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Effect of Power Supply on the performance of Small and Medium Size Enterprises: A comparative analysis between SMEs in Tema and the Northern part of Ghana

Author

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  • Nyanzu, Frederick
  • Adarkwah, Josephine

Abstract

Electricity provision in Ghana has been marred by low generation, poor supply and frequent power outages. The situation compel firms to adopt strategies to cope with this poor public supply of power for their business. To this end, this study analysed the effect of power supply on the performance of SMEs: a comparative analysis between two regions in Ghana where Small and Medium firms are located. The study uses the current World Bank 2013 Enterprise Survey on Ghana which consist of 710 firms. The study employs both chi-square and t-test to do pattern analysis. In addition, ordinary regression analysis (OLS) was employed to regress firm performance variable on electricity supply variable and other covariates. The results show that, the presence of power outages, thus, the number of times power outages experienced and hours of power outages negatively affected firms performance (profitability). In addition, it was further realized that power outages (power interruptions) severely affects SMEs located in the Northern part of Ghana than SMEs located elsewhere. The study therefore recommends that government should implement policies and programs such as power mix approach and renewable energy and bring in private sector participation to install competition and efficiency. This is in the interest to mitigate the unreliable electricity supply. Also, SMEs should consider alternative sources of power such as solar power, inverter, biogas, generators, which would help curb the cost power outage brings to their production and to boost output.

Suggested Citation

  • Nyanzu, Frederick & Adarkwah, Josephine, 2016. "Effect of Power Supply on the performance of Small and Medium Size Enterprises: A comparative analysis between SMEs in Tema and the Northern part of Ghana," MPRA Paper 74196, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:74196
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    References listed on IDEAS

    as
    1. Adeola Adenikinju, 2005. "Analysis of the cost of infrastructure failures in a developing economy: The case of the electricity sector in Nigeria," Working Papers 148, African Economic Research Consortium, Research Department.
    2. Fisher-Vanden, Karen & Mansur, Erin T. & Wang, Qiong (Juliana), 2015. "Electricity shortages and firm productivity: Evidence from China's industrial firms," Journal of Development Economics, Elsevier, vol. 114(C), pages 172-188.
    3. Kirubi, Charles & Jacobson, Arne & Kammen, Daniel M. & Mills, Andrew, 2009. "Community-Based Electric Micro-Grids Can Contribute to Rural Development: Evidence from Kenya," World Development, Elsevier, vol. 37(7), pages 1208-1221, July.
    4. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2005. "SMEs, Growth, and Poverty: Cross-Country Evidence," Journal of Economic Growth, Springer, vol. 10(3), pages 199-229, September.
    5. Thorsten Beck & Asli Demirgüç-Kunt, 2004. "SMEs, Growth, and Poverty," World Bank Publications - Reports 11278, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lamessa T. Abdisa & Alemu L. Hawitibo, 2021. "Firm performance under financial constraints: evidence from sub-Saharan African countries," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-17, December.
    2. Abdisa, Lamessa T., 2018. "Power outages, economic cost, and firm performance: Evidence from Ethiopia," Utilities Policy, Elsevier, vol. 53(C), pages 111-120.
    3. Abdisa, Lamessa Tariku, 2018. "Power Outages, Its Economic Cost and Firm Performance: Evidence From Ethiopia," MPRA Paper 88217, University Library of Munich, Germany.
    4. Emilia Olanrewaju & Olumuyiwa Olanrewaju, 2020. "Rural Electrification and Profitability among Rural Women - Owned Microenterprises in Nigeria," Shanlax International Journal of Economics, Shanlax Journals, vol. 8(4), pages 1-11, September.
    5. Samuel David Adebisi & Raymond Osi Alenoghena & Ayobola Olufolake Charles, 2023. "Impact of Energy Supply on Economic Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(2), pages 959-969, February.
    6. Abdisa, Lamessa T., 2019. "Firm Performance Under Infrastructure Constraints: Evodence from Sub-sahara African Firms," MPRA Paper 95758, University Library of Munich, Germany.

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    More about this item

    Keywords

    Medium and Small Scale Enterprise; Power Supply; Firm Performance; Ghana.;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General

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