According to a study by the Center for Global Development (CGD), power blackouts in Sub-Saharan Africa cost businesses as much as 31 per cent in sales. The aim of the study, which analysed data from over 3,000 companies in 37 African countries, was to find out the impact of frequent power outages on businesses’ growth goals and bottom lines.
The study’s lead author and a senior fellow at CGD Vijaya Ramachandran said:
“While there is a lot of effort put into providing solar panels and generators to African households to power their daily lives, to actually change the economic development equation in Africa we must focus our efforts on the energy infrastructure that can power businesses. We found that unreliable power can have a major impact on businesses, dampening their growth prospects and undermining job creation opportunities.”
The Findings
The study discovered that some of Africa’s biggest economies like Ghana, Nigeria, and Angola, over 25 per cent of businesses face double-digit losses due to power outages, with some companies recording average losses of 31 per cent.
Interestingly, some companies have grown rapidly in spite of unreliable power supply, even in poor countries. Still, some individual firms have lost more than 70 per cent of their sales.
Other businesses rely heavily on generators which means they are mostly unaffected by blackouts but only record an average growth of three per cent.
Businesses that experience power outages more frequently recorded over 200 hours without power every month with the least affected companies recording over ten hours without electricity every month.
In middle-income Southern Africa countries, firms do not experience significant effects on sales due to limited power blackouts.
“Of course, there is no single story of how African businesses cope with unreliable power, but it is clear that across the continent, a huge number of firms suffer high costs and lost sales. Better power infrastructure could enable business growth, create jobs, and produce better economic outcomes for the region,” said Ramachandran.
