Electricity Gulps 50% Of MSMEs’ Profits, Says NCEEC

The National Centre for Energy Efficiency and Conservation, University of Lagos, has said electricity consumes about 50 per cent of the profits of micro, small and medium enterprises in Nigeria.

The acting Director, NCEEC, Olawale Ajibola, said this at a workshop on energy efficiency, energy audit and energy management for MSMEs in South-West Nigeria held in Ibadan, Oyo State.

According to him, all over the world, the backbone of business sector are the MSMEs.

“It is therefore imperative that the government focuses on MSMEs for rapid economic growth. According to findings, energy consumes about 50 per cent of profits of MSMEs,” he said.

The Vice-Chancellor of Dominion University, Prof. Abel Olajide Olorunnisola, who delivered the keynote address, described energy as one of the most important inputs for economic development.

He said, “The poor quality of electricity supply in Nigeria is perceived to impact negatively on the operations MSMEs. It is a general belief that insecure electricity supply constitutes a serious constraint on MSME development and expansion.

“Overall, firms with access to electricity tend to have higher productivity than firms without. However, pre-existing conditions (location, access to finance, and management competence) have a strong impact on how access to electricity affects an MSME.”

According to him, power outages tend to affect small firms more than large firms.

“Estimate shows that around 33 per cent of SMEs in developing countries use a generator. Proportion of SMEs using a generator is higher in countries with low electricity reliability.”

According to him, numerous MSMEs in Nigeria suffer from energy insecurity with the attendant negative impacts on several indices of their growth and development.
– Punch