Effect of Electricity Services on Microenterprise: Evidence from Ganaja Village, Kogi State, Nigeria

Abstract

The development of sufficient and sustainable access to electricity services for micro-enterprises have been acknowledged as a major challenge confronting most developing country, and fast becoming a prerequisite for reducing poverty and achieving robust development of micro-enterprises. The study employed descriptive statistics to examine the role of electricity services on micro-enterprises establishment, growth, expansion, decline, and closure in rural Ganaja. Data were obtained from one hundred micro-enterprises located in Ganaja village of Kogi State. The results from the study showed that electricity services had both positive and negative effects on micro-enterprises establishment, growth, expansion, decline, and closure in Ganaja village. The findings further revealed that the effect of electricity services was felt in the opening of new businesses, expansion of existing businesses, employment of more employees, the decline in turnover, increase in income and stoppage of production or operation. The problems and barriers experienced by Micro-Enterprises in accessing and using electricity services are lack of service line materials such as fuses, cables, poles and transformers, complicated tariff structure such as high initial connection and installation fees and high monthly bills; illegal connection and vandalism of cables and cooling transformer oil which causes power rationing, low voltage and fluctuation. The study, therefore, recommends increase access to capital for investments in electricity generating equipment and appliances; rural electricity access projects should focus on micro-credit provision, allowing the poor to purchase direct-use electricity generating equipment and appliances. Also, subsidies from the Local Government and credit based sales need to be provided to the micro-enterprises, encouraging them to purchase equipment such as generators to increase development in the village.