Electricity is central to nearly all aspects of our lives; it is fundamental to a higher standard of living and directly related to socio-economic development. The benefits are so extensive that it is unequivocal that every country today needs more electricity, not less.
This makes the energy crisis currently confronting Ghana a grave challenge – one that calls for deliberate studies to investigate and give a fair idea of the actual costs to the nation, and to find solutions that are workable and sustainable. In this spirit, the Economy of Ghana Network (EGN) of ISSER, on 14th May 2015, organized a workshop on the theme “Electricity Insecurity and its Impact on the Economy of Ghana” to share and discuss findings of two studies conducted under the Public Sector thematic area of the EGN.
A study titled “Electricity insecurity and its Impact on Micro and Small Businesses in Ghana” – presented by Dr. Charles Ackah, head of the Economics Division of ISSER –investigated 350 electricity dependent micro and small enterprises (MSEs). One third of the sample indicated that electricity supply was insufficient for their business. It was found that this power deficit lowered a firm’s annual sales by 37 – 48 percent. Considering that about 90 percent of businesses in Ghana are MSEs; that they provide two-thirds of jobs in Ghana; and that only one in every 10 firms operates a back-up generator, the poor electricity supply is considered a major constraint to business operations, according to the study.
Dr. Charles Ackah revealed that presently, on average, the nation is losing about US$ 2.2 million per day or US$ 686.4 annually (figure that translates into 2 percent of annual GDP) on account of the energy crisis alone.
Mr. Ismael Ackah, head of the policy unit of the Africa Centre of Energy Policy (ACEP), presenting on the topic “Ghana’s Power Crises: The Hype, The Hope and the Reality,” noted that Ghana requires about $4 billion in the electricity sector over the next 10 years to make up for past investment deficits.
Important issues ensuing from the discussions include the following:
- The power crisis is the result of market failure; the magnitude of the crisis defies economic solutions, it demands political resolve and action.
- Research has an important role to play in finding sustainable solutions to national problems such as the current one. There is the need for close engagement and discourse between researchers and MMDAs, this is necessary to promote buy-in for research outcomes by policy actors.
- The energy sector needs a reformed offtaker. The appointment of a concessionaire for the Electricity Company of Ghana (ECG) is good news. It is pertinent, however, that the selection process is objective and transparent, to ensure that only the best and deserving candidate is selected.
*A detailed synthesis of discussions is being developed, to be released shortly.
*The study, “Electricity insecurity and its Impact on Micro and Small Businesses in Ghana” is part of the larger Gender and Enterprise Development in Africa (GENDA) Survey (2014), in which 1,250 MSEs (including 350 electricity dependent MSEs) were surveyed across all the 10 regions of Ghana.