Abstract
The economy of Ghana has attained a middle-income status and is seeking to advance; hence, an analysis of the economy based on the supply chain management of energy is significant to provide the quantitative results and comprehensive information about how and where the en- ergy use affects economic growth and development. This information is necessary to enable the government to respond promptly with measures that will improve the supply of energy to ensure the profitability and competitiveness of firms. The objective of this paper is to analyse the effect of electric power fluctuations on the profitability and competitiveness of SMEs, using SMEs operating within the Accra business district of Ghana as a case study. This research is a cross- sectional survey and it adopted a mixed method approach. A sample of 70 Ghanaian SMEs was selected using a systematic sampling approach. Inclusion criterion for the selection of the SMEs was their location within the business district of Accra as well as their use of electricity in their main business operation. Data was collected with an interviewer-administered structured ques- tionnaire which focused on the effect of power fluctuation on the operations of SMEs, especially on the profitability and its resulting effect on the firms' competitiveness. The SPSS statistical package was used to group and analyse the data. The study is a single-factor analysis of the exog- enous problems facing the Small and Medium Enterprise sector. The study found that without reliable energy supply, SMEs are unable to produce in increased quantities and quality leading to poor sales hence low levels of profitability. It is established that low profitability negatively affects Return on Assets (ROA) and Return on Investment (ROI) of SMEs. Consequently, if the level of profitability is high, it is expected that ROA and ROI will be high and vice versa. With high profits, SMEs are able to increase their competitiveness.
Highlights
Research on SME problems in Ghana have so far concentrated on variables such as product and service development challenges, difficulties in accessing finance, competitiveness of SMEs and government policy and intervention in the area of SME development (Abdullah, 2013; Olumuyiwa and Mnse (2008)
This study is significant in drawing stakeholder attention to critical effect of energy supply on the growth and development of SMEs in Ghana with regards to its profitability and competitiveness
The role of electricity in Ghana’s economy is prodigiously significant for growth and development. This has been amply captured in the mission statement of the Electricity Company of Ghana (ECG): “To provide quality, reliable and safe electricity services to support the economic growth and development of Ghana” (ECG, 2014 n.d)
Summary
Research on SME problems in Ghana have so far concentrated on variables such as product and service development challenges, difficulties in accessing finance, competitiveness of SMEs and government policy and intervention in the area of SME development (Abdullah, 2013; Olumuyiwa and Mnse (2008). Whiles these variables were studied independently, there is a relationship between other variables like the price of energy (electric power) and an SME’s capacity to. Thousands of industries in Ghana use hydro-electric power for production, storage and distribution
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