Female microenterprise creation and business models for private sector distribution of low-cost off-grid LED lighting
Gender quotas are an effective way to ensure that new energy supply systems promote gender equality rather than reinforcing old roles. However, there’s often a fear that energy initiatives helmed by women will be less successful or productive in countries where cultural norms discourage women from assuming positions of authority or taking part in income-generating activities.
This large-scale study in Rwanda looks at whether gender quotas in the energy sector could empower female energy entrepreneurs and their families while still making business sense.
Results from the randomly assigned women’s quota system showed that female and male entrepreneurs perform similarly in similar circumstances.
- Gender quotas won’t hurt anyone’s bottom line: Quotas can be implemented with no negative impact on profitability, while dramatically increasing participation by women from 10 to 50 percent.
- Women and men perform similarly in testing and real-world situations: In both experimental and real-world operations, women-run microenterprises were able to serve their customers as well as their male counterparts, and performed as well financially.
- Entrepreneurship opportunities designed for gender equality can still take differences into account: While there was no substantial difference in tested competitiveness of male and female entrepreneurs, female entrepreneurs were slightly less likely to take risks than male entrepreneurs, which can be taken into account when tailoring entrepreneurship models for female empowerment.
The study also found that the families of female entrepreneurs had heightened benefits.
The children of female entrepreneurs are healthier, harder working, and more hopeful: In households of female entrepreneurs, school-age children study an hour longer per week at home, are more likely to use a clean light source, and are more likely to expect that their future will hold an enjoyable career.
- Households with female entrepreneurs are happier: Teens from households with female entrepreneurs were 16% more likely to report feeling happy than teens from female controls.
- Female entrepreneurs had higher expectations for their families: Female entrepreneurs were more likely than the female controls to report expecting their children will be studying in 3 years’ time.
Gender quotas can help increase female empowerment in the entrepreneurial sector without having any adverse effect on profitability.
It’s also worth noting that the study’s tests found that a free three month trial period of new energy systems increased usage up to 6 months after the trial ended. Additional analysis of customer surveys indicated that this was not so much due to overcoming problems of information and learning, but rather the result of habit formation, and acclimatization to the comfort of electric light. The evidence also showed that reducing the price did not have a negative impact on the long-term usage of lights, disproving the notion that people value goods more when they pay for them.
Recommendations from the Report
- Institute gender quota systems to ensure equal access to microenterprise expansion. While setting up entrepreneurship programs, take into account the unique needs of female entrepreneurs.
- Create free trial periods to help users of new energy systems form a habit of use before having to make a decision about whether or not it’s worth the cost to continue.