Electricity, corruption crippling Nigerian firms

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The World Bank has identified power, corruption and access to finance as the bane of the private sector in Nigeria. According to the bank, this has resulted in as high as 17-20 per cent losses in sales recorded by Nigerian firms. To make matters worse, rather than improving, power generation dropped again, yesterday, to 2,884.30 megawatts, MW, a development the Ministry of Power struggled to explain. Power This came on a day the Federal Government said it was determined to cut down on Nigerians’ spending on foreign products by introducing and enforcing a local patronage policy that will drive patronage of made-in-Nigeria goods, especially by government. The present precarious situation of companies in Nigeria is contained in the report of the bank’s study, entitled: “The Nigerian private sector and its challenges,” presented by the bank’s Specialist, Finance and Private Sector, Mr. Michael Wong, in Abuja, yesterday. According to Wong, the study was conducted within the period of April 2014 to April 2015. He noted that 48 per cent of the 28,000 firms sampled identified inadequate power supply as their greatest challenge, adding that the study covered 19 states of the federation. Generation capacity Generation capacity fell from 3,192.00MW last recorded on Monday, after reaching a peak of 4,326.80MW. Spokesman for the Power Minister, Mr. Hakeem Bello, had promised to find out what was responsible for the drop, but could not at press time, especially as reports had quoted the minister, Mr. Babatunde Fashola, as saying that generation had increased appreciably to above 4,000MW. The drop in output meant a corresponding reduction in the quantity of power allocated to the 11 distribution companies, DISCOs, for onward distribution to homes and businesses. The Federal Government after apologising for the very poor power situation, promised Nigerians of improvement in the comings days. Data from the Nigerian Systems Operations, NSO, Department of the Transmission Company of Nigeria, TCN, website,www.nsong.org, indicated that power generation peaked at 2,884.30MW as at 12:57PM:00  on Tuesday. The 2,884.30MW was distributed to the 11 electricity Distribution Companies, DISCOs, as follows: Ikeja – 432.65MW; Abuja – 331.69MW; Eko – 317.27MW; Benin – 259.59MW; Enugu – 259.59MW; Ibadan – 374.96MW; Jos – 158.64MW; Kano – 230.74MW; Kaduna – 230.74MW; Port Harcourt – 187.48MW; and Yola – 100.95MW. Other business challenges The two other worst problems of Nigerian businesses, according to the World bank report, are corruption and access to finance. The report said: “When asked to take the severity of investment climate constraints, Nigerian managers of formal firms were most likely to report electricity, corruption and access to finance as serious obstacles to business performance. “Firms in Nigeria are significantly more affected by power outages than firms in comparative countries. Nigerian firm managers reported that losses due to power outages were approximately 17 per cent of sales. “Firms in Lagos and other Southern states reported the highest losses, equivalent to more than 20 per cent of sales. “There are slight differences across states. Electricity and corruption are among the top three constraints throughout Nigeria. Firms in Northern states rank political instability among the biggest constraint.” However, the drive to shore up Internally Generated Revenue, IGR, of the last Lagos State government under Mr. Babatunde Fashola was considered an impediment to operational growth by companies that responded in the study. “In Lagos, tax rates rank among the top constraints, and in other Southern states, the top constraint is access to finance,” Wong said. The report called for greater attention to the power sector in order to make Nigerian companies competitive, both at the regional and global levels. In her presentation on “More, and More Productive, Jobs for Nigeria”, another official of the bank, Ms. Kathleen Beegle, noted that the nation was facing a major challenge of a population that was growing more than the economic growth rate. She noted that the wide gap in the socio-economic well-being between the North and the South had continued to increase and had been exacerbated by the high fertility rate in the North where girls get married at early age and give birth to many children. Ms. Beegle said the study indicated that those in that category were categorised as “inactive” going by the International Labour Organisation’s definition because they were illiterate and hardly ever get into meaningful employment. She noted that Human Development Index results had shown that Northern Nigeria had largely lagged behind in virtually all areas of development, owing to antagonism to formal education, as well as cultural and religious beliefs that have continued to increase the rate of poverty in most areas of that region. According to her, the refusal to moderate birth rate in most parts of the North and the  almajiri  culture have contributed not only to an increasing poverty rate but also now directly responsible for the level of insecurity in much of the North. Made-in-Nigeria goods Meanwhile, the Federal Government said, yesterday, it was determined to cut down on Nigerians’ spending on foreign products by introducing and enforcing a local patronage policy that will drive patronage of made-in-Nigeria goods especially by the government. The Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, stated this during the opening session of the 3rd annual Manufacturing Partnerships for African Development and Nigerian Manufacturing Expo 2016, organised by Clarion Events, Spintelligent Pty Limited in collaboration with Manufacturers Association of Nigeria, MAN in Lagos. Represented by Mrs. Omotara Awobokun, Director of Trade at the Ministry, the Minister said: “We are working on a Memo for local patronage at the ministry and we are about to present it to the Federal Executive Council for approval. “When the policy takes effect, it will compel government agencies, ministries and departments to be in the vanguard of purchasing made-in-Nigeria products. “The administration has identified the manufacturing sector as one of the key drivers of the nation’s economic diversification process. The strategic plan is to support increased production of goods and services, encourage more patronage of locally produced goods and services and export processed goods to earn much needed foreign exchange. “More than ever before, we shall pursue these objectives with vigour and a determination to succeed.  My presence here is to identify with you as a starting point in this process of economic diversification and to appeal to all Nigerians to buy Made in Nigeria products as a matter of service to our nation. “The event is timely as it is coming at a time when the nation is faced with the urgent need to diversify the economy in the light of dwindling price of crude oil in the global market which has had significant negative impact in the Nigeria economy with depletion of our foreign reserve and decline in GDP growth from 6 per cent in 2014 to 3 per cent in 2015.” According to the Minister, the Federal Ministry of Industry, Trade and Investment was strategically positioned to play a pivotal role in the economic diversification agenda of the government. Also speaking, President, Manufacturers Association of Nigeria, Dr. Frank Jacobs, commended the anticipated policy and described government as the biggest spender in the economy.

Read more at: http://www.vanguardngr.com/2016/03/electricity-corruption-crippling-nigerian-firms/

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