NIGERIAN ELECTRICITY SECTOR AND IMPACT ON SMES IN LAGOS STATE

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 Presentation of Results

This chapter contains an in-depth presentation, analysis and interpretation of the data obtained

from respondents on the work titled “THE NIGERIAN ELECTRICITY SECTOR AND

IMPACT ON SMALL AND MEDIUM SCALE ENTERPRISES GROWTH IN LAGOS

STATE”. The appropriate statistical formula will be used to analyze the data collected in order to

aid understanding of the respondents’ view pertaining to topical issues as extracted from the

questionnaires. A total of 50 questionnaires were administered and the entire 50 were duly

completed and returned. Data collected from the questionnaire were analyzed, summarized, and

interpreted accordingly with the aid of descriptive statistical techniques such as total score and

simple percentage. Chi-square test was used to measure the discrepancies existing between the

observed and expected frequencies and to prove the level of significance in testing stated

hypotheses. The section is divided into two sections, A and B. Section A focused on the bio-data

of the respondents, while section B discussed in detail the research questions.

4.1.1 Analysis And Interpretation Of Respondents’ Personal-Data Demographic Analysis:

Table 4.1 Sex distribution of respondents

Gender Frequency Percentage %

Male 30 60

Female 20 40

Total 50 100

Source: Research survey 2016

The above table shows the gender distribution of the respondents. There were 30 males and 20

females which represented 60% and 40% distributed respectively. It could be drawn that most of

the respondents were male represented due to the admittance of more males as compared to the

female. This is further represented pictorially below with pie chart diagram.

Table 4.2 Distribution of respondents by age

Age Frequency Percentage %

20 – 29 9 18

30 – 39 19 3.8

40 – 49 15 30

50 and above 7 14

Total 50 100


The above table shows the age distribution of the respondents. 18% of the respondents were

between Ages of 20-29 years, 3.8% of the respondents were between Ages of 30-39 years, 30% of

the respondents were between Ages of 40-49 years, while 14% of the respondents were of Ages of

50years and above. It could be drawn that most of the respondents were between ages of 26-31

years. This is represented pictorially below with a pie chart diagram.

Table 4.3 Distribution of respondents by Educational Qualification

Educational Qualification Frequency Percentage %

SSCE 9 18

High School 15 30

Bachelor’s degree 18 36

Master’s degree 5 10

Others 3 6

Total 50 100


The above table shows the educational qualification of the respondents. There were 9 SSCE

holders which represented 18% of the respondents, 15 High School Holders which represented

30% of the respondents, 18Bachelor’s degree holders which represented 36% of the total

respondents, 5 were Master’s degree holders which represented 10% of the respondents, while

3has other degrees which represented 6% of the total respondents. By implication, Bachelor’s

degree holders made the most frequency in the table of analysis which would go a long way in

decision making. This is also represented pictorially below with a pie chart diagram.

4.1.2 The Main Research Questions

Power Outage Experience

Table 4.4: I am aware of the power outages.

Response Frequency Percentage % Valid Percentage % Cum. Percentage %

Strongly

Disagree

0 0 0 0

Disagree 0 0 0 0

Indifferent 0 0 0 0

Agree 38 76 76 76

Strongly

Agree

12 24 24 100

Total 50 100 100

From table 4.4 above, none of the respondents strongly disagreed to be aware of the power

outages, none of the respondents disagreed to be aware of the power outages, none of the

respondents is indifferent about the statement, 38 which represented 76% of the respondents

agreed with the statement above, while only 12 of them represented by 24% of the total

respondents strongly agreed to be aware of the power outages. This implies that majority of the

respondents agreed with the statement.

Table 4.5: The power outages are not regular.


Strongly

Disagree

25 50 50 50

Disagree 24 48 48 98

Indifferent 0 0 0 98

Agree 1 2 2 100

Strongly

Agree

0 0 0 100

Total 50 100 100


The table reveals that 25 people representing 50% of the respondents strongly disagree that

power outages are regular, 24 people representing 48% of the respondents disagree that power

outages are regular, none of the respondents are indifferent about the statement, only 1 person

representing 2% of the respondents agree that power outages are regular, while none of the

respondents strongly agree that power outages are regular. This implies that respondents who

strongly disagree are on the high side of the frequency but almost equally distributed with those

that disagrees.

Table 4.6: I do not get enough electricity supply for my business.


Strongly

Disagree

1 2 2 2

Disagree 0 0 0 0

Indifferent 1 2 2 4

Agree 34 68 68 72

Strongly

Agree

14 28 28 100

Total 50 100 100


From the table above, 1 person representing 2% of the respondents strongly disagree that they do

not get enough electricity for their business, none of the respondents disagree with the statement,

only one of them which is represented by 2% is indifferent about the statement, 34 people

representing 68% of the respondents agree with the statement, while 14 of them represented by

28% of the respondents strongly agree that they do not get enough electricity for their business.

This implies that most of the respondents agree with the statement above.

Table 4.7: I have no idea when the outages will stop.


Strongly

Disagree

0 0 0 0

Disagree 1 2 2 2

Indifferent 2 4 4 6

Agree 42 84 84 90

Strongly

Agree

5 10 10 100

Total 50 100 100


The table shows that 23 none of the respondents strongly disagree that they have an idea when

the power outages will stop, 1 of them representing 2% of the respondents disagree that they

have an idea when the power outages will stop, 2 of them representing 4% of the respondents are

indifferent about the statement, 42 of them representing 84% of the respondents agree that they

have an idea when the power outages will stop, while only 5 representing 10% of the total

respondents strongly agree with the statement above. This implies that more proportion of the

respondents agree with the statement as it has the largest frequency of the distribution.

Table 4.8: My business depends on electricity supply.


Strongly

Disagree

0 0 0 0

Disagree 5 10 10 10


Agree 28 56 56 70

Strongly

Agree

15 30 30 100

Total 50 100 100


The table above shows that none of the respondents strongly disagree that their business depends

on electricity supply, 5 people representing 10% of the respondents disagree with the statement,

2 people representing 4% of the respondents are indifferent, 28 people representing 56% of the

respondents agrees to the statement, while 15 people representing 30% of the respondents

strongly agree with the statement. This imply that majority of the respondents agree that their

businesses depends on electricity supply.

Table 4.9: Intermittent power outages is killing my business


Strongly

Disagree

0 0 0 0

Disagree 1 2 2 2

Indifferent 2 4 4 6

Agree 30 60 60 66

Strongly

Agree

17 34 34 100

Total 50 100 100


The table above shows that none of the respondents strongly disagree that intermittent power

outages is killing their business, only 1 of them disagree that intermittent power outages is killing

their business, 2 representing 4% of the respondents are indifferent, 30 people representing 60%

of the respondents agree with the statement, while 1of them representing 34% of the respondents

strongly disagree. This implies that majority of the respondents agree that intermittent power

outages is killing their business.

4.1.3 Operational Cost

Table 4.10: Cost of materials has gone up.


Strongly

Disagree

0 0 0 0

Disagree 1 2 2 2


Agree 25 50 50 72

Strongly

Agree

14 28 28 100

Total 50 100 100


The table above shows that none of the respondents strongly disagree that cost of materials has

gone up, just 1person representing 2% of the respondents disagree that cost of materials has gone

up, 10 people representing 20% of the respondents are indifferent, 25 people representing 50% of

the respondents agree with the statement, while 14 of them representing 28% of the respondents

strongly agree that cost of materials has gone up agree that cost of materials has gone up. This

implies that respondents that agree that cost of materials has gone up make the most frequency of

the distribution.

Table 4.11: Employee wages has gone up.


Strongly

Disagree

0 0 0 0



Agree 10 20 20 100

Strongly

Agree

0 0 0 100

Total 50 100 100


From the above table, none of the respondents strongly disagree that employee wages has gone

up, 24 people representing 48% of the respondents disagree that employee wages has gone up,

16 people representing 32% of the respondents are indifferent, 10 people representing 20% of the

respondents agree with the statement, while none of the respondents strongly agree that

employee wages has gone up. This implies that the respondents that disagree that employee

wages has gone up dominates the distribution, having the highest frequency.

Table 4.12: Cost of preserving/Producing my products/services has gone up.


Strongly

Disagree

0 0 0 0

Disagree 2 4 4 4

Indifferent 1 2 2 6

Agree 37 74 74 80

Strongly

Agree

10 20 20 20

Total 50 100 100


The table above shows that none of the respondents strongly disagree that the cost of

preserving/producing their products/services has gone up, 2people representing 4% of the

respondents disagree with the statement, only 1 of them representing 2% of the respondents are

indifferent, 37 people representing 74% of the respondents agree with the statement, while

10people representing 20% of the respondents strongly agree that the cost of

preserving/producing their products/services has gone up. This implies that more of the

respondents agree with the above statement.

Table 4.13: Cost of utilities has gone up.


Strongly

Disagree

0 0 0 0

Disagree 1 2 2 2

Indifferent 1 2 2 4

Agree 45 90 90 94

Strongly

Agree

3 6 6 100

Total 50 100 100


The table above shows that none of the respondents strongly agree that the cost of utilities has

gone up, 2% of the respondents disagree with the statement, also 2% of the respondents are

indifferent, 45 people representing 90% of the respondents agree with the statement, while 3

people which is represented by 6% of the respondents strongly agree that the cost of utilities has

gone up. This implies that respondents who agreed to the assertion made the highest frequency of

the distribution in the table of analysis.

Table 4.14: Maintenance and replacement cost has gone up.


Strongly

Disagree

2 4 4 4

Disagree 1 2 2 6

Indifferent 0 0 0 6

Agree 41 82 82 88

Strongly

Agree

6 12 12 100

Total 50 100 100


From the table above, 2 people representing 4% of the respondents strongly disagree that

maintenance and replacement cost has gone up, 1 person representing 2% of the respondents

disagree that maintenance and replacement cost has gone up, none of the respondents are

indifferent about the statement, 41 people representing 82% of the respondents agree with the

statement, while 6 people representing 12% of the respondents strongly agree with the statement.

This implies that the respondents who agree with the statement dominate the distribution.

Table 4.15: High cost of power supply is negatively affecting my business.


Strongly

Disagree

0 0 0 0

Disagree 1 2 2 2

Indifferent 0 0 0 2

Agree 37 74 74 76

Strongly

Agree

12 24 24 100

Total 50 100 100


From the table above, none of the respondents strongly agree that high cost of power supply is

negatively affecting their business, 1 person representing 2% of the respondents disagree with

the statement, none of the respondents are indifferent, 37 people representing 74% of the

respondents agree with the statement, while 12 of them representing 24% of the total respondents

strongly agree that high cost of power supply is negatively affecting their business. This implies

that majority of the respondents agree with the above statement.

4.1.4 Alternative Power Supply

Table 4.16: Alternative power supply is not reliable.


Strongly

Disagree

24 48 48 48



Agree 4 8 8 94

Strongly

Agree

3 6 6 100

Total 50 100 100


From the table above, 24 people representing 48% of the respondents strongly disagrees that

alternative power supply is not reliable, 19 people representing 38% of the respondents disagrees

that alternative power supply is not reliable, none of the respondents are indifferent about the

statement, 4 people which is represented by 8% of the respondents agree with the statement,

while 3 people representing 6% of the respondents strongly agree with the statement. This

implies that the respondents who strongly disagree with the statement made the most frequency

of the distribution.

Table 4.17: Alternative power supply is not adequate and suitable substitute for my

business.


Strongly

Disagree

8 16 16 16



Agree 21 42 42 98

Strongly

Agree

1 2 2 100

Total 50 100 100


The table above reveals that 8 people representing 16% of the respondents strongly disagree that

alternative power supply is not adequate and suitable substitute for their businesses, 19 people

representing 38% of the respondents disagree with the statement, 1 person representing 2% of

the respondents is indifferent with the statement, 21 people representing 42% of the total

respondents agree that alternative power supply is not adequate and suitable substitute for their

businesses, while 1 person representing 2% of the respondents strongly agree with the statement.

This implies that a large number of respondents agree with the above statement.

Table 4.18: Alternative power supply is expensive compare with that of electricity.


Strongly

Disagree

0 0 0 0

Disagree 0 0 0 0

Indifferent 0 0 0 0

Agree 41 82 82 82

Strongly

Agree

9 18 18 100

Total 50 100 100


The table above reveals that none of the respondents strongly disagree that alternative power

supply is expensive compare with that of electricity, none of the respondents disagree with the

statement, none of the respondents is indifferent with the statement, 41 people representing 82%

of the total respondents agree that alternative power supply is expensive compare with that of

electricity, while 9 people representing 18% of the respondents strongly agree with the

statement. This implies that a large number of respondents agree with the above statement.

Table 4.19: Generators are the most preferred substitute for electricity power.


Strongly

Disagree

2 4 4 4



Agree 29 58 58 96

Strongly

Agree

2 4 4 100

Total 50 100 100



generators are the most preferred substitute for electricity power, 17 people representing 34% of

the respondents disagree with the statement, none of the respondents is indifferent with the

statement, 29 people representing 58% of the total respondents agree that generators are the most

preferred substitute for electricity power, while 2 people representing 4% of the respondents

strongly agree with the statement. This implies that respondents who agree with the above

statement dominate the distribution.

Table 4.20: The generators are not environmentally friendly.


Strongly

Disagree

0 0 0 0

Disagree 0 0 0 0

Indifferent 1 2 2 2

Agree 23 46 46 48

Strongly

Agree

26 52 52 100

Total 50 100 100


The table above reveals that none of the respondents strongly disagree that generators are not

environmentally friendly, none of the respondents disagree that generators are not

environmentally friendly, only 1 of the respondents is indifferent with the statement, 23 people

representing 46% of the total respondents agree that generators are not environmentally friendly,


implies that respondents who strongly agree with the above statement made the most frequency


4.1.5 SMEs Growth

Table 4.21: I have reduced the number of my employees significantly.


Strongly

Disagree

0 0 0 0

Disagree 7 14 14 14


Agree 31 62 62 96

Strongly

Agree

2 4 4 100

Total 50 100 100


From the table above, none of the respondents strongly disagree that they have reduced the

number of their employees significantly, 7 people representing 14% of the respondents disagree

that they have reduced the number of their employees significantly, 10 people representing 20%

of the respondents are indifferent with the statement, 31 people representing 62% of the total

respondents agree that they have reduced the number of their employees significantly, while 2

people representing 4% of the respondents strongly agree with the statement. This implies that

respondents who agree with the above statement made the most frequency of the distribution.

Table 4.22: Sales have been dropping drastically.


Strongly

Disagree

2 4 4 4

Disagree 9 18 18 22


Agree 29 58 58 98

Strongly

Agree

1 2 2 100

Total 50 100 100



sales have been dropping drastically, 9 people representing 18% of the respondents disagree with

the statement, 9 people representing 18% of the respondents are indifferent with the statement,

29 people representing 58% of the total respondents agree that sales have been dropping

drastically, while 1 person representing 2% of the respondents strongly agree with the statement.

This implies that respondents who agree with the above statement dominate the distribution.

Table 4.23: I have disposed some of my assets.


Strongly

Disagree

0 0 0 0



Agree 20 40 40 90

Strongly

Agree

5 10 10 100

Total 50 100 100


The table above reveals that none of the respondents strongly disagree that they have disposed

some of their assets, 10 people representing 20% of the respondents disagree with the statement,

15 people representing 30% of the respondents are indifferent with the statement, 20 people

representing 40% of the total respondents agree that they have disposed some of their assets,


implies that respondents who are indifferent with the above statement made the most frequency


Table 4.24: I have closed down some other branches/businesses.


Strongly

Disagree

4 8 8 8



Agree 9 18 18 96

Strongly

Agree

2 4 4 100

Total 50 100 100



they have closed down some other branches/businesses, 18 people representing 36% of the

respondents disagree with the statement, 17 people representing 34% of the respondents are

indifferent with the statement, 9 people representing 18% of the total respondents agree that they

have closed down some other branches/businesses, while 2 people representing 4% of the

respondents strongly agree with the statement. This implies that respondents who disagree with

the above statement made the most frequency of the distribution.

Table 4.25: I have reduced my product lines.


Strongly

Disagree

5 10 10 10

Disagree 9 18 18 28


Agree 31 62 62 100

Strongly

Agree

0 0 0 100

Total 50 100 100


From the table above,5 people representing 10% of the respondents strongly disagree that they

have reduced their product lines, 9 people representing 18% of the respondents disagree with the

statement, 31 people representing 62% of the respondents are indifferent with the statement,

none of the respondents agree that they have closed down some other branches/businesses, while

none of the respondents strongly agree with the statement. This implies that respondents who

agree with the above statement made the most frequency of the distribution.

Table 4.26: Most of my products perish frequently.


Strongly

Disagree

5 10 10 10



Agree 10 20 20 98

Strongly

Agree

1 2 2 100

Total 50 100 100


From the table above, 5 people representing 10% of the respondents strongly disagree that most

of their products perish frequently, 26 people representing 52% of the respondents disagree with

the statement, 8 people representing 16% of the respondents are indifferent with the statement,10

people representing 20% of the respondents agree that most of their products perish frequently,

while only one of the respondents strongly agree with the statement. This implies that

respondents who disagree with the above statement made the most frequency of the distribution.

Table 4.27: The customer base of the business has increased.


Strongly

Disagree

1 2 2 2



Agree 10 20 20 100

Strongly Agree

0 0 0 100

Total 50 100 100


From the table above, 1 person representing 2% of the respondents strongly disagree that the

customer base of the business has increased, 29 people representing 58% of the respondents

disagree with the statement, 10 people representing 20% of the respondents are indifferent with

the statement, also 10 people representing 20% of the respondents agree that the customer base

of the business has increased, while none of the respondents strongly agree with the statement.

This implies that respondents who disagree with the above statement made the most frequency of

the distribution.

Table 4.28: Existing customers have reduced their purchases


Strongly

Disagree

0 0 0 0



Agree 16 32 32 100

Strongly

Agree

0 0 0 100

Total 50 100 100


From the table above, none of the respondents strongly disagree that existing customers have

reduced their purchases, 28people representing 56% of the respondents disagree that existing

customers have reduced their purchases, 6people representing 12% of the respondents are

indifferent with the statement, 16 people representing 32% of the total respondents agree that

existing customers have reduced their purchases, while none of the respondents strongly agree

with the statement. This implies that respondents who disagree with the above statement made

the most frequency of the distribution.

Table 4.29: Which of the following best describes your position in this business?


Sole Owner 35 70 70 70

Partner 10 20 20 90

In charge of

finance

2 4 4 94

Occupying

another

position

3 6 6 100

Others 0 0 0 100

Total 50 100 100

From the table above, 35 people representing 70% of the respondents are sole owner of the

business, 10 people representing 20% of the respondents are partners in the business, 2 people

representing 4% of the respondents are the people in charge of finance in the business,3 people

representing 6% of the respondents are occupying another position in the business, while none of

the respondents are classified as others. This implies that respondents who are sole owners of

their businesses made the most frequency of the distribution.

Table 4.30: How long has your business been in existence?


Up to 2 years 17 34 34 34

2 – 5 years 16 32 32 66

5 – 9 years 14 28 28 94

9 – 13 years 3 6 6 100

13 years and

above

0 0 0 100

Total 50 100 100


The table above shows that 17 people representing 34% of the respondents have their businesses

to have been existing for up to 2 years, 16 people representing 32% of the respondents have their

businesses to have been existing for about 2 – 5 years, 14 people representing 28% of the

respondents have their businesses to have been existing for about 5 – 9 years, 3people

representing 6% of the respondents have their businesses to have been existing for about 9 – 13

years, while none of the respondents have their businesses to have been existing for up to 13

years and above. This implies that most of the respondents have been in their business for up to 2

years as well as 2 – 5 years.

4.2 Discussion of Results

The researcher under this section will be discussing the result from the detailed questionnaire

analysis show in the earlier sub-section. To further discuss the results presented, the use of chi

square is used to test the three hypothesis started in the introductory chapter of this research. The

hypothesis are started and tested below.

IHypothesis 1

Ho: There is no significant relationship between electricity insecurity and SMEs productivity.

H1: There is a significant relationship between electricity insecurity and SMEs productivity.

Hypothesis II

Ho: There is no significant relationship between electricity insecurity and SMEs decision

making when considering moving into a new area or development of business.

H1: There is a significant relationship between electricity insecurity and SMEs decision making

when considering moving into a new area or development of business.

Hypothesis III

Ho: There is no significant relationship between electricity and SMEs cost- competitiveness.

H1: There is a significant relationship between electricity and SMEs cost- competitiveness.

Chi-square ( ) is calculated using this formula:

= Σ

Where: Σ = Summation;

O = Observed frequency;

E = Expected frequency.

4.2.1 Hypothesis 1

Ho: There is no significant relationship between electricity insecurity and SMEs productivity.

H1: There is a significant relationship between electricity insecurity and SMEs productivity.

Hypothesis I will be tested by using table 4.26

Observed Expected Residual

Strongly

Disagree

5 10 -5 25 2.5

Disagree 26 10 16 256 25.6

Indifferent 8 10 -2 4 0.4

Agree 10 10 0 0 0

Strongly

Agree

1 10 -9 81 8.1

Total 50 36.6

Decision rule: Reject , where calculated is greater than tabulated, otherwise, accept .

Calculated = Σ = 36.6

Degree of freedom “d.o.f” = n – 1

Where n = number of rows

Therefore, d.o.f = 5 – 1 = 4

At 0.05% level of significance, the tabulated value of for 4 degrees of freedom is =9.49.

Decision: Since the calculated is greater than the tabulated , we reject the null hypothesis (

) and accept the alternative hypothesis ( ).

We thereby conclude that there is a significant relationship between electricity insecurity and

SMEs productivity. From the result obtained by testing this hypothesis, we can conclude that the

productivity of SMEs depends greatly on the provision of a stable source of electricity generation

and vice versa if there is no provision of adequate electricity generation.

Hence, the productivity of small and medium scale business depends largely on the provision of

electricity which is a highly needed input for production of their goods and services. Also, if

adequate electricity supply is guaranteed, more business can be established to reduce the level of

unemployment in the country.

4.2.2 Hypothesis II

Ho: There is no significant relationship between electricity insecurity and SMEs decision

making when considering moving into a new area or development of business.

H1: There is a significant relationship between electricity insecurity and SMEs decision making

when considering moving into a new area or development of business.

Hypothesis II will be tested by using table 4.24


Strongly

Disagree

4 10 -6 36 3.6

Disagree 18 10 8 64 6.4

Indifferent 17 10 7 49 4.9

Agree 9 10 -1 1 0.1

Strongly

Agree

2 10 -8 64 6.4

Total 50 16.5






At 0.05% level of significance, the tabulated value of for 4 degrees of freedom is =9.49



We thereby conclude that there is a significant relationship between electricity insecurity and

SMEs decision making when considering moving into a new area or development of business.

The economic implication of is that the decision to establish a firm of business by enterprises

depends largely also on the guarantee that they have adequate electricity input which they need

to operate their businesses. As a result of electricity insecurity, some businesses under review

had to shut down, while those who are still in business have to use alternative sources of

electricity generation, so as to remain relevant or still remain in business.

4.2.3 Hypothesis III

Ho: There is no significant relationship between electricity and SMEs cost- competitiveness.

H1: There is a significant relationship between electricity and SMEs cost- competitiveness.

Hypothesis III will be tested by using table 4.12


Strongly

Disagree

0 10 -10 100 10

Disagree 2 10 -8 64 6.4

Indifferent 1 10 -9 81 8.1

Agree 37 10 27 729 72.9

Strongly

Agree

10 10 0 0 0

Total 50 97.4






At 0.05% level of significance, the tabulated value of for 4 degrees of freedom is =9.49



We thereby conclude that there is a significant relationship between electricity and SMEs cost-

competitiveness.

From the result of hypothesis three, which seeks to test for if there exists a relationship between

small and medium scale competitiveness in terms of cost used in running their businesses? The

result of the test showed that absence of electricity generation leads to a higher cost of doing

business for small and medium scale enterprises, it also leads to a reduction in labour force of

enterprises, as they are compelled to either reduce their work force and remain in business or

continue to incur addition cost by having to pay more to generate electricity for themselves.

Also, in terms of cost competitiveness, some businesses under review also reduce their product

lines in other to meet up with the high cost of electricity generation.

4.3 Comparism of Results with Previous Findings

From the result obtained in this research and a detailed review of researches by earlier scholars

and researcher on this topic, we can there compare if there are any similarities or differences in

results obtained. A comparism between this research work and that of Arnold et al. (2006) show

that an unreliable electricity supply has a significant negative impact on a firm’s total factor

productivity. A study examining the impact of power disruptions on firm productivity in the

manufacturing sector in Nigeria shows that power outage variables (measured using hours per

day without power and percentage of output lost due to power disruptions) have a negative and

significant effect on productivity (Moyo, 2012). From both result, we can therefore conclude that

electricity generation is very key to the survival of businesses and firms in Nigeria.

Also, a comparism between this research result and that of Adenikinju (2005) provided a strong

argument to support the importance of energy supply. The poor nature of electricity supply in

Nigeria, he argued, has imposed significant cost on the industrial sector of the economy. This

result corroborates the survey of the Manufacturers Association of Nigeria (MAN, 2005). In that

survey, MAN indicated that the costs of generating power constitute about 36 percent of

production. All these studies used time series analysis and electricity production and

consumption as power infrastructure indicator variables while, in this study, we go down to firm

level data and use infrastructure reliability indicators (number of days and hours without power),

which is a big departure from the standard approach in the literature.

Hence, the researcher concludes that for small and medium enterprises or business to remain in

business, in Lagos State Nigeria, the electricity sector must to strengthened to operate and

generate electricity efficiently and effectively for business to be able to operate competitively

and also, this would help firms to be more productive.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings

The research findings from the data analyzed in the previous chapter indicated the followings:

(1) The productivity of small and medium businesses to a great extent depends on the level of

electricity they can get as input for their businesses. It was discovered that the due to

inconsistencies in the level of electricity supply, business level of sales and production level

dropped as enterprises are not able to produce or render services effectively and efficiently.

Firms also considered alternative sources of electricity generation as expensive.

(2) Also this study has established that, power outages experience increases the operation cost of

SMEs, due to the high cost of alternative energy supply and the damages of assets through the

power fluctuations. The operational cost in effect also have a damming effect on the growth of

the SMEs, since most of the revenue meant for reinvesting will rather goes to the servicing of

electricity and alternative power bills.

(3) The research further shows that, the major alternative power supply is generator, but the cost

of using the generator was very high and was increasing the operational cost and reducing the

firm’s growth. Apart from the high cost of running a generator, respondents also say responded

by saying that generators were not environmentally friendly.

(4) Also, from this research, it is discovered that employees’ wages or salaries of firms or

businesses did not increase despite the increasing cost of other inputs which firms or businesses

used to produce their goods and services. Some respondent when interviewed as to why

employees wages didn’t increase, said that due to the fact that they can easily replace any worker

who demands for higher wages, and also because of the high rate of unemployment in the

country

5.2 Conclusion

Small and medium enterprises play a crucial role in Nigerian economy, both in terms of wealth

and employment generation. Yet, their activities, and even survival, are hindered by many

constraints, including poor electric service quality that shows up as daily power outages. This

study was concerned with the measurement of the losses associated with electric power outages,

and the analysis of how business productivity is related to those events.

The purpose of this research is to investigate the impact of the electricity sector and small and

medium enterprises performance in Lagos state, Nigeria. This research concludes that,

competition in international markets as well as against local competitors depends on SMEs

competitive advantage (Irjayanti and Azis, 2012). However, high energy cost, irregular energy

supply, lack of technology; non-competitive prices have been cited in several works as the

causes of SMEs inability to compete effectively (Wang, 2002; Irjayanti and Azis, 2012).

Availability and reliability of electric power supply is crucial for the adoption of appropriate

technology and the latter is sine-qua-non for increased levels of productivity and quality.

Without suitable technology, high-tech dependent firms (steel fabrication plants) are unable to

produce in increased quantities and quality leading to poor sales hence low levels of profitability.

Consequently, they are unable to compete effectively.

This cyclical pattern, thus, low profits leading to inability to acquire appropriate technology

resulting in poor quality and lowered production, affects the SMEs competitiveness. Therefore,

the levels of profitability of SMEs can act as a competitive tool. If the level of profitability is

high, it is expected that the level of competitiveness will be high since the return on asset (ROA)

and return on investment (ROI) will be high and vice versa. The findings of this study confirm

the relevance of electricity and energy resources in enhancing the competitiveness of businesses,

particularly that of Lagos State in order to get the ever increasing population engaged in

productive services. If SMEs are to contribute to economic growth and development of the

country, then it is essential for them to access reliable energy at an affordable cost because

energy is a necessity to their operations and productive capacity.

5.3 Recommendations

The findings from this study have tremendous significance for policy development and economic

analysis.

regulatory bodies responsible for the energy sector must set some standards for the

generation, distribution and costing of electric power where preference would be given to

key sectors of the economy such as SMEs since they are known to provide jobs for a

large number of people and contribute significantly to the economic growth of the

country.

There is also a need for an opening of the market for greater competition in the supply

and distribution of power. Increase in the levels of competition would yield quality and

efficiency in supply and service delivery.

There should be improved efficiency by providing working vehicles, better

communication and easy access to operational electrical lines.

Electricity generation should be decentralized so that each plant will deliver electricity to

its immediate locality in order to avoid waste and extra cost of linking to the national

distribution system.

The computerized maintenance management system should be adopted to effectively

streamline activities like predictive, preventive and corrective maintenance.

For many firms an alternative supply of electricity can mitigate the effects of outages.

Standby generators are currently the preferred option for most firms, but decentralized

renewable technologies are increasingly available. Increased availability of information

about renewable energy technologies could facilitate their adoption by SMEs.

5.4 Limitations of the Study

The major constraints to the study are time and funds to carry out a more and through research

work. There were also a problem of administering and collection of questionnaires as a result of

the fall-out of the two reasons stated above. Also, some of the data collected is based on their

perceptions and recall and therefore open to a subjective bias.

5.5 Suggestions for Future Research

It will be useful to conduct longitudinal research into the long-term effects of electrical power

outage on the profitability and competitiveness of firms. The longitudinal research could use a

multiple regression analysis with power fluctuation as an independent variable and the

competitiveness and profitability of SMEs as the dependent variable. This will provide a strong

predictive trend and draw conclusions on the relationship between the variables. In such a study,

the sample size could be increased to strengthen the outcomes of findings. Since this research is

based on a section of SMEs operation in Lagos State, Nigeria, it will be useful to extend the

study to other regions in the country to observe the trends for comparative analysis.

Date post:	19-Nov-2023
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NIGERIAN ELECTRICITY SECTOR AND IMPACT ON SMES IN LAGOS STATE

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