Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/304197 
Year of Publication: 
2023
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 11 [Issue:] 2 [Article No.:] 2251822 [Year:] 2023 [Pages:] 1-17
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
Electricity outages affect the performance of firms in sub-Saharan Africa (SSA) through a reduction in production capacity and over-reliance on backup generators, which raises the cost of production and render them uncompetitive. Based on this, we estimated the joint effect of electricity outage frequency and duration of outages on the performance of firms in SSA through the method of instrumental variable (IV). Employing firm-level data from the World Bank Enterprise Survey for 28 SSA countries from 2007 to 2018, the study found a unit increase in outage frequency and its duration combine to reduce yearly sales of firms in SSA by \114.9. Also, the study revealed that small-size firms in SSA incur \408.894 losses relative to large firms for every joint increase in outage frequency and outage duration largely because they cannot cope with electricity outages. Since electricity shortages persist in SSA, mitigation policies must target small firms as they are the worst affected by electricity outages.
Subjects: 
SSA
firm performance
endogeneity
electricity shortages
PCA
JEL: 
D24
C26
Q49
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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