Firm Performance Under Infrastructure Constraints: Evodence from Sub-sahara African Firms

Abdisa, Lamessa T. (2019): Firm Performance Under Infrastructure Constraints: Evodence from Sub-sahara African Firms.

Abstract

The poor business environment mainly poor infrastructure is found to has paramount importance in explaining Africa's disadvantage relative to other similar countries. To cope with this poor supply of electricity, firms adopt different mechanisms to reduce the resulting effects. The commonly adopted coping strategy is an investment in self-generation of electricity. This study examined the role of investing in self-generation in mitigating the outage loss and evaluated the outage loss differential between �firms that invested in self-generation and those that did not, using World Bank Enterprise Survey data collected from �firms operating in 13 Sub-Saharan African countries. The result obtained shows that, though self-generation has reduced the amount of outage loss for fi�rms that invested in self-generation, these firms continue to face higher unmitigated outage loss compared to firms without such investment. In spite of this, �firms that invested in self-generation would have incurred 36%-99% more than the current amount of outage loss if they do not engaged in self-generation. Similarly, �firms that did not invest in self-generation would have reduced their outage loss by 2% - 24% if they had engaged in self-generation. The study thus, recommended a di�fferential supply interruption to be followed by public authorities based on �firms' degree of vulnerability to power interruptions.

• Item Type: MPRA Paper
• Language: English
• Keywords: Self-generation, Outages, Sub-Sahara Africa, Firm
• Subjects: L - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General; L - Industrial Organization > L8 - Industry Studies: Services > L81 - Retail and Wholesale Trade ; e-Commerce; N - Economic History > N7 - Transport, Trade, Energy, Technology, and Other Services > N77 - Africa ; Oceania; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply ; Prices

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