ERRATIC POWER SUPPLY AND BUSINESSES

Unreliable electricity supply is a bane to economic growth

When ‎the Managing Director and Chief Executive Officer of Arewa Cotton and Allied Products Limited, Mr Anibe Achimugu said recently that “electricity has become one of the biggest threats to industrial survival in Nigeria,” he was only reechoing what many people, including Africa’s foremost businessman, Alhaji Aliko Dangote, have repeatedly said. Unreliable power supply, according to both Achimugu and Dangote, not only disrupts production schedules and makes it difficult for businesses to meet delivery deadlines, but also deter prospective investors from the country.

The perennial national grid failure and attendant shortage of electricity supply place a constraint on our economic growth with industries and commercial organisations, including small and medium enterprises, relying on diesel and petrol as alternative sources of generating power. In most cases, the variable costs are factored into the cost of production which are indirectly borne by the end consumers. The fall-out of this situation is often grim, creating a situation where many businesses either fold up or lay off workers. For any serious nation that is seeking to actualise all its medium and long-term development goals and attain economic prosperity, neglecting the power sector is always dire.

It is indeed a notorious fact that the epileptic nature of power supply makes Nigeria one of the harshest environments to do business and this renders the country less competitive. In the face of this fitful electricity supply, individuals and businesses resort to self-help by generating their own power. But privately generated electricity also comes at a huge cost. This is aside the negative implications of the more expensive and self-generated electricity on the cost of living, on business profitability, on the incidence of poverty, and on health, safety and the environment.

Unfortunately, the promise that the reforms in the power sector undertaken more than a decade ago would lead to increased access to electricity, engender private sector investments, improve infrastructure as well as create employment for the growing population of jobless Nigerians, has become a mirage.

No nation can achieve true industrial growth or unlock its economic potential without stable power since businesses cannot expand or compete when basic infrastructure like electricity is unreliable. Indeed, analysis of firm-level data from the Nigeria World Bank Enterprise Survey showed that electricity supply is consistently the biggest constraint to doing business in the country. Amplifying this challenge, the World Bank report further stated that annual per capita electricity consumption of Nigeria is 147 kilowatt hour (kWh), which is a fifth of the average low middle-income country consumption of 736kWh and a twentieth of the global average consumption of 3,298kWh.

Today, there is hardly any part of the country that does not presently experience power failure on a daily basis. In some places, several days go without electricity with its resultant effects on socio-economic activities. This much is contained in a recent World Bank report which revealed that Nigerian businesses experience an average of 239 hours of power outage every month. This, according to the International Bank, does not just push businesses to seek off-grid alternatives or causes economic losses but also creates payment apathy by consumers who do not feel obligated to pay for electricity services they consider to be unreliable. That invariably means double jeopardy for the economy.

For a very long time now, the challenges of poor electricity supply and its attendant impact on businesses have headlined conversations in almost every economic summit in Nigeria. But it is now time to move such conversations from the meeting rooms to the fields.