Telecommunications finance and electric power services form a major share of goods and services production costs. Therefore, they are important determinants of productivity and growth. Using the latest World Bank Economic Survey data of 26 sub-Saharan African countries, I study how these services influence firm productivity. Services are divided into access and cost services. The former inhibits productivity by raising firm entry barriers whereas the latter increases firm marginal costs by driving down productivity. The aim of this study is to find out, which one most affects firm productivity in sub-Saharan Africa. Results show a significant relationship between the ownership of a generator, high power outages and productivity. In telecommunications services, the study finds a significant relationship between use of email, use of websites and productivity. For financial services, the relationship between productivity and the percentage of firms with lines of credit or loans was is significant. In conclusion, I find that the access-cost influence of services on productivity is dependent on the service under consideration.
The Influence of Services on Firm Productivity in Sub-Saharan Africa
Journal of Emerging Issues in Economics, Finance and Banking, Vol. 3, Issue 1