Effects of electricity outages on enterprise productivity in Egypt: Lessons learned

Abstract

This study investigates the impact of advanced electricity outage announcements on the operational efficiency of small and medium enterprises (SMEs), in Egypt, using profitability as a key performance indicator. Leveraging data from “Transition to Clean Energy Enterprise Survey” and applying the inverse probability-weighted regression adjustment (IPWRA) method to address selection bias, we estimate how outage predictability influences firm outcomes. We find that SMEs receiving advance notice of power disruptions are significantly more likely to achieve higher profitability compared to those without such information. The benefits are most evident among larger firms and sectors such as transportation, financial services, and accommodation, where operational planning is critical. While the policy partially offsets losses from outages, firms in areas with frequent blackouts still face substantial profitability challenges, highlighting the limits of transparency alone. Our findings emphasize that advance announcements enhance SME resilience by enabling adaptive measures, but long-term solutions require complementary infrastructure investments in high-risk regions. The study advocates for policy frameworks centered on transparency and rational expectations, demonstrating how proactive communication in public services can bolster economic resilience amid global uncertainties. These insights are particularly relevant for developing economies seeking to balance immediate crisis management with sustainable energy infrastructure development.