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Power importation and growth of SME’s in Nigeria

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When in 2013, a research firm came up with statistics that importation of generator sets in Nigeria is expected to grow to about N151.16 billion ($950.7 million) by the year 2020, many especially those in government circles refused to accept the figures, and where they grudgingly did, assured Nigerians that things wouldn’t go that bad.

Five years down the road, it seems the research finding is not only coming to past, but equally at an alarming rate, with a day by day frustration from Nigerians given the now “normal” epileptic power supply by the Power Holding Company of Nigeria PHCN.

For any economy to thrive, Small and Medium Scale Enterprises SME’s constitute the major economic cluster on which the Gross Domestic Product GDP grows. As such available and affordable power which is a critical factor for small and micro industrial operations to thrive cannot be overemphasized.

The major snag on the road to Nigeria’s economic recovery especially through the private sector however, remains the erratic nature of electricity supply to power businesses across Nigeria.

The rhythmic sound emanating from electricity generating sets were indicators of a society that has adopted a suicidal coping mechanism to face the challenges before it. In Nigeria today, small business owners groan daily as it becomes increasingly difficult to feed their families, with so much funds spent in fueling generating sets to keep their business going.

 

Economic and Financial experts all agree that the economy must be sufficiently diversified to stabilise the country in the face of impending economic disaster from oil misfortune. As such, diversification of the economy and the inclusive growth envisaged can only succeed with adequate support for SME’s.

Small businesses performance in Nigeria is threatened by the situation of poor power supply in Nigeria. The situation is very serious due to the high cost of depending on fuel and operating the business with generators and poor plants instead of using the funds to buy more goods and services to grow their businesses.

Constant power outages is rampant in Nigeria, many companies are relocating from Nigeria to other countries due to the situation.  The consequence of this situation is job displacement and high level of poverty and unemployment and in addition, many potential entrepreneurs are discouraged from starting up small and medium enterprises (SMEs) due to the unfavourable condition.

Business expert and entrepreneur Lara Fatunbi believes that most businesses in Nigeria all in a bid to keep up with the business, have to struggle each day with this very issue of shortage in power supply so that they won’t have to close or fold up the business.

”It is sad to know that so many businesses that could not cope with the daily struggle of shortage in power supply had to eventually fold up. This issue of power supply shortage has also been acting as a hindrance or a factor that tends to also scare many foreign based businesses from investing in the nation’s economy, or even transfer business to Nigeria.

“The shortage in power supply and generation has indeed posed a very big treat to a lot of businesses and to the economy at large, coupled with the hike in the rate of this electricity bills, your business can be sent packing. Furthermore, the recent pain brought by the price of fuel has been made worse by the challenges caused by the shortage of power supply.

“One could only imagine the amount of untold hardship and suffering that will be faced if nothing is done and this continues for a longer period of time. All of this is gradually making the Nigerian economy which stood as the largest economy in Africa, to be literarily shutting down,” she lamented.

The importation of generators however which seems to be the only alternative of generating constant power if small businesses are to thrive will continue to soar at least until government does the needful.

Abduljabar, a mobile phone repairer in the popular Wuse market laments how much he spends on a daily basis on providing power for his 20 by 20 meters shop from where he operates and repairs mobile phones of clients. According to him, due to the lack of power, he spends an average of N1, 500 daily just to power his little shop. This to him is unacceptable as it eats deeps into whatever gains he makes from his job.

Although he laments on a daily basis, he said he has no option for now, since government is not ready to provide the enabling environment for small businesses to thrive.

Ayodele Sebiotimo, the founder of Creative Enterprise for Development Initiative said Nigeria needs to democratize job creation and the surest way to achieve this is by creating and empowering more entrepreneurs.

“I advise the Federal Government to assist our young entrepreneurs by creating the enabling environment and introduce policies that allow them to strive. If we are serious about solving the unemployment challenges facing Nigeria, we must fully address these issues restraining our entrepreneurs from reaching their full potential.

“Addressing issues such as power, access to land and capital, fair taxes and less government bureaucracy, will go a long way in supporting Small Scale and Medium Enterprises to grow their business,” he said.

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