Promoting the job creation and skills development agenda in the off-grid sector in Uganda

Promoting the job creation and skills development agenda in the off-grid sector in Uganda

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The Beyond the Grid Fund for Africa (BGFA) was established in 2019 with the aim of accelerating the creation of sustainable markets for distributed and stand-alone off-grid energy services in rural and peri-urban Africa based on the on-going Beyond the Grid Fund for Zambia, which was initiated by Sweden and implemented by the Renewable Energy and Energy Efficiency PArtnership (REEEP). BGFA has grown into a EUR 77 million multi-donor programme which aims to support the use of solar home systems (SHS) and mini-grids in Burkina Faso, Liberia, Mozambique, Uganda and Zambia. In 2020-21, BGFA is launching three Calls for Proposals in these five countries, covering 10 funding Lots that will finance about 25 enterprises aiming to bring clean energy to over 6 million Africans and promote sustainable green recovery.

Transforming the energy sector globally will create a wide variety of new jobs that require new and alternative skills to be done effectively. It is forecast that in this scenario, training and reskilling will be needed to serve the off-grid sector efficiently and effectively. The off-grid sector in particular is emerging as a significant employer in the context of a post-COVID-19 green recovery and for emerging economies that are suffering from high rates of joblessness. Although nascent and just beginning to scale, it has already grown a workforce comparable in size to that in the utility power sector, and it can have a broad and positive impact in Uganda through formal, informal and productive use jobs. Distributed renewable energy is an engine for creating decent, skilled jobs in emerging economies through formal employment, with an additional 2 to 5 times multiplier on jobs being created through informal work and productive use. Estimates of productive use jobs stimulated through new or improved electricity access in 2017–18 show 65,000 jobs in Kenya and 15,000 in Nigeria – five times the sector’s direct, formal workforce (Reference: Research Summary: Jobs, decentralized renewables, and the energy transition, Power for All, July 2019)

Importantly, off-grid energy and clean cooking solutions are still a largely untapped opportunity for job creation for women and youth, both priority areas for BGFA in its countries of operation. At present, less than 25% of the global off-grid workforce are women. Increasing this number at all organisational levels, from sales agents to management teams, is a key objective.

Currently, about 38% of Uganda’s population is reported to have access to electricity (Reference: This is the SEforALL figure. A lower figure of 28% is included in the Draft National Energy Policy (2019). About half of that population (19% overall) is served by stand-alone SHS or solar lights, with some 399,000 systems sold in the country to date, while the other half is almost entirely served by grid connections. Only a very small proportion of the population (0.04%, about 4000 people) are currently served by mini-grids (Reference: Taking the Pulse of Energy Access in Uganda, SEforALL, 2019). Uganda conservatively estimates the market size to be US $1.5 billion, with over 5 million unserved households. To meet part of the demand, BGFA, funded by Denmark and Sweden, is shortly due to launch its Ugandan country programme, which will include standalone SHS and mini-grids as well as elements related to productive use of energy. Both donors will prioritise jobs and skills development as part of their contributions.

It was against this backdrop that BGFA commissioned Oxford Policy Management (OPM) (Reference), in association with Bopinc (Reference) and Kampala-based CREEC (Reference), to assess the opportunities to increase job creation in Uganda within the context of the BGFA programme for off-grid electricity and clean cooking solutions. To inform the study, OPM, Bopinc and CREEC conducted over 30 consultations with Ugandan companies, institutions and other sector stakeholders between November 2020 and February 2021.

A huge unserved market and ambitious government plans drive employment opportunities, although challenges remain

In terms of assessing off-grid skills development in Uganda, OPM confirmed that significant opportunities for off-grid growth remain. As in many countries across Sub-Saharan Africa, limited network expansion has left the majority of rural households and businesses unconnected, while on-grid supply remains unreliable and relatively expensive. The SHS market is fairly well developed and growing, and the Rural Electrification Agency has identified 683 mini-grid sites. Furthermore, targets are in place to increase the use of clean cooking technologies (including electric cooking) and reduce the use of biomass. Finally, the productive use of electricity is rapidly emerging as a key growth area, with opportunities ranging from small businesses, such as tailors and hairdressers, to large-scale agro-processing activities.

The supply side in Uganda is diverse and dynamic, and the solar energy association, USEA, counts an impressive 190 members. The actors include local component importers, suppliers and integrators; an active NGO sector; and large, vertically integrated international developers.

However, challenges remain. In particular, the low standard of SHS and off-grid equipment, resulting from poor-quality imports and insufficient after-sales servicing, is damaging public perception. In addition, limited access to capital is holding off-grid companies (especially smaller ones) back and customer awareness and willingness to pay are low. As a result, off-grid companies often struggle to achieve a satisfactory balance of scale, profitability and impact. On top of these core issues, COVID-19 has severely affected the sector, with sales reduced and costs increased, although it appears that a recovery is under way.

Companies face hiring challenges, significant off-grid skills gaps exist and women face barriers to entry

In terms of hiring, OPM found that all off-grid companies experience challenges. These include a general lack of awareness of sector training and job opportunities among potential employees, the requirement for staff to be based in remote rural locations and high levels of turnover, especially among commission-based sales staff for whom earnings and advancement opportunities may be low. Hiring processes differ according to company size, with some larger companies offering internships and smaller ones relying on local adverts and connections. An underlying issue is that significant data gaps limit quantitative analysis of hiring and employment.

In terms of under-represented groups, despite some progress, women continue to face barriers to entry, including cultural and social norms, limited access to finance (and financial literacy) and practical barriers, such as lack of access to a motorbike (required for many roles). Where women are employed, it tends to be in non-technical roles, meaning overall percentage employment figures may hide the true picture. Although training for basic technical roles is opening up to women, there remains a gap. Some development partners address this by including minimum requirements for the participation of women in their projects (for example, GIZ has targeted 30% in its recent initiatives), and BGFA is looking at introducing similar targets, as well as measures to promote the representation of women at all levels and address pay inequality. Conversely, young people comprise the majority of solar company employees (up to 90% in the companies OPM interviewed), although they are largely recruited into entry-level sales roles and many experience frustration at limited career progression and earnings.

The off-grid electricity sector in Uganda offers significant and diverse employment opportunities

OPM forecasted potential job numbers in the off-grid sector in Uganda to 2030. This was a difficult task, made even more challenging by the lack of hard data on the size of the existing workforce and the number of conflicting ‘official’ targets for how and when universal access should be achieved. The process began by considering different estimates for the demand for off-grid electricity in Uganda provided by mini-grids and SHS, and translating those into lower and upper bound estimates of likely annualised installation rates. The forecasting approach then used existing data on job factor multipliers (for example, typical jobs per mini-grid system or jobs per 10,000 SHS sold) from other countries, combined with annualised projections of installation rates in Uganda, to make projections of the potential workforce required by the off-grid electricity sector in Uganda.

The final projection suggests that the direct jobs needed to meet current sector access targets in the off-grid sector will be in the following ranges.

Employment Estimates in the Ugandan Off-Grid Sector

In order to meet the range of current sector access targets, the direct jobs needed in the off-grid sector will be in the following ranges:
 Formal jobsInformal jobsTotal jobs
Stand-alone/solar home systems3,200 – 5,4002,300 – 3,8005,500 – 9,200
Mini-grid operation and maintenance1,500 – 2,7001,500 – 2,7003,000 – 5,400
Mini-grid construction600 – 2,000
Low levels of retention are likely to create an on-going need for training to replace workers leaving the sector. The annual replacement requirement is estimated to be in the following ranges:
 Formal jobs/ yearInformal jobs/ yearTotal jobs/ year
Likely job ‘churn’ due to low retention600 – 1,1002,700 – 4,5003,300 – 5,600
There is insufficient data available to estimate the impact on jobs of productive use of off-grid electricity in Uganda. It is possible that much of this impact will be in the form of induced jobs (created as a result of increased spending in the wider economy by those that have invested in productive use appliances) as opposed to direct jobs created through the productive use of electricity itself.

Source: OPM

Due to limited data availability, OPM did not calculate jobs resulting from productive use. Interest in productive use in Uganda is growing, but the market for high-capacity appliances is nascent, with take-up limited by affordability and access to finance. In terms of employment, the relationship between productive use and employment is complicated. Access to productive use appliances, such as an irrigation pump, may improve the efficiency of production, for example on a small farm, without necessarily increasing employment, and may even reduce employment if it replaces the need for manual labour (for example, use of a solar water pump rather than manual irrigation). Thus, productive use applications of electricity may, in some cases, have a greater impact through induced jobs (jobs created in the wider economy through increased spending as a result of income rises from the use of productive appliances) than through direct job creation.

Innovative approaches abound

Some of the companies and entities OPM spoke to presented interesting and innovative model approaches to tackle different challenges associated with scaling up sales and access coverage. In particular, Enlight Institute, ENVenture and SunnMoney are working to develop skills in off-grid companies and raise awareness amongst potential customers.

Enlight InstituteENVentureSunny Money
•Spun out of Village Energy in 2018 to improve installation and after-sales skills
•Initially designed an 8-week curriculum and used mobile training facilities
•Started by charging a fee for every trainee placed with a company
•Now works with companies by providing one-on-one coaching plus multi-day/week workshops
•Covers technical and sales skills through certified courses
•Aims to increase uptake of low-cost green energy technologies
•FCDO and Unilever funded expansion in 2016
•Now provides loans, mobile bookkeeping, training and a business coach
•Funded through grants and consultancy work
•Utilises Business Bootcamp, mentorship and network
•Now part of New Energy Nexus
•Three models: (1) field officers who recruit agents, (2) teachers as retailers (unprofitable but impactful) and (3) direct sales
•Teacher approach is key to raising awareness and understanding of products
•Operates a cash model to reduce working capital requirements
•Lantern is $8, with some more advanced products also sold
•Expansion is achieved by activating new districts

Source: OPM

The future for job creation in Uganda

In the short term, most direct jobs will be created in SHS and biomass (not calculated in this analysis). In particular, SHS will generate jobs in sales roles, and challenges accessing biomass will create jobs in the manufacture of improved cookstoves and briquette production for fuel. Given Uganda’s young, growing population, this could be vital for supporting the creation of jobs at the required rate.

However, the biggest predicted driver of jobs overall, and the one with the most transformational potential, is productive use. This will create jobs in agriculture and appliances, as well as a range of businesses in villages, at a rate far beyond direct employment by energy companies. However, productive use is still in an early stage in Uganda, with sales of appliances relatively low. As such, a supporting environment (including access to the right products, awareness, financing, and training) will need to be established. Currently, there is limited data and research on productive use in Uganda, although the IFC’s forthcoming PULSE report may help close that gap.

BGFA to play its role

The Beyond the Grid Fund for Africa aspires to play its part in the growth of the Ugandan off-grid sector and has announced an upcoming Call for Proposals to be launched in April 2021 . It targets sustainable and inclusive development of off-grid energy service markets, supporting some 10 companies with approx. EUR 20.7 million of financial incentives establishing up to 600,000 connections and reaching 3 million Ugandans. BGFA believes that job creation can be accelerated through primarily supporting financially sustainable businesses with strong business models by providing ‘free equity’. This assessment has been made on the basis of Beyond the Grid Fund for Zambia, through which contracts worth EUR 11 million have been signed with four awardee companies that to date have created 1376 jobs and leveraged almost four times the capital committed

With respect to much-needed skills development, companies are again best placed to address training needs; however, there may well be a role for external support in addressing and supplementing skills gaps in the sector. Based on the initial market analysis undertaken in Uganda, an enhanced skills development/technical and vocational education and training sub-programme will be added to the BGFA’s theory of change and rolled out over the 2022-2025 period. Subject to a detailed needs assessment, support is expected to be primarily directed to BGFA awardee companies, complementing the BGFA’s existing model of technical assistance and expanding it to the wider ecosystem as necessary. The work programme will seek to be targeted at key skills deficits, build on existing training initiatives and use locally based institutions and delivery partners.

Read the full report: Market scoping for a job creation agenda for the Beyond the Grid Fund for Africa

The article was written by Ash Sharma, Head of BGFA, Nefco, and Simon Trace, Principal Consultant, and Jamie Stewart, Senior Consultant, both at Oxford Policy Management

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