Electricity Outages and Firm Choices in Ghana: A Case Study of Manufacturing Firms in Kumasi

Abstract

The research investigates the effect of electricity outages on the decision-making and sales performance of 288 small-scale enterprises in the Greater Kumasi area of Ghana. Quantitative methods were employed to analyze data derived from closed-ended questionnaires. Through the application of Chi-square tests and Pearson’s correlation analysis, the study explored the associations between electricity disruptions, firm decision processes, and performance metrics. Descriptive statistics, notably the calculation of means, were utilized to encapsulate firms’ experiences and illuminate prevalent patterns in outage frequency, production losses, and adaptive strategies. The results of the study indicate that the majority of firms encountered power interruptions during operations, prompting the adoption of generators and plants to maintain production continuity, while a minority opted for outsourcing. Furthermore, alternative electricity sources, predominantly dependent on fuel-powered generators and plants, escalate production costs, thereby diminishing output and sales revenue. These fuel-powered energy solutions also pose significant environmental risks, underscoring the necessity for firms to reconsider investments in solar energy, which presents a more cost-effective, viable, and environmentally sustainable energy alternative. Considering the substantial overhead expenses associated with such large-scale endeavors, firms in the Greater Kumasi area could collaborate to establish, co-own, and operate a shared solar power plant. This initiative would reduce dependency on the national grid, offering a more reliable, cost-efficient, and sustainable energy source to enhance firm productivity and revenue, while promoting clean energy for sustainable community development.