Lack of electricity is ruinous to the economy
The picture of Nigeria’s energy sector painted by the World Bank Regional Director for Infrastructure, Africa West and East of the global bank, Ashish Khanna, should give the authorities sleepless nights. It is not only that our country has the highest number of people without electricity worldwide, leading to about four per cent loss of Gross Domestic Product (GDP), but that we lag far behind other African countries. On a comparative basis, according to Khanna, Ghana already has 85 per cent electricity access while Senegal was on its way to achieving 100 per cent access by 2025.
For the umpteenth time this year, major cities across the country, including the Federal Capital Territory (FCT), last week Sunday experienced a total blackout, following another collapse of the national grid. But that has become the new normal. From Kano to Calabar, Sokoto to Abakaliki and Jos, indeed across the country, several days go without electricity with its resultant effects on socio-economic activities. As things stand, the promise that the reforms in the power sector would lay a solid foundation for sustainable power generation and service efficiency and 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.
While we wait for the authorities to resolve the power crisis, it is a notorious fact that the epileptic supply of electricity makes Nigeria one of the harshest environments to do business and this renders the country less competitive. In the face of fitful electricity supply, individuals, and businesses resort to self-help by generating their own power. Yet 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.
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 report, accounts for nearly seven per cent of the business losses recorded by these enterprises that are now forced to resort to self-generation of electricity at a high cost to themselves and the economy. The situation results in economic losses of more than $25 billion annually to the country.
Analysis of firm-level data from the Nigeria World Bank Enterprise Survey indicates that electricity supply is consistently the biggest constraint to doing business in the country. Younger firms, exporters, and manufacturers, the report noted, are most likely to identify electricity access as a key obstacle to their productivity. Yet, having a reliable electricity supply is consistently associated with higher levels of economic productivity. Because the country’s power supply system is mostly unreliable, the World Bank report argues that it does not just push businesses to seek off-grid alternatives or causes economic losses but also creates payment apathy by consumers who don’t feel obligated to pay for electricity services they consider to be unreliable.
With the nomination of presidential candidates by the political parties, we hope that the issue of energy will be on the front burner during the campaigns. For a very long time now, the challenges of poor electricity supply and its attendant impacts on businesses have headlined conversations in almost all economic summits or fora in Nigeria. But it is now time to move such conversations from the meeting rooms to the fields. Notwithstanding, we are hopeful that the recently initiated Energising Economy Programme (EEP) which the Rural Electrification Agency (REA) is implementing in key economic hubs will serve as a lift for electrifying businesses in Nigeria.
