THE IMPACT OF ELECTRIC POWER OUTAGE ON THE PROFITABILITY OF SMALL BUSINESSES IN NIGERIA: A CASE STUDY OF GWAGWALADA TOWN

Аннотация

INTRODUCTION instance, sustained economic expansion is largely Background to the Study contingent upon an uninterrupted and reliable Electric power, a critical component of global energy supply (Atif et al., 2010). energy consumption, has long been the backbone Electricity is indispensable for industrial growth, of economic activities worldwide. Its pivotal role as economic development, and the overall well-being a driver of economic growth and productivity is of a nation. Reliable electricity supply is especially extensively documented in the literature. Studies vital for the survival and growth of small have shown that electricity significantly influences businesses, with future business expansion relying productivity across various sectors, underscoring on affordable and accessible energy sources its importance in sustaining economic growth. For https://www.theamericanjournals.com/index.php/tajmei 47 THE USA JOURNALS THE AMERICAN JOURNAL OF MANAGEMENT AND ECONOMICS INNOVATIONS (ISSN- 2693-0811) VOLUME 06 ISSUE11 (Babatunde & Shuaibu, 2008). Beyond powering billion metric tons of coal—Nigeria suffers from industries, electricity drives advancements in "energy poverty" amidst plenty. Furthermore, communication, fosters innovation in science and while Nigeria is a major exporter of liquefied technology, enhances healthcare delivery, and natural gas (LNG), the country’s gas-dominated elevates living standards. Its impact extends across electricity grid frequently collapses due to infrastructure and socio-economic activities, inadequate gas supply, compounded by issues such including transportation, communication, and as pipeline vandalism and wasteful gas flaring, construction, thereby shaping the quality of life which contributes to environmental degradation (Adedokun, 2014). (Ademola & Afeiwana, 2013). In the Nigerian context, electricity plays a Billions of dollars have been invested in expanding significant role in economic development. The electricity generation and transmission, yet the nation's economy is heavily reliant on energy, with outcomes remain poor, with frequent outages and stable electricity supply deemed essential for voltage fluctuations. This has led to widespread Nigeria to achieve its ambition of becoming one of reliance on polluting generators, which adversely the 20 most developed economies globally. affect environmental quality and public health. Unfortunately, the persistent electricity crisis Despite decades of reforms, beginning with the remains a significant impediment, with no Structural Adjustment Program (SAP) in 1986, the apparent resolution in sight (Ademola & Afeiwana, electricity crisis persists. 2013). Power outages continue to hinder This study seeks to empirically assess the impact of development, underscoring the inefficiencies in the electricity supply fluctuations on the profitability country's electricity sector (Usunamlele, 2011). of small businesses in Gwagwalada, providing Efforts to reform the electricity sector, such as the insights into how power instability affects local privatization and unbundling of the Power Holding economic development. Company of Nigeria (PHCN), were expected to Statement of the Problem enhance efficiency. However, these reforms have Despite Nigeria's abundant oil resources, a yet to translate into adequate and stable electricity significant portion of its citizens lack access to supply for consumers (Subair & Oke, 2014). reliable and uninterrupted electricity. The country Reliable electricity is central to wealth creation and has an installed electric generating capacity of serves as the engine of growth across all sectors of approximately 5,900 megawatts (MW), yet the economy. Its development and utilization frequent power outages and suboptimal profoundly affect socio-economic activities and, by performance have kept the power sector operating extension, the living standards of citizens well below its potential capacity. A primary issue is (Adenikinju & Iwayemi, 2012). the disparity between the installed capacity and The inadequacy of electricity supply and frequent the actual generating capacity of the Nigerian power outages remain among the most frustrating power sector, necessitating reforms aimed at challenges for businesses and society. This improving power generation and distribution. situation is paradoxical given Nigeria’s abundant Key reforms include the establishment of the primary energy resources, including coal, natural National Electricity Regulatory Commission gas, solar, and hydroelectricity. Despite its (NERC), the unbundling of the Power Holding substantial reserves—35 billion barrels of crude Company of Nigeria (PHCN), and the introduction oil, 185 trillion cubic feet of natural gas, and 2.75 https://www.theamericanjournals.com/index.php/tajmei 48 THE USA JOURNALS THE AMERICAN JOURNAL OF MANAGEMENT AND ECONOMICS INNOVATIONS (ISSN- 2693-0811) VOLUME 06 ISSUE11 of Independent Power Producers (IPP). These • assess th