Acta Universitatis Danubius. Œconomica, Vol 15, No 6 (2019)

Electrical Energy Insecurity and the Performance of the Small and Medium Enterprise Sub-Sector in Nigeria

Justine Tochukwu Nwanakwere, Justin Uzoeto

Abstract


This study investigates electrical energy insecurity and the performance of the SME sub-sector in Nigeria using data from the World Bank Enterprise Survey for Nigeria. The survey covered a total of 2676 SMEs which were categorized as “small”, “medium” and “large” based on the number of their employees. Differences among the categories of SMEs based on the effect of energy insecurity are identified from the study. The study reveals that SMEs in Nigeria experience electricity outages on daily basis with duration of 11.6 hours on the average. Large Enterprises experience more outages of 44.2 times in a month. On the average, SMEs record loss of 15.6 per cent of their annual sales to electricity outages and generate 56 per cent of electricity from generator. Large and small enterprises generate as much as 64.8 and 59.2 per cents electricity from generator, respectively. Also, the findings show that SMEs spend an average of N766, 801.5 naira (USD 2,126.93 at USD360.52 exchanges) on electricity annually. Finally, they indicate electricity insecurity as major obstacle to their business operations. We therefore recommend that government should address electricity issues in the country as a state of emergency with priority given to not only the households but also the SME sub-sector


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