Role of investment in self-generation in mitigating outage loss: evidence from Sub-Saharan African firms
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ORIGINAL ARTICLE
Role of investment in self-generation in mitigating outage loss: evidence from Sub-Saharan African firms Lamessa T. Abdisa1,2 1 2
Universities of Milan and Pavia, Milan, Italy Frontieri Consult, Addis Ababa, Ethiopia
Received: 12 February 2020 / Revised: 4 May 2020 / Accepted: 7 May 2020 The Joint Center on Global Change and Earth System Science of the University of Maryland and Beijing Normal University 2020
Abstract The study examines the role of investing in selfgeneration in mitigating the outage loss and evaluates the outage loss differential among firms that invested in selfgeneration and those that did not using World Bank Enterprise Survey data collected from firms operating in 13 Sub-Saharan African countries. The results show that though self-generation has reduced the amount of outage loss for firms that have invested in self-generation, these firms continue to face higher unmitigated outage loss compared to firms without such investment. Firms that have invested in self-generation would have incurred 36–99% higher than their current outage loss had they not been engaged in such investment. Likewise, firms that did not invest in self-generation would have reduced their outage loss by 2–24% had they been engaged in self-generation. Thus, the study recommends a differential supply interruption to be followed by public authorities based on firm’s degree of vulnerability to power interruptions. Keywords Self-generation Outages Sub-Saharan Africa Business environment Firm
1 Introduction Modern economies are crucially and increasingly dependent on the services of a reliable power sector. This dependence, to a large extent, stems from the reliance of The pre-print version of the manuscript is available online on the Munich Personal RePEc Archive (MPRA) and can be accessed from https://mpra.ub.uni-muenchen.de/95758/1/MPRA_paper_95758.pdf. & Lamessa T. Abdisa [email protected]; [email protected]
other critical infrastructure sectors such as manufacturing, health services, access to education, water supplies, petroleum, telecommunications, and transportation, on power supplies. However, many of the developing countries are in the midst of a reliable power supply crisis. Even though power outage is a problem both in developed and developing countries, the cause of power outages in developed countries is different from that of developing countries, mainly in Sub-Saharan African (SSA) countries. For instance, the major power outages reported in Italy/ Switzerland in 2003, Sweden in 2005, Central Europe in 2006, London in 2003, US/Canada in 2003 were caused by natural disasters or technical faults, while the power outages in many developing countries including SSA are attributed to inadequate generating capacity (Oseni and Pollitt 2013; De Nooij et al. 2007; Balducci et al. 2002). In SSA countries, power outage is not just frequent and prolonged but also erratic. According to the World Bank Enterprise Survey (WBES), in 2007, the average Sub-Saharan African firm suffered a loss
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