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Impacts of a Micro-Enterprise Clustering Programme on Firm Performance in Ghana

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Abstract

Widely considered an important backbone of economies in developing countries, micro- and small enterprises face several growth constraints. The creation of industrial zones (IZs) with improved access to infrastructure and secure land tenure is a potential remedy to promote local economic development. We assess the effects of an intervention on business performance indicators that establishes IZs for micro-enterprises in Ghana based on firm-level data on 227 enterprises. The results show that the establishment of IZs leads to the creation of new firms, but for existing firms that relocated to the IZs the effects on firm performance are negative.

Abstract

Considérées comme la pierre de voute de l’économie des pays en développement, les micro et petites entreprises font face à plusieurs contraintes quant à leur croissance. La création de zones industrielles (ZI) permet un meilleur accès à l’infrastructure et à une propriété foncière sécurisée, et est un remède potentiel pour promouvoir le développement économique local. Nous évaluons les effets d’une intervention sur les indicateurs de performance commerciale ; l’intervention consiste à établir une ZI pour les micro-entreprises au Ghana, et les données sont collectées auprès de 227 entreprises. Les résultats montrent que la mise en place de ZI entraîne la création de nouvelles entreprises mais que l’impact est négatif sur la perfomance des entreprises existantes qui se sont déplaçées sur la ZI.

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Notes

  1. PSED’s Industrial Zone Development component is part of the Dutch–German energy partnership Energizing Development. The project is jointly financed by the German Federal Ministry for Economic Cooperation and Development (BMZ) and the Directorate-General for International Cooperation of the Dutch Ministry of Foreign Affairs (DGIS).

  2. The presidential elections in 2010 with former president Gbagbo not accepting his electoral defeat resulted after month of negotiations in the outbreak of an armed conflict between followers of Mr. Gbagbo and his challenger Mr. Ouattara. The crisis was only solved by April 2011 when pro-Ouattara forces backed by the UN and French forces captured and arrested Mr. Gbagbo. To support the transition process, UN peacekeepers and French military are still present in Cote D’Ivoire.

  3. The oversampling is accounted for in the data analysis by weighting all start-up enterprises with the inverse of the probability of being interviewed.

  4. We received crop production data from the Statistics, Research and Information Department of the Ministry of Food and Agricultural (MOFA) that was prepared for a GIZ Crop Insurance Feasibility Study in 2010. We obtained the information on monthly market prices for the last 4 years from the regional MOFA office in Sunyani.

  5. Numbers on the market value of cocoa for the last 4 years in Brong Ahafo were provided by the regional cocoa board in Sunyani.

  6. For the indicators monthly sales and monthly wage payments we observe several missing values that also induce missing values for value added. Data on customers by contrast is almost complete. In order to check whether missing values can be assumed to be missing at random, we carry out sensitivity tests using the estimations of number of customers. Since this indicator is almost complete we compare regression results using the whole sample and a sub-sample consisting of only those observations for which we have the information on the other outcome indicators. Since results do not change, we are confident that the missing values do not induce any bias. Furthermore, we do not find significant differences in other firm characteristics between the whole sample and the sub-sample without missing values.

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Acknowledgements

We thank Sven Neelsen, Colin Vance and Christoph M. Schmidt for valuable comments. Financial support of the Netherlands Enterprise Agency (RVO) is gratefully acknowledged.

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Authors and Affiliations

  1. Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Essen, Germany

    Jörg Peters & Maximiliane Sievert

  2. AMERU, University of the Witwatersrand, Johannesburg, South Africa

    Jörg Peters

  3. University of Duisburg, Essen, Germany

    Christoph Strupat

Authors
  1. Jörg Peters
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  2. Maximiliane Sievert
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  3. Christoph Strupat
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Corresponding author

Correspondence to Christoph Strupat.

Appendix

Appendix

Table A1

Table A1 Means of total workers, employees, family members and apprentices
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The strongest decrease in workers can be observed among apprentices, but the number of family members also decreases slightly. This might be due to the fact that enterprises are located further away from their families and, thus, less pressure or opportunities to hire family members exists.

Table A2

Table A2 Regression results for relocated firms using variation in exposure time
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Peters, J., Sievert, M. & Strupat, C. Impacts of a Micro-Enterprise Clustering Programme on Firm Performance in Ghana. Eur J Dev Res 27, 99–121 (2015). https://doi.org/10.1057/ejdr.2014.18

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