Grid Extension in Rural Benin: Micro-Manufacturers and the Electrification Trap

SummaryProductive electricity use is widely believed to contribute to positive impacts of electrification projects. This paper investigates these impacts by comparing the performance of micro manufacturing enterprises in grid-covered and non-covered villages in Northern Benin. Using firm-level data, the analysis employs Propensity Score Matching techniques to measure differences in profits according to a grid-connection. Although beneficial impacts are found from firm creation following electrification, firms that existed before electrification perform no better than their matched counterparts from a non-electrified region. Complementary measures that sensitize firms about the implications of a grid connection are recommended as important features of program design.