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

Justine Tochukwu Nwanakwere () and Justin Uzoeto ()
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Justine Tochukwu Nwanakwere: NISER
Justin Uzoeto: University of Warwick

Acta Universitatis Danubius. OEconomica, 2019, issue 15(6), 55-69

Abstract: This study empirically 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 electricity insecurity is a reality among SMEs in Nigeria as they experience outages on daily basis on the average, with duration of 11.6 hours. Large Enterprises experience more outages of 44.2 times in a month. On the average, SMEs record loss of 15.6% of their annual sales to electricity outages and generate 56% of electricity from generator. Large and small firms generate as much as 64.8% and 59.2% 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, and indicate electricity insecurity as major obstacle to their operations. Thus, 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 sector.

Keywords: Energy insecurity; Electricity; SMEs; Enterprise survey (search for similar items in EconPapers)
Date: 2019
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