The Impact of Rural Electrification on SME Growth in Zambia: Evidence of Kawambwa District

This study focused on analyzing the Impact of Rural Electrification on SME Growth in Zambia using data for Kawambwa District. Using qualitative and quantitative methods and a sample size of 50 SMEs, the study aimed to assess the impact of rural electrification on SME revenue, operating costs, and employment. The results showed that rural electrification has a positive impact on SME revenue and Competitiveness. A statistical test run in Chi-Square between electrification and SME revenue yielded a highly significant association between the two variables. (n = 50, χ² (9) = 150.0 and p = 0.000). The study revealed a significant and strong association of the impact of rural electrification on four dependent variables - Bills Reduction, Reliance on Expensive Electricity Sources, Efficient Equipment use and Production Costs Reduction. Regression output yielded R2 values ranging from 0.58 to 0.96 with all model specifications statistically significant at the α = 1% level. Rural electrification showed a positive effect on bill reduction, with an estimated coefficient of 0.86 (95% CI: 0.62–4.28). Reliance reduction is particularly strong, with an estimated effect of 0.94 (95% CI: 0.88–0.99), indicating that rural electrification substantially decreases dependence on alternative energy sources. The effect of rural electrification on employment was examined and the results showed that it has a positive impact on employment. The model was statistically significant, F (1,48) = 111.96, p < 0.001, and explained approximately 70% of the variation in employment outcomes (R² = 0.6999). Further, it showed that, with electricity, the demand for workers increases from a baseline of 1.33 to 1.40 workers per SME. The study concluded that rural electrification is a catalyst for SME growth. It recommended that the government should expand rural electrification, integrate it with SME support programs, promote educational advancement, monitor employment dynamics, strengthen competitiveness through revenue-based policies, address infrastructure gaps for those without electricity and conduct further research on emerging trends.