23 August 2017

SMEs lose GH¢200m to dumsor – Report

Ghana lost at least 200 million cedis in revenue accruing from the operations of Small and Medium Enterprises (SMEs) due to the impact of the power crisis on such businesses between 2012 and 2015.

This is according to a new research conducted by the Institute of Statistical Social and Economic Research (ISSER) and the International Growth Centre (IGC).

The loss is also reported to be the equivalent of 10 percent of all output of the SME subsector within the four year period.

The study contends that the impact was also due to the inability of such businesses to cope with the high cost of operations due to the power challenges.

“We also see that the crisis led to 10 percent loss in output or sales of the manufacturing firms and because of that the businesses were forced to use a lot of raw materials,” a co-author of the research, Dr. Patrick Opoku Asuming disclosed at the launch of the report on Wednesday.

Ghana experienced severe power crisis from 2012 to 2015 which in turn affected the general performance of businesses.

The issue had largely stemmed from constraints in hydro power generation due to poor rainfall as well as low thermal power generation due to the disruption of gas supply.

The development translated into a 12 to 13 hours of power supply to consumers albeit the attendant challenges it brought to businesses.

Relationship with job losses

Though the study argues that job layoffs were not necessarily associated with the power challenges, Dr. Asuming argues that at least 55 companies were compelled to fold up over their unprofitability.

“The results do not tell us that the crisis led to job layoffs among the firms that we surveyed…we only focused on firms that had existed as at 2010 or earlier and had stayed through the crisis so it is possible that some firms never survived through the crisis. There are about 55 of such firms,” he remarked.

Textile and garments affected most

In all, 885 firms were surveyed across four towns; Accra, Kumasi, Sekondi- Takoradi as well as Tema.

Majority of the businesses were engaged in Textile and garment (58.3%).

This is followed by Wood processing (20.3%) as well as Food and Beverage and others with 13.3% and 8.1% respectively.

Coping strategies

Even though the affected firms undertook many coping strategies to stay in business, it turns out that majority operated fewer hours; 60.2% followed by change in production time; 51.1%.

Firms that engaged in less electricity –intensive products accounted for the least of 26.9%.

By: Pius Amihere Eduku/citibusinessnews.com/Ghana

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