By Francis Effiong
The latest release of the World Bank Ease of Doing Business Report shows Nigeria at 182nd position among 189 countries ranked on the ease of access to electricity. This low result, which has been the norm over the past few years, highlights the precarious state of the nation’s power sector. Although famed as Africa’s largest economy, the performance of the nation’s power sector is abysmal when compared to other economies in the region.
According to the report of the World Bank Group, on ‘the reliability of power supply and transparency index’, Nigeria scored 0 on a scale of 1-8, it also indicated that a period of 198 days is required to get connection to the power grid, which far exceeds Sub-Saharan Africa’s average of 115 days. In neighbouring Benin and Ghana, 96 and 79 days are required respectively for businesses to get access to the grid, while in South Africa and Kenya, major economies in the region, 84 and 97 days are needed respectively to be linked to the grid. This poor performance calls for urgent and concerted interventions if we hope to consolidate on the economic gains gathered over the past decade and to improve the business climate and general wellbeing of citizens.
There is no doubt that the energy sector is a key driver of economic growth because it fuels the productive processes, which lead to the output of goods and services. Abounding evidence from economic history proves this true, for instance, the emergence of coal-powered steam engine played a significant role in the economic trajectory of nations like Britain, Spain and Portugal between the 19th and 20th centuries. The case is not much different today, depicted by the OECD countries and emerging economies including China and India that have reliable sources of energy and are better equipped to manage them to power and sustain their growth.
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The precarious state of Nigeria’s energy sector, evidenced in the Ease of Doing Business report has significant economy-wide consequences. Commenting on this ugly trend, Dr Peter Ubi of the Department of Economics at the University of Calabar stated that, ‘poor energy access has actually increased the cost of investment in Nigeria’. He went on to explain the effect of this on businesses and the generality of Nigerians, ‘… what it means is an increase in the cost of investment. Employment will decline, income will decline, output will decline, poverty will increase, standard of living will fall, and the cost of living will increase, all things being equal. It will have a lot of direct and indirect effect on citizens.’ Clearly, energy poverty in Nigeria conflates with income poverty, jointly aggravating the wellbeing and standard of living of the average citizenry. Over 63% of Nigerians presently lack access to electricity, showing a strong correlation with the population of Nigerians estimated to be living below the poverty line.
However, in recent times, some worthy efforts have been made by the government, NGOs, and foreign investors to revamp the country’s ailing power sector, which may likely explain the marginal advancement from 182nd position in the 2016 index to the 180th in 2017. One of such is the Bank of Industry and UNDP co-sponsored ‘Access To Renewable Energy’ project, aimed at raising the nation’s capacity to adopt renewable energy resources to alleviate the difficulties Small and Medium Enterprises (SMEs) face in securing improved energy facilities. Another prominent intervention is the ‘Energy Africa Campaign’ of the United Kingdom’s Department for International Development. Launched in October 2015, the specific target of the project is the generation of modern energy to spur off-grid access, currently Lagos and Kaduna have been chosen as flagship states for its demonstration in Nigeria. A more recent move has been made by a French firm, GreenWish Partners. It aims to develop two solar plants in Abuja and kaduna with a generating capacity of 50 megawatts each. It is believed that this would beef-up the North’s energy security, occasionally hampered by attacks of oil and gas facilities of the Niger-Delta militants.
Impressive as these initiatives are, more still needs to be done to reach the country’s goal of attaining 75% of population access to energy by 2020. The Minister for Power, Works and Housing, Mr Babatunde Raji Fashola has severally reiterated the commitment of the present administration to transition the country from the stage of ‘Incremental Power to Steady Power and then to Uninterrupted Power’.
Alutu Uzochukwu, an Applied Economist at the Presidency remarks both the executive and legislative arms of government have been upbeat at addressing the energy crises ‘to ensure equity and fairness for its citizens.’ Nevertheless, he opines that ‘ Political will is also needed to ensure that there are no bottlenecks and rent seeking behaviours’ and ‘our gas pipelines must be safeguarded if we must increase our energy production capacity.’
Off-grid connection appears to be the more promising option, considering the reduced duration required to install necessary electricity generating equipment like Photovoltaic panels and inverters. But how cost effective are these renewable energy off-grid solutions when compared to the traditional grid electricity? It is expected that if the government musters the political will to implement the energy’s sector blueprint, and is able to build meaningful partnerships with relevant stakeholders and investors, the business environment will record remarkable improvements.
Businesses will be able to cut cost of production related to sourcing electricity from alternative means, mostly power generating plants. This would not only reduce the burden transferred to consumers in forms of higher cost, it would as well serve to limit the emissions of greenhouse gasses and mitigate the impact of climate change, and also release a spiral effect of increased job opportunities, raise income levels and bolster the average standard of living.