Electricity Disruptions and the Efficiency of Manufacturing Firms in Africa: A Stochastic Frontier Analysis

Abstract

Many African countries experience power shortages and regular interruptions in electricity supply. We use stochastic frontier models to study the impact of power disruptions on the efficiency of African manufacturing firms. Power disruptions appear to have negative effects on efficiency and the use of generators further exacerbates the impact. The interaction of power outages with generator ownership result in a negative effect on efficiency and this could probably be explained by the high cost of running these alternative power sources. Our results support a policy of investment in the electricity sector, to improve the maintenance and quality of infrastructure that is used to generate power in African countries.