The effect of erratic power supply on SME’s in the Kumasi business district of Ghana

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Energy supply is the major driving force for business sustainability in today’s competitive world. It is therefore important that an access to reliable power supply is essential for the success of any business which in turn leads to consumer satisfaction, high productivity, profitability and overall economic growth. The drive for this study was to find out the effect that erratic power supply is having on the profitability of the SMEs in the Central Business District (CBD) of Kumasi. The study used a simple random sampling technique which is a probability sampling method which draws a portion of a population so that each member of the population has an equal chance of being selected. The study also used 80 structured questionnaires to collect primary data directly from the selected SME owners to supplement secondary data from literature. The study identified that the erratic power supply from the national grid is a major challenge to SMEs profitability. The response to the questionnaire received indicates that some of the SME owners have acquired alternative sources of electricity such as petrol/diesel-powered generators to guarantee continuous supply of electricity with unbudgeted extra operational costs raging from GH¢50.00 to GH¢100.00 every month in addition to the perceived high tariffs they paid to the Electricity Company Of Ghana (ECG). The study further revealed that the energy situation in the country now is as a result of a systemic failure by various institutions responsible for power supply; because they haven’t invested consistently enough, planned well or addressed the issue of demand in the power sector. Based on these challenges the study recommends that government interventions are required to install solar panels for small consumers of power such as hairdressers, barbering shops and dressmakers to enable their businesses operate without any setbacks from energy crisis and also strategic power plants should be constructed for medium scale industries use.
A Thesis submitted to the School of Business, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the degree of Master of Business Administration (Finance Option) ,