Research Article

Total Factor Productivity Growth of Ghanaian Electricity Distribution Utilities Using Data Envelopment Analysis and Malmquist Index (2000–2020)

Authors

Abstract

The increasing need for electricity access to drive economic growth, social development, poverty alleviation and environmental sustainability requires that efficient allocation of scarce and competing resources in the generation, transmission and distribution subsectors of the electricity sector is indispensable. This paper analyses total factor productivity growth in a single input multiple-output framework in Ghana. The technique applied is data-orientated nonparametric Data Envelopment Analysis using Win4Deap 2 software. Total Factor Productivity Change is evaluated through Malmquist Productivity Index (MPI), as well as technological change (TECHC) and efficiency change (EFFCH) using firm-level panel data. Sources of productivity growth comparison are made between Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) for the periods 2000 to 2020. The results show TECHCH marginally declined at an average annual rate of 0.3% and drives the electric power distribution productivity regress in ECG and NEDCO from 2000 to 2020. Further, the results indicate stagnation in scale efficiency, pure efficiency and efficiency change when estimated over 20 years. At firm levels comparison, the study shows that the Northern Electricity Distribution Company recorded a productivity growth rate of 4.9%, mainly due to technical progress. However, the Electricity Company of Ghana experienced a slight deterioration of productivity performance due to a 5.3% decline in technical efficiency. The study offers several policy recommendations on how the underperforming firm can learn to improve efficiency and technical to reduce electricity transmission losses.

Article information

Journal

Journal of Economics, Finance and Accounting Studies

Volume (Issue)

3 (2)

Pages

233-248

Published

2021-12-25

How to Cite

Amanfo, S. E. (2021). Total Factor Productivity Growth of Ghanaian Electricity Distribution Utilities Using Data Envelopment Analysis and Malmquist Index (2000–2020). Journal of Economics, Finance and Accounting Studies, 3(2), 233–248. https://doi.org/10.32996/jefas.2021.3.2.23

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Keywords:

Ghana, Electricity Distribution Utilities, Electricity Economics, DEA, Malmquist Index, Total Factor Productivity, Growth, Electricity Transmission Losses, Electricity Distribution Utilities, Undesirable output, JEL Classification: D24, L94, K32