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How constraining are electricity fluctuations to Ghanaian firms’ performance?

Author

Listed:
  • Edwin Teye Sosi

    (African Review of Economics and Finance Consult)

  • Philip Akrofi Atitianti

    (Zhongnan University of Economics and Law)

Abstract

In this study, we examine the impact of electricity power disruptions on the performance of Ghanaian enterprises. We make use of comprehensive firm-level data from the World Bank Enterprise Survey (WBES) in the years 2007 and 2013 to ascertain the extent to which sales generation and firm-level productivity are affected by power outages. The cross-sectional nature of the data limits our analysis and makes fixed-effects estimation unfeasible; consequently, we generate a firm cohort identification (cohort ID) to serve as a pseudo firm fixed-effects element to obtain a more robust result. The findings show that power outages negatively affect firm performance; specifically, the sales growth and productivity of Ghanaian firms. The magnitude of negative impact is higher among manufacturing firms compared to firms in the service sector. Furthermore, firms that do not resort to a backup electricity generation plan are highly affected than firms that adopt other forms of electricity generation. Firms that possess backup electricity generators are, however, not completely immune from the negative impact of erratic power supply. The findings suggest that backup electricity generation isn’t a sustainable alternative, hence, the improvement of national electricity generation would be significant to firms’ performance.

Suggested Citation

  • Edwin Teye Sosi & Philip Akrofi Atitianti, 2021. "How constraining are electricity fluctuations to Ghanaian firms’ performance?," SN Business & Economics, Springer, vol. 1(11), pages 1-23, November.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:11:d:10.1007_s43546-021-00157-3
    DOI: 10.1007/s43546-021-00157-3
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    References listed on IDEAS

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    More about this item

    Keywords

    Ghana; Electricity power fluctuation; Firm performance; Backup generation; Sales; Labour productivity;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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