting that existed in many cases, it proved difficult to generate a precise accounting of the number of jobs associated with project-related activities. For example, only one firm (which oversaw the mini grid installation in Akipelai) was able and/or willing to provide a detailed breakdown of the types of workers hired as well as the sequence in which hiring coincided with the rollout of mini grid construction, which is likely similar to the hiring and operational practices of the other firms: 1. The respondent from this firm noted that work kicked off with an “initiation stage,” during which the firm recruited local personnel to scout potential mini grid sites within the selected community (based on an assessment of sites that would be feasible as well as the most beneficial). 2. Once site selection was completed, the firm’s 11 existing workers carried out project- related engineering, procurement, and construction (EPC) tasks in two teams: one involved with the planning, design, and operations components of the work, and the other overseeing compliance and customer care. Once construction activities commenced, new workers were hired to string cables and construct energy cabins and powerhouses (four employees), erect poles and distribution lines (five employees), and erect stanchions (five employees). 3. Firms responsible for multiple sites moved on to a subsequent site only after work on one site was completed. Once the project concluded, a smaller group of workers (at most 15 percent of the total employees working on the project) were retained for O&M roles. This team typically worked as site technicians and energy vendors. Given that mini grids can be operated remotely, only a limited presence is required for this task, and the number of available job opportunities declines. Domestic and foreign employment. All companies indicated that before projects’ initiation, preexisting full-time employees are drafted to EPC-related roles by mini grid developers, and are rotated from one project to the next. The majority of the employees are Nigerian, although they may not be from the communities where the projects are being implemented. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 19 TABLE 4 Number and Types of Direct Jobs Created, by Mini Grid Developer QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS QUALIFICATIONS MINI GRID SITE JOB QUALITY NUMBER OF EMPLOYED INFORMAL JOB TYPE PERSONS FORMAL/ FOREIGN FEMALE WAGES YOUTH Rokota Skilled Total 25, 0 No specific — — • Qualification — • Medical including: number and com- insurance, paid • Site developer provided, but petency leave holiday • Project • 2 security included in required bonus managers guards contractors’ (typically a • Disbursement • Supervisory • 2 administrative university of COVID-19 roles: Con- technicians staff degree). support fund tracted most (conducting • Higher jobs, such as repairs or national internal wiring connecting diploma (e.g., and distribu- new technical tion, generation, customers) education for installation, • 4 agents semiskilled and network (promoting workers and connectivity, but the sale of some skilled supervised by power to workers). pre­existing staff community • Accountant members) • O&M officer Semiskilled 0 2 in customer — — — relations in • Customer charge of relations the sign-off • Mini grid process at operator initiation • Business development • Supply chain manager • Local technicians Unskilled 0 Local — — — Training provided technicians (e.g., for opera- • Local agents are youths tions workers, (sales local technicians) representatives) • Security guards • Manual jobs (such as land clearing, fetching water, cleaning of the powerhouse) Ugbo Nla Skilled and in- 7 0 2 (technical, 9 youths Formal Degree — • Housing, house full-time compliance) (professional communication staff courses allowance, in solar health, pension, • Engineers (civil, technology, life insurance mechanical, PV installation, • Strict safety electrical, and or related measures software) subjects). • Flexible work • Energy assessor hours, if and design necessary • Compliance • Training officer provided • Operations officer (continues) 20 Results TABLE 4 Number and Types of Direct Jobs Created, by Mini Grid Developer (Continued) QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS QUALIFICATIONS MINI GRID SITE JOB QUALITY NUMBER OF EMPLOYED INFORMAL JOB TYPE PERSONS FORMAL/ FOREIGN FEMALE WAGES YOUTH Ugbo Nla Semiskilled 16 0 2 (customer 9 youths Formal/ Local workers Negotiable • In-house/on-the- (continued) care, informal— from the host (subject job training • Artisans (e.g., operations) but mostly community to budget, provided based layers, brick­ informal who must have economic on PV technology welders, for cable a university de- situation, and O&M painters, pole stringing, gree for O&M inflation, • Flexible work erection, cable powerhouse/ work; com- negotia- hours joining) energy munity heads tion— • Local technicians cabin con- are involved in especially • Local struction the selection for informal community (4), pole of workforce jobs, for scouts erection/ based on which • O&M personnel cable recommenda- ~N5,000 per stringing/ tions. day is not distribution uncommon) Unskilled 0 0 lines (5), and Technical stanchion (3) certificate can • Manual labor/ be advanta- construction geous. • Local agents (sales representatives) Lomileju Skilled and in- 7 0 2 (technical, 9 youths Formal Degree (profes- — • Housing, house full-time compliance) sional courses communication staff in solar allowance, technology, PV health, pension, • Engineers (civil, installations, life insurance mechanical, or related • Strict safety electrical, and subjects). measures software) • Flexible work • Energy assessor hours, if and design necessary • Compliance • Training officer provided • Operations officer Semiskilled 16 0 2 (customer Formal/ Local workers Negotiable • In-house/on-the- care, informal— from the host (subject job training • Artisans (e.g., operations) but mostly community to budget, provided based layers, brick­ informal who must have economic on PV technology welders, for cable a university de- situation, and O&M painters, pole stringing, gree for O&M inflation, • Flexible work erection, cable powerhouse/ work; com- negotia- hours joining) energy cabin munity heads tion— • Local technicians construction are involved in especially • Local (4), pole the selection for informal community erection/ of workforce jobs, for scouts cable based on which • O&M personnel stringing/ recommenda- ~N5,000 per distribution tions. day is not lines (5), and uncommon) Unskilled 0 0 stanchion Technical (3) certificate can • Manual labor/ be advanta- construction geous. • Local agents (sales representatives) (continues) JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 21 TABLE 4 Number and Types of Direct Jobs Created, by Mini Grid Developer (Continued) QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS QUALIFICATIONS MINI GRID SITE JOB QUALITY NUMBER OF EMPLOYED INFORMAL JOB TYPE PERSONS FORMAL/ FOREIGN FEMALE WAGES YOUTH Shimankar Skilled 18 0 0 — Formal — — Formal: Childcare, health, house, and • Project transportation al- developer lowance provided • Engineers Standard work hours applied: 8 am to 5 pm Semiskilled 27 (mostly lo- 0 10 (engaged 100% Formal/ No formal Informal • Informal: Lunch cal hires from in the youth informal education rates (e.g., provided • Builders host com- delivery of required, but N4,000– • PPE provided • O&M munities), of construction basic literacy N6,000 per to workers. • Technicians which 7 were materials, and commu- day) Safety measures • Field agents permanently technical nication skills prioritized • Welders, employed tasks) necessary, as during training carpenters, after imple- well as learn- and construction masons, mentation ing on the job. • Work hours electricians Majority of flexible and the workforce based on Unskilled 0 0 Informal drafted from project timeline (employment the local com- deliverables • Casual labor affected by munity. • COVID-19 cultural/ outbreak religious affected project barriers) implementation and operations significantly, resulting in inflated costs • Training pro- vided (e.g., for PV installation and house wiring) Oloibiri Skilled 6 full-time 2 0 — Formal — — • Formal: and Received • Mini grid preexisting benefits and developer flexible work hours Semiskilled 32 persons 0 0 — Formal/ — — • Informal: No (primarily informal benefits • O&M during start- • PPE, safety, and • Local up of the precautionary technicians and project site, measures PV installers and gradually adopted scaling down toward O&M) Unskilled 0 20% of total 10% of Informal Training was Informal: • Flexible working unskilled total provided, N30,000 per environment • Security guards labor unskilled which led to month on with allocated • Manual jobs labor capacity devel- average routine break (e.g., land opment and time clearing, skill empower- • Safe working fetching water, ment for environment cleaning of the beneficiaries powerhouse) even beyond project devel- opment stage. (continues) 22 Results TABLE 4 Number and Types of Direct Jobs Created, by Mini Grid Developer (Continued) QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS QUALIFICATIONS MINI GRID SITE JOB QUALITY NUMBER OF EMPLOYED INFORMAL JOB TYPE PERSONS FORMAL/ FOREIGN FEMALE WAGES YOUTH Akipelai Skilled 6 full-time 2 0 — Formal — — • Formal: and Received • Mini grid preexisting benefits and developer flexible work hours Semiskilled 32 persons 0 0 — Formal/ — — • Informal: no (primarily informal benefits • O&M during • PPE, safety, and • Local start-up of precautionary technicians and the project measures PV installers site, and adopted gradually scaling down Unskilled 0 20% of total 10% of Informal Training was Informal: • Flexible working toward O&M) unskilled total provided, N30,000 per environment • Security guards labor unskilled which led to month on with allocated • Manual jobs labor capacity devel- average routine break (e.g., land opment and time clearing, skill empower- • Safe working fetching water, ment for environment cleaning of the beneficiaries powerhouse) even beyond project devel- opment stage. Source: Interviews/correspondence with solar developers. Notes: For sites overseen by the same developer (i.e., Ugbo Nla and Lomileju MG overseen by A4&T Power Solutions, and Oloibiri and Akipelai overseen by Renewvia), respondents provided corresponding job- and employment-related information. “—” means the respondent chose to not provide an answer to this question. O&M = operation and maintenance; PPE = personal protective equipment; PV = photovoltaics. Typically, a small percentage of the workforce is made up of foreign labor. Three of the four companies contacted did not report any foreign workers. One company, Renewvia (headquartered overseas), reported two foreign employees in supervisory roles. Note that the NEP did not have a specific mandate to hire local workers (such as those from the host communities where mini grids were located). Yet, all developers who were interviewed indicated that the majority of the semiskilled installation-related employees were intentionally hired from nearby areas (i.e., the vicinity of mini grid sites). One developer reported that this is because such workers are familiar with the host communities, while another emphasized that hiring in this manner helps to stimulate the rural economy by providing jobs to local artisans, thus increasing the number of customers that local businesses (e.g., barber shops and snack bars) have and increasing opportunities for the creation of new enterprises. Developers may also hire locally to enhance the effectiveness of community awareness events, which are used JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 23 to stimulate demand for mini grids—something “The on-the-job training that is a standard procedure for projects of this provided to [technicians nature in Nigeria. and electricians] at Developers did not report having difficulty various stages is such recruiting locally. Given that many of these that some of them are communities are rural and agrarian, job using that to ply their opportunities outside of the agriculture sector trade beyond the scope are limited, and a large portion of the population of the mini grid site is unemployed or only seasonally employed. In development.” such host communities, farmers were often hired to work in construction and security on unskilled manual jobs. All project developers noted that they provided on-site training for the local employees involved in installation and construction as daily laborers, engaged in tasks such as land clearing, fetching water, and cleaning of the powerhouse. Skilled workers involved in engineering and design were expected to have relevant experience, assessed during hiring and supported by suitable qualifications (e.g., a relevant degree in civil engineering). However, the firms reported that it was difficult to find skilled labor for projects in the northern regions of Nigeria. For such roles, permanent employees were transferred from other project sites. Job postings for projects located in the country’s northern region tended to include lower qualifications for hiring than did job postings in the south. Finding unskilled workers did not pose similar challenges. Wages. Respondents were generally unwilling to reveal detailed information about wages and benefits. The information collected is, thus, not representative of all mini grid operators. However, one firm reported that the average wage is between N4,000 and N6,000 per day for semiskilled (e.g., technicians) and unskilled (e.g., construction) workers employed in both formal and informal capacities during the construction phase. Another developer indicated that the average wage is approximately N30,000 per month for informal workers. This developer also reported that it offered better wages to employees compared with other available alternatives. Note, for reference, that the statutory minimum wage in Nigeria is N30,000 per month or N1,500 per day (Wallace 2019), suggesting that the availability of other employment opportunities is limited. Benefits. In general, developers reported providing transportation allowance, paid leave, housing, communication allowance, health insurance, and pension benefits to formal workers. Informal workers were generally provided food and “flexible work hours.” Women and youth. In Nigeria, women and youth (aged 18–35) are considered vulnerable groups. Of the four developers whose project sites were surveyed, one reported having all youth employees, while another reported that nearly 40 percent of its employees were youths. The other developers had approximately 10 percent youths in the project workforce. The number of women hired varied by company (from 20 percent to 40 percent). Women were employed in diverse roles (such as engineering, community engagement, customer relations, and operations and supply). This suggests that the overall rate of female 24 Results employment was comparable to what is typical of the global renewable energy sector, which is approximately 32 percent female (IRENA 2019). In general, developers reported that they encouraged female employment as long as it did not disrupt the religious and social order of the host communities. That said, no developer reported having any special policies or practices in place to promote the hiring of women. Job sustainability. All firms indicated that some workers were retained for operations and management work after the mini grid’s construction. For example, in the Shimankar community, seven workers were retained as site technicians and energy vendors/agents after the completion of the project’s development stage. Similarly, in the Oloibiri and Akipelai communities, many informal workers who received on-the-job training (e.g., in solar PV installations) reportedly continued to apply these skills in other employment after the mini grids were completed and commissioned. Formal employees, such as engineers, and compliance and account officers, were in permanent jobs, and moved from one project to another on a rotational basis. Total direct jobs. The firms struggled to provide estimates of the number of workers required, and for how long.3 Each firm ultimately estimated total employment and employment duration by worker type for some types of workers. The duration estimates averaged approximately 6–7 weeks for engineers and procurement workers and approximately 20 weeks for construction workers.4 One firm did not report duration for one type of worker. For this firm, the average duration for the other workers was used. O&M were estimated as requiring 15 percent of the job-years required to install the systems each year for a period of 25 years.5 Table 5 summarizes the direct jobs by site and shows that there were a total of 192 job-years of direct jobs, nearly all (99.7%) of which were domestic.6 Indirect Jobs Indirect jobs were created for workers employed to manufacture the inputs required for the mini grids’ design and construction. Companies procured poles, cables, and metals in Nigeria. For example, approximately 30 percent of the materials used to construct the Oloibiri and Akipelai mini grids were sourced domestically. Other materials were supplied by distributors of foreign products (e.g., PV panels, inverters and batteries, smart meters, charge controllers). The majority of the developers relied on imports either because goods were not produced by domestic industry or because domestically produced materials were not of the required standard quality. One respondent commented that overreliance on imported goods limited opportunities for the establishment of indirect domestic jobs. The total indirect jobs (foreign and domestic) were estimated by multiplying direct jobs by 0.99 (the ratio of indirect to direct domestic jobs for solar power in India) and dividing the result by 0.92 (the fraction of domestic inputs in India). Domestic indirect jobs were estimated by multiplying the total indirect jobs by 0.3 (the fraction of inputs that were domestic in JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 25 Nigeria).7 Table 5 summarizes the indirect jobs by site. The ratio of job-years to dollars was much lower for Shimankar than for the other sites. This may be related to the fact that this site had over 2,000 expected connections, compared with fewer than 500 for each of the other sites (as shown previously in table 3). This means that Shimankar may have benefited from economies of scale in connecting new customers, allowing them to connect customers more efficiently than the other sites. Since the performance-based grants provided to developers are based on total connections, higher efficiency in connecting customers translates to lower efficiency in job creation (i.e., fewer job-years of employment per dollar spent on the performance-based grants). Induced Jobs A newly electrified area may present an opportunity for locals to open small businesses (such as informal dispensaries or agricultural processing facilities). Access to electricity may also enable electricity users to engage in a wider range of productive activities. For example, the availability of electric light increases the number of hours available for productive activities. Similarly, the use of electric tools and machinery may help users to perform activities at a larger scale due to increased productivity (e.g., an electric sewing machine relative to a manual alternative). It may also enable activities that were previously not feasible (e.g., photocopying, refrigeration). The jobs created as a result of these changes are referred to as induced jobs. To gain insights on how the development of mini grids under the NEP was associated with the creation of induced jobs, qualitative interviews were conducted with beneficiaries from five local businesses (a barber shop owner, a dispensary/grocery store owner, a restaurant/bar, and two grocery/provisions stores). In addition, to obtain quantitative estimates of induced jobs, a separate study was conducted using a survey of approximately 1,200 households across 28 sites with mini grids and 32 without mini grids. On average, there was no improvement in employment rates based on the survey data. A study based on the survey data did not find evidence of improved employment rates in the sites with mini grids compared with those without. The study did not find evidence of improved wages or income as well. One potential explanation for these results is that the mini grids were not providing sufficient electricity for productive uses that would improve employment outcomes. At the same time, it is also possible that the mini grids had not been in place for long enough for impacts to appear. While the survey data did not show positive impacts in the short run, the qualitative data did suggest the potential for positive impacts. Electrification gave rise to productive-use activities. Beneficiaries reported new commercial activities in the sampled mini grid sites that were previously not observed in 26 Results their communities. These included activities carried out by the beneficiaries themselves (such as grocery stores and restaurants) as well as activities carried out by other community members (e.g., welders, barber shops). One respondent noted that three new stores had opened in the community within one month of receiving access to mini grid electricity. Businesses—and the community at large—acknowledge the benefits of electrification. The mini grid reportedly provides more stable, efficient, and less expensive electricity, which enables the use of new appliances, delivers cost savings, and stimulates the local economy. Most of the respondents (both developers and beneficiaries) expressed general satisfaction with the quality of electricity provided by the mini grids, and its resulting impact on local economies. The majority also believed that the mini grids helped generate employment and made it easier to meet the basic household needs. Specifically, the respondents highlighted benefits along four key themes, as follows. • New appliances: Although it is difficult to directly attribute the growth of any new businesses to mini grid electrification, many respondents report that business creation would not have been possible in its absence. For example, one business owner purchased a refrigerator and began selling cold drinks. Another business owner reported expanding from selling only groceries to also selling electrical and electronic equipment and appliances, such as electrical cables, fans, television sets, and irons. This has reportedly been a successful venture due to increased interest in appliance ownership following electrification. In more agrarian TABLE 5 Job-Years by Job Type and Site SITE* DIRECT DESIGN DIRECT TOTAL INDIRECT TOTAL GRANT, INCLUDING JOB-YEARS/ AND INSTALLATION O&M DIRECT OVERHEAD** ($) MILLION $ Rokota 6.6 24.9 31.5 33.9 65.4 129,313 506 Oloibiri 11.5 43.1 54.5 58.7 113.2 144,387 784 Akipelai 11.5 43.1 54.5 58.7 113.2 144,387 784 Shimankar 10.8 40.4 51.2 55.1 106.4 900,037 118 Total 40.4 151.4 191.8 206.4 398.2 1,318,123 302 Source: Interviews with firms and the Nigeria Electrification Project, Rural Electrification Agency. Note: Job-years are estimated by multiplying the number of workers of a specific type by the number of years worked for that type and then adding across types. Thus, a worker who works half-time for one year counts as 0.5. O&M = operation and maintenance. *The developer overseeing Ugbo Nla and Lomileju (A4&T) did not provide information on employment duration or type. For this reason, these sites are not covered in this table. **Overhead cost (captured in the technical assistance allocation under Component 4 of the NEP) covered various consultancy services provided for the project, including capacity building. Overhead was estimated to be about 13 percent of the total grant amount for each project. This table includes both foreign and domestic jobs. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 27 communities, respondents reported having seen an increase in the use of electric rice mills, which make rice milling more efficient and productive. • Cost savings: Beneficiaries reported cost savings from transitioning away from generator fuel. For example, one respondent reported spending N200 on generator fuel, plus additional costs for the generator’s routine maintenance, to power two light bulbs for approximately three hours. By contrast, with a N1,000 voucher of mini grid electricity, he could now power a freezer for up to two months. Similarly, another respondent was spending N1,000–N1,500 per month on fuel to operate the water pump in his household, but now reported spending only N250 per month for the extended water pumping that serves both his household as well as his neighbors. In addition, mini grid electricity is more stable than electricity from diesel-powered generators, which are relatively inefficient and prone to malfunctioning. Beneficiaries thus also reported their gadgets requiring fewer repairs, since they were no longer malfunctioning. For example, one respondent reported that his generator and submersible pump, which were used to operate a water pump in his household, frequently broke down in the past under diesel-powered electricity, resulting in expensive repairs. However, such occurrences were now a thing of the past ever since he received mini grid electricity. • Productivity and quality-of-life benefits: Beneficiaries named a range of other benefits due to electrification. For example, electric lights allowed businesses to extend operating hours later into the evening. Two respondents reported that they stay updated on national and global news now that they can connect to cable TV easily. A few interviewees reported having electric fans in their businesses or houses, which helped to reduce the number of mosquitos. • Economic growth: The local economy of the host communities has reportedly boomed as a result of these new businesses. One community head remarked that the mini grid installation had encouraged people from neighboring villages to visit his community, especially on market days, to engage in commercial activities. One pharmacist/grocery store owner, who is not indigenous to the mini grid host community, reported a near doubling of sales within one year of receiving mini grid electricity, noting further that he wished similar installations could be replicated in his neighboring home community. Other beneficiaries reported an increase in e-commerce opportunities. For example, one beneficiary mentioned ongoing negotiations related to the setting up of a commercial bank branch for the first time within the community due to the presence of the mini grid. Endnotes Note that layers of subcontracting often complicated efforts to precisely account for the 1.  number of jobs generated by the project. Employees hired for O&M tasks after the commissioning of the project were generally 2.  local workers from host communities. For example, respondents from firms that oversaw mini grid installation across multiple 3.  sites reported aggregate information across sites rather than site-specific information. 28 Results A category called “other” covered 17 percent of the total for direct domestic job-years 4.  and had an average of about 10 weeks per year. Respondents reported that 13.5–15 percent of the workers involved in design and 5.  installation continued on with O&M work. Foreign workers were only working part-time. Therefore, excluding them removes only 6.  one person-year of employment. The calculations begin with the ratio of indirect to direct domestic jobs because this is 7.  what was available from Pollin and Chakraborty (2015). This ratio is adjusted to include foreign jobs by dividing by the estimate of the fraction of inputs that were domestic in India. This number is then multiplied by the total direct jobs in Nigeria (i.e., foreign and domestic) to estimate the total indirect jobs (foreign and domestic). This last step implicitly assumes that the direct–indirect job ratio is the same for foreign and domestic workers (note that this is not a standard assumption in this literature). Finally, domestic indirect jobs in Nigeria are estimated by multiplying total indirect jobs (from Table 5) by 0.3, based on the fact that one developer (covering two sites) reported importing 70 percent of its inputs. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 29 SIX ENABLERS OF AND BARRIERS TO MINI GRID USE AND EXPANSION Institutional enablers: One developer described selected public institutions as being particularly supportive of mini grid development; specifically, the Federal Ministry of Environment ensured that the project did not negatively impact the environment; the Nigerian Electricity Management Services Agency ensured that the project met the national electricity standards; and the NERC ensured that the project met technical, performance, and tariff standards. In so doing, these agencies reportedly aided the successful implementation and operation of the mini grid projects they managed under the World Bank NEP performance-based grant. Infrastructural enablers: In several communities, mini grid installation reportedly coincided with the introduction of mobile telecommunication, roads, and hospitals. Although it is not possible to attribute this to the arrival of mini grid electricity, the presence of these complementary infrastructure projects may have resulted in synergies (e.g., internet connectivity, irrigation potential due to availability of water infrastructure, increased visits by members of neighboring communities on market days) that further drove the use of mini grid electricity. This is consistent with respondents’ perceptions that the presence of the mini grid electricity was “bringing development.” In particular, some developers noted that host communities were also seeing other construction projects related to road culverts and road grading. Constraints on the use of mini grid electricity: While there is evidence that mini grid electricity increased economic activity or generated new economic activity, not all businesses were able to take full advantage of these opportunities. For example, some respondents noted that the “wares and gadgets” required for businesses were not necessarily available locally. One former commercial user, who had been running a restaurant/bar, reported that her business closed due to reduced patronage, that is, the business venture was not viable within the community, especially during the COVID-19 pandemic. She thus replaced her commercial electricity meter with a household meter. This appeared to have been an isolated case, and not directly related to the provision of commercial- or household-level electricity services. Respondents’ suggested approaches to address barriers to the mini grid’s use: In response to a variety of perceived challenges, the beneficiaries suggested different ways to improve the operations and impacts of the mini grids in their communities, which could potentially enhance associated impacts on jobs and other employment outcomes: • Expand mini grid capacity: One community head suggested expanding the project’s capacity to accommodate the rising load demand, given that there are stanchions already constructed within the existing solar PV farm for the mounting of additional PV modules. He also suggested extending the project’s geographical reach by erecting additional electricity poles. This suggests that the mini grid’s capacity may be insufficient to support desired activities, indicating that the resulting job impacts may have been limited. • Increased job opportunities to capitalize on electrification: A few respondents suggested creating more job opportunities to adequately harness the new electricity access. One MSME beneficiary at the Rokota mini grid site stated that incentivizing the locals in his host community (which is primarily agrarian) to set up rice mills would translate to the creation of more productive use jobs through the mini grid electricity. The same sentiments were echoed by the village head of Rokota. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 31 • Alternative electricity vending option: Two beneficiaries suggested alternative ways of buying and selling electricity that might relate to the mini grids’ job creation potential. In order to recharge their meters for delivering mini grid electricity, beneficiaries need to contact a vendor and request a specific amount of electricity. The vendors are typically intermediaries with limited knowledge or expertise on the operations of the mini grids. They are reportedly often unavailable as they are itinerant. Further, the payment method, wherein customers call and request tariff units, while promising to pay at a later date, has created some challenges for recovering electricity revenues. Vendors may not be able to supply vouchers when needed, and/or payment to the mini grid operators may be delayed when the money set aside by customers for electricity vouchers is diverted to other pressing needs. In rare cases, vendors are physically available to market and receive payment for electricity immediately. The unintended delay in payments for electricity vouchers by the mini grid beneficiaries could hinder electricity access for businesses (e.g., temporary electricity shutoffs). It also has adverse impacts on induced job creation, since productive activities and business expansion are limited by the service unreliability stemming from customers’ inability to easily pay for electricity when desired. Finally, local direct job creation could benefit from replacing itinerant vendors with local vendors. To resolve these issues, beneficiaries suggested alternative methods, such as locally operated stand-by kiosks providing a pay-as-you-go billing system (as used by mobile service operators to enable the sale of airtime or mobile data). Note, however, that there are other barriers to these systems’ adoption, such as low usage of mobile money in rural areas and inadequate network coverage. • Streetlight installation: One beneficiary suggested that developers should install streetlights in the host communities following the construction of the mini grids. Given the increased business activities and extended operating hours, community members may need to walk home late at night, which may be risky, especially for women and children. 32 Enablers of and barriers to mini grid use and expansion SEVEN CONCLUSION Summary of Findings This case study sought to assess the employment impacts associated with the Nigeria Electrification Project, which was partly funded by the World Bank. It focused solely on the project’s components that involved the construction and operation of mini grids and drew on insights from a series of qualitative interviews with developers and beneficiaries at selected mini grid sites. The results of this study suggest a total of 398 job-years of employment were generated by this project, of which 192 were estimated to be domestic jobs in Nigeria.1 This combines data on direct, indirect, and induced jobs. Direct jobs were estimated based on interviews with four developers responsible for the mini grids’ design, construction, maintenance, and operations. Indirect jobs were estimated using a ratio of indirect and direct domestic jobs found in the literature and information on the fraction of inputs that were imported (Pollin and Chakraborty 2015). Induced domestic jobs were estimated using a separate study based on a survey of approximately 1,200 households. The interviews also provided an overview of underlying employment patterns associated with project-related activities, including job formality status and education/training requirements, and the hiring of local workers (including from the host communities where mini grids were located). In general, skilled jobs (such as in management, engineering, and technical design) were formal; semiskilled jobs included a mix of formal and informal labor depending on the nature of the task; and unskilled jobs (including manual laborers, security personnel, and “haulers,” who move materials and/or clear construction sites) were informal. The members of the host communities were often hired as part of the project in a variety of different roles (including for longer-run O&M activities). Interviews were also conducted with selected household and commercial beneficiaries of the mini grids. These interviews provided qualitative insights about the ways in which electricity was being consumed for productive uses as well as on the beneficiaries’ perceptions of the mini grids themselves. The interviewed beneficiaries classified three main types of benefits: the ability to use new (electrical) appliances in their households and businesses, the cost savings associated with using mini grid electricity relative to other sources of energy, and the potential for local economic growth (including through increased commercial activity). Theory of Change Figure 1 presents a theory of change (TOC) for Component 1 of the NEP. This TOC delineates the causal pathways between the activities undertaken as part of investments to support the installation, commissioning, and deployment of mini grids in selected sites across Nigeria and the impacts on the final employment outcomes. It does so by drawing on the JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 35 36 FIGURE 1 conclusion Theory of Change for Component 1 of the Nigeria Electrification Project Activities Outputs Outcomes Long-term outcomes Mini grids installed, Increased access to • Cost savings from reduced Minimum subsidy tender and commissioned, and affordable and reliable dependence on diesel performance-based grants incentivize deployed in viable electricity services for generators private developers to deliver mini grid sites households and MSMEs • Use of productive-use and electricity services to new customers household appliances in underserved areas with high Access to growth potential • Extended working hours after finance for sunset appliance purchase • Increased comfort/quality of life (e.g., fan, lighting) Training activities Direct and indirect jobs F V Workers with skills, No other binding and/or presence experience, and constraint for creation of local labor with training available Demand for new of relevant businesses suitable skills Unskilled/ Skilled/semiskilled/ for other mini grid businesses/goods (e.g., access to finance, Skilled jobs semiskilled jobs unskilled jobs projects in the produced by MSMEs availability of labor) (i.e., design, (e.g., construction, (i.e., jobs created country Building materials engineering) panel installation, among suppliers of O and M) project inputs) Availability of electric meeting cost/quality productive-use and New businesses standards produced household appliances (e.g., dispensaries, locally or in Availability of and machinery (e.g., rice mills, cold neighboring countries complementary refrigerator) drink shops) F V and available for import infrastructure Continued investment in and development of (e.g., roads) New jobs from mini grids in the Increased travel to electrified the businesses country rural communities Higher incomes (due to new jobs) Legend Direct jobs Indirect jobs Induced jobs WB-supported activity F = females employed V = vulnerable populations (youth) Assumptions Note: MSME = micro, small, and medium enterprises. findings of this case study as well as the key objectives of the NEP, as outlined in its Project Appraisal Document (World Bank 2018).2 The TOC indicates that World Bank financing for Component 1 of the NEP supported minimum subsidy tenders and performance-based grants to incentivize private sector developers to deliver mini grid electricity services to new customers in underserved areas with high growth potential. Among the employment categories listed as part of labor inputs into this activity, the TOC also highlights those categories where increased opportunities for vulnerable populations (namely, females and youth populations) were also observed. Specifically, female workers and youths benefited from employment opportunities as skilled, semiskilled, as well as unskilled workers over the course of implementation of project activities. In addition, subsequent O&M positions associated with the longer-term upkeep of the installed mini grids created additional opportunities for youth populations. Consistent with the case study’s findings, the TOC also outlines the pathways through which improved access to affordable and reliable electricity gives rise to induced jobs. Specifically, these jobs can arise due to the expansion of productive uses of electricity that were not feasible previously, the use of new appliances, and cost savings associated with switching from relatively expensive sources of electricity to the mini grid, all of which foster the creation of new businesses and jobs (such as dispensaries, cold drink shops, and rice mills). Complementary activities included as part of the design of similar clean energy projects (such as educational campaigns that increase awareness of productive uses of electricity, or financing to increase the affordability of electricity-using appliances) may thus enhance the creation of associated induced jobs. It is worth noting that induced jobs can also potentially arise due to the pathways by which workers employed to carry out project-related tasks gain relevant skills and experience. In the case of the NEP, this happened when: 1. Selected workers received on-the-job training on the skills relevant to the mini grid sector (such as on mini grid O&M) from developers; and 2. Workers hired by mini grid developers gained relevant experience through working on project-related tasks (such as installation of mini grid components) over the course of their employment. The TOC in figure 1 represents the increased worker-level skills and experience as an additional project output resulting from the installation and commissioning of mini grids at the project sites. Assuming continued growth of the mini grid sector in Nigeria, the acquisition of these relevant skills and experience increases workers’ employability, further resulting in the creation of new businesses and jobs as workers spend their earnings in local markets. Project teams looking to enhance such longer-term employment impacts may consider including support for similar complementary initiatives (such as support for vocational training programs focusing on skills relevant to the mini grid sector) to also enhance the longer-term potential for the creation of induced jobs. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 37 Endnotes This is based on the four completed projects summarized in table 5.1. 1.  The Project Appraisal Document for the NEP did not contain a formal TOC for the 2.  project. 38 conclusion References Advisory Power Team. 2015. Nigeria Power Baseline Report. Nigeria: Advisory Power Team, Office of the Vice President, Federal Government of Nigeria. https://mypower.ng/ wp-content/uploads/2018/01/Baseline-Report.pdf. African Development Bank Group. 2020. “Nigeria—Country Strategy Paper 2020–2024.” https://www.afdb.org/en/documents/nigeria-country-strategy-paper-2020-2024. 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World Bank. 2020. “World Development Indicators Data Base.” http://databank.worldbank. org/data/reports.aspx?source=world-development-indicators. 40 References APPENDIX A Synergies with Other World Bank Energy Interventions in Nigeria The Nigeria Electrification Project was designed to have synergies with several other proposed and ongoing World Bank projects in the energy sector in Nigeria, including: • The Power Sector Recovery Performance Based Operation (P164001), which was launched in 2020 and aims to make electricity supply more reliable, achieve financial and fiscal sustainability, and enhance accountability in the power sector; • The Nigeria Electricity and Gas Improvement Project (P106172), which was launched in 2009 and concluded in 2018, and aimed to improve the availability and reliability of gas supply to increase power generation in existing public sector power plants, and improve the power network’s capacity and efficiency in transmitting and distributing quality electricity to consumers; and • The Nigeria Power Sector Guarantees Project (P120207), which was launched in 2014 and concluded in 2019, and aimed to increase the supply of electricity received by Nigerian consumers. In addition, given the Nigeria Electrification Project’s focus on rural electrification, it was expected that the project would complement activities conducted under other projects aimed at enhancing rural productivity and economic growth, such as the Agro-Processing, Productivity Enhancement and Livelihood Improvement Support Project (P148616), which aims to enhance the agricultural productivity of small- and medium-scale farmers between 2017 and 2023, and could, thus, benefit from increased access to electricity services in rural areas. JOBS GENERATED BY THE NIGERIA ELECTRIFICATION PROJECT 41 4 Appendix A