THE IMPACT OF ELECTRICAL POWER OUTAGE ON THE OPERATIONAL PERFORMANCE OF SMALL SCALE INDUSTRIES IN KANO STATE

THE IMPACT OF ELECTRICAL POWER OUTAGE ON THE OPERATIONAL PERFORMANCE OF SMALL SCALE INDUSTRIES IN KANO STATE

CHAPTER ONE

INTRODUCTION

1.1      Background of the study

Nigeria is hugely endowed with energy resources that include oil, natural gas, coal, biomass, solar, wind and hydro resources among others (Iwayemi, 2008; Onuaha, 2010). However despite this huge endowment Nigeria is also an energy deficient country whose economy suffers tremendously from the shortage of energy supply (Iwayemi, 2008). The shortage imposes huge cost on the economy and compels widespread private provision by different classes of energy users (Lee and Anas, 1998; Adenikinju, 2005). Additionally Nigerians often spend many productive hours queuing for petroleum products in the fuelling stations to buy fuel at government regulated prices because fuel supply scarcity has been a recurrent feature of the Nigerian energy market. Fuel scarcity in the economy and failing electricity supply create dual energy crisis for Nigeria (Iwayemi, 2008). Investment in back up generating facility is widespread and imposes significant costs on the economy. Small Scale businesses suffer the most from Nigeria’s energy poverty as they spend a large proportion of their capital (about 20- 25% of their investment) on back up generating facilities (Lee and Anas, 1991; Foster and Steinbuks, 2008). In fact Iwayemi, (2008) links most of the country’s economic woes including its inability to industrialize to the dismal performance of the energy sector. However power supply outages are not peculiar to developing countries alone considering the recent black outs in California and other parts of north Western United States of America. Though it has been the cardinal policy of government electricity policy and consumers desire to have power supply reliability, keeping the light on is an extremely difficult challenge (DOE, 2003) especially in a developing economy. Ukpong, (1973); Iyanda, (1982); Lee and Anas, (1991, 1992); Uchendu, (1993); Ajayi (1995), Adenikinju, (2005); Oseni and Pollit, (2013) have examined the cost of power outages and unreliable supply of electricity on firms and document firms survival strategies in Nigeria and Africa.

1.2      Statement of the Problem

This study builds on the previous studies by focusing on the small scale businesses in the North West Nigeria for many reasons. First the small scale businesses have a lot of contributions to make towards the development of the Nigerian economy in terms of providing employment and income opportunities for the people. Based on experience, these types of businesses provide the surest path to industrialization. Additionally the choice of small scale business is informed by the fact they are the dominant businesses found in the North West region of Nigeria but,like other parts of Nigeria, the North West region also suffers from epileptic supply of electricity and this affects small scale industries a lot.

1.3   Objectives of the Study

1. To determine the impact of deficient electricity supply on the operational performance of small scale businesses in north West Nigeria

2. To evaluate the true state of power supply in the country.

3. To ascertain the relationship between electrical power outage and operational performance of small scale industries.

THE IMPACT OF ELECTRICAL POWER OUTAGE ON THE OPERATIONAL PERFORMANCE OF SMALL SCALE INDUSTRIES IN KANO STATE