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.
1.4 Research questions
1. Does electrical power outage affect the
operational performance of small scale industries?
2. What is the relationship between electrical
power outage and operational performance of small scale industries.
2. How can electricity supply be made available to
small scale industries in Kano state?
1.5 Research Hypotheses
Hypothesis One
Ho: Deficient electricity
supply does not significantly constrain the operational performance of small
scale businesses in north West Nigeria.
Hi: Deficient electricity
supply significantly constrain the operational performance of small scale
businesses in north West Nigeria.
Hypothesis Two
H0: There is no significant relationship between electrical
power outage and operational performance of small scale industries.
H1: There is significant relationship
between electrical power outage and operational performance of small scale
industries.
1.6 Significance of the study
The study is expected to bring to the
fore the challenges small scale businesses face due to unreliable supply of
electricity in the region as a way of attracting the needed policy attention
that could go to alleviate their plight. It is also expected to highlight on
the investment potentials for electricity generation, transmission and
distribution infrastructure that the private sector could take opportunity of
in closing the prevailing deficit. This is especially important considering the
recent introduction of electricity market reform in Nigeria.
1.7 Scope/Limitations
of the study
This study covered the impact of electrical power
outage on the operational performance of small scale industries in Kano state.
Limitations of
study
1.
Financial
constraint- Insufficient fund tends to impede the efficiency of the
researcher in sourcing for the relevant materials, literature or information
and in the process of data collection through the internet, questionnaire and
interview.
Time constraint- The researcher simultaneously engaged
in this study with other academic work. This consequently cut down on the time
devoted for the research work.
1.8 Definition of terms
Electricity:
Is the set of physical phenomena
associated with the presence and flow of electric charge.
Power
Outage: Is a
short or long term loss of the electric power to an area.
Operational
Performance: Firm's performance measured against standard or
prescribed indicators of effectiveness, efficiency, and environmental
responsibility such as, cycle time, productivity, waste reduction, and
regulatory compliance.