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

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.