The effects of power outage on the growth of manufacturing enterprises in Tanzania

Manufacturing enterprises contribute significantly to economic growth in Tanzania, as evidenced by their increased share in GDP and employment in the recent decade. Electricity is one of the key raw materials in manufacturing activities, and a reliable supply of this energy is said to contribute to manufacturing enterprises’ growth. However, power supply in Tanzania has been characterized by episodes of outages, most of which are frequent and unannounced. This research was conducted with a main objective of assessing the effects of power outages on the growth of manufacturing enterprises. Specifically, the study assessed how power outages affect production level, revenues, and profitability of these enterprises. The study surveys a total of 97 manufacturing enterprises in Dar es Salaam to collect data, and this data was analyzed through descriptive to show frequency and percentage and regression to show relationship between power outage and growth of manufacturing enterprises. The study finds that power outages experienced by manufacturing enterprises reduce production levels, reduce sales and revenues, reduce profits, and consequently constrain the potential growth of manufacturing enterprises. Main areas in production activities affected by power outages are costs of production, storage, and timely delivery of goods and services. To revenues, power outages have been reported to reduce market share, number of customers, and hence affecting the pricing decisions. On profitability, power outages have been said to disrupt the planning for future production and expansion, as well as negatively affecting the ROI and ROA. The study recommends that there is a need to have reliable power supply, as well as provision of information of outages in advance, in cases when power cuts are inevitable.