Power Outages, Firm Productivity, and Generator Ownership in East Africa

Unreliable electricity supply is a widespread problem in developing countries. This paper examines the impact of power outages on firm productivity in East Africa, considering the effect of generator ownership in general and during blackouts. The results show large negative effects of power outages on productivity and a mitigating effect of self-generating during power outages of approximately the same size. However, self-generation is also found to generally reduce productivity due to the idle capital effect of unused generators during blackout-free times. This finding highlights that self-generation is only profitable for firms if the experienced power outages are severe enough.