The Effect of an Electricity Crisis on Firms – A Case Study of Dumsor in Ghana

Between late 2012 and 2016, Ghana experienced a severe electricity crisis called Dumsor. The crisis triggered a severe power rationing program resulting in heavy load shedding throughout the country. Such electricity crises often happen in Africa and may hinder economic growth. This paper estimates the overall effect of such a crisis on firms using a sample of 265 firms from Greater Accra. The analysis shows that Dumsor had a severe negative effect on firm productivity and that previously electricity-intensive firms drove this effect. In more detail, electricity-intensive firms owning a generator before the crisis drove the effect, possibly due to an even higher degree of vulnerability or inflexible coping strategies. Considering channels driving these effects, the study finds significant changes in the production process of firms. Electricity-intensive firms substituted electricity with workers, which may be causing productivity losses. Some of the found effects even persist after the crisis. This finding highlights the tremendous effect of electricity crises on firm performance and, thus, economic growth