High Energy Costs Affecting Businesses: The MSMEs’ Perspective

Presentation by Prof. Rosalea Hamilton, Scotiabank Chair, Entrepreneurship and Development, UTech President, The MSME Alliance during CARICOM Energy Week 2011  in Jamaica.

In celebration of CARICOM Energy Week held for the first time across several Caribbean member states during November 6-11, 2011. The University of Technology (UTECH), Jamaica in association with the Ministry of Energy and Mining’s staging of Jamaica’s Energy Week held a panel discussion on Jamaica’s Energy Future on Thursday, Novem­ber 10, 2011 at the prestigious campus.

 

One of the speakers at the event was Professor Rosalea Hamilton, Vice President of Devel­opment and Community Service, UTECH and Presi­dent of the MSME Alliance. She provided an informative presentation on the results of an ongoing survey re­lating to the effect of energy on businesses in Jamaica. The objective of the survey was to better understand the impact of high electricity cost on businesses, in particular micro, small and medium sized enterprises (MSMEs) in Jamaica from the perspective of business owners.

 

The sur­vey which was being conducted from September to November 2011 had indicated some early results and these were presented at the event. Data presented here are survey results from: September 20, 2011 – November 7, 2011 that been presented to the public.

 

The initial results of the survey showed that high energy cost of electricity was a leading factor for the closure of businesses in Jamaica (with as much as 40% of respondents indicating that reasoning). Most respondents cited JPS as the source of power with a few users or solar energy.

 

Though most respondents found their high electricity bills stressful- the survey revealed that many businesses had to find creative ways to save on energy costs. The survey also revealed that electricity costs ac­counted for approximately 20% of business expenses and high bills were a contributing factor in business failure and limited business growth. Though the re­port was not representative of the MSMEs in Jamaica it provided a strong indication of what businesses were experiencing.

 

Highlights from the presentation included:

 

KEY SURVEY FINDINGS

Perspectives on Electricity Expense/Total Expense

80% of the 70 MSMEs indicated that their electricity expense is about 20% of their total expense

  • 80% of the 33 Sole Proprietors indicated that their electricity expense is about 28% of their total expense
  • 80% of the 26 Micro enterprises indicated that their electricity expense is about 17% of their total expense
  • 80% of the 6 Small enterprises indicated that their electricity expense is about 8% of their total expense
  • 80% of the 5 Medium enterprises indicated that their electricity expense is about 13% of their total expense

Contributing to Business Closure

  • 73% of the 55 Respondents who are past business owners have indicated that High Electricity cost have contributed to their Business Failure
  • 38% of the 88 Respondents who are past business owners have indicated that High Electricity cost have contributed to their decision to close their business
  • 17% of the 337 Respondents who currently have a business indicated that due to High Electricity cost they plan to close part or all of their Business
  • 9% of the 441 Respondents currently in business indicated that they were forced to close of part of their Business

In conclusion the survey results at that time revealed influences that were negative and positive:

  • NEGATIVE INFLUENCE – The data suggest that high electricity costs are negatively affecting the MSMEs in the survey and may deter individuals from starting a business
  • POSITIVE INFLUENCE – The data also suggest that high electricity costs are contributing to energy conservation and management in the use of electricity among MSMEs in the survey

 

For a copy of the presentation, email: support@ceebip.org

 

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