Table 3: The effect of flood-exposure on infrastructure disruptions as experienced by firms in 13 African cities

|Dependent:|Blackouts|Water disruptions|Transport<br>disruptions|
|---|---|---|---|
|Firm age<br>_years of official registration_|0.217<br>_(1.46)_|8.145**<br>_(2.89)_|-0.001<br>_(0.00)_|
|Employment|-0.912*|0.494|0.001|
|_number of full time employees_|_(0.50)_|_(0.90)_|_(0.00)_|
|State ownership|3.128|-0.656|0.015|
|_in %_|_(5.81)_|_(7.00)_|_(0.02)_|
|Export orientation|-0.214|4.232|-0.000|
|_% of total sales_|_(1.45)_|_(3.69)_|_(0.00)_|
|Generator ownership|69.452|126.011|0.054|
|_Dummy_|_(50.81)_|_(289.08)_|_(0.15)_|
|Distance to city centre|-0.001|0.008|-0.000|
|_at the ward-level, in meter_|_(0.00)_|_(0.01)_|_(0.00)_|
|ISIC Sector Fixed Effects|YES|YES|YES|
|City Fixed Effects|YES|YES|YES|
|Flood-threatened|28.583|54.883|0.150|
|_Dummy_|_(70.41)_|_(262.29)_|_(0.14)_|
|N<br>|2217|828|2600|
|R<sup>2</sup>|0.185|0.115|0.124|

Results from weighted OLS regression, city-level normalized survey stratification weights applied. Standard errors in italics, clustered on cities. Significance levels: *** 0.01, ** 0.05, * 0.10

# 3. What are the business costs of infrastructure disruptions?

Reliable and efficient infrastructure systems are crucial to enable firms to follow long-term planning, and to maximize their capacity, without the need to invest excessively in expensive back-up or contingency technology. For instance, the ownership of costly diesel-based electricity generators is far less common in countries with reliable electricity supply. In addition, reliable and efficient infrastructure is key to facilitating firms’ access to the markets and information that drive their ability to provide goods, services, and jobs. For as long as infrastructure systems remain disruption-prone, this will have substantial adverse effects on the continuity of production and service delivery, affecting the smooth functioning of supply chains, diminishing aggregate productivity, and restricting the ability of firms to trade and compete internationally.

This section assesses and quantifies the business cost of unreliable and vulnerable infrastructure. In the case of electricity outages, self-reported sales of firms are available through the World Bank’s Enterprise Surveys (ES). This makes it possible to estimate directly the rate at which an additional hour of electricity outages reduces the sales of firms (Section 4.1). Similarly, self-reported electricity generation rates are used to assess the upfront and operating costs of self-generation (Section 4.2).

In the case of water and transport outages self-reported sales losses are not available in the Enterprise Surveys. Instead, Section 4.3 and 4.4 use a harmonized global dataset of firms to assess the nature and extent of the losses associated with infrastructure disruptions. In particular, it estimates the size of negative impacts due to infrastructure disruptions, and further investigates the transmission channels through which firms are affected; i.e. are firms primarily affected directly – i.e. production stops due to missing water, power or transportation service inputs – or through indirect effects – i.e. production stops due to supply chain interruptions?

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