IMPACT OF POWER OUTAGE ON SMALL AND MEDIUM ENTERPRISES IN NIGERIA
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Abstract
Power Outage has been identified as the key constraint to manufacturing sector development in Nigeria. Hence, this study analysed the cost of power outages to the business sector of the Nigerian economy using both a survey technique and regression analysis. One strong outcome of the study is that the poor state of electricity supply in Nigeria has imposed significant costs on the manufacturing sector. The bulk of these costs relate to the firms’ acquisition of very expensive backup capacity to cushion them against the even larger losses arising from frequent and long power fluctuations. Small- scale operators are more heavily affected by the power outage as they are unable to finance the cost of backup power necessary to mitigate the impact of frequent outages. The small-scale operators that could afford to back up their operations have to spend a significant proportion of their investment outlay on this. The study suggests for institutional reforms of the power supply sector in Nigeria.
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