Impact of Electricity Service on Performance of Microenterprises of Rural Entrepreneurs in Ogun State, Nigeria

Abstract

The expansion of microenterprises in rural areas is linked with the increase in access and use of electricity services, leading to changes income. However, there is little empirical evidence to underpin the mechanisms that lead from energy supply to profit generation among rural entrepreneurs. To this end, this study analyzed the impact of electricity service on performance of microenterprises of rural entrepreneurs. Primary data were used for this study. Data were collected using questionnaires from a sample of 150 rural entrepreneurs engaged in various microenterprise economic activities from Odeda Local Government Areas of Ogun State in a three-stage sampling procedure. The data collected were analyzed using descriptive statistics, logit model and ordinary regression analysis. The result shows that hair dressing and retail shop were the most common form of businesses followed by grain milling, tailoring, welding, relaxation sports centre and cassava processing. In addition, the result reveals that age, years of schooling, nature of business, monthly expenditure on alternative source of power and duration of power outage supported the microenterprise owner decisions to connect to grid electricity service. Also power outage duration and billing method negatively affected firms’ profitability. On other hand durations of power supply and expenditure on alternative power supply significantly has a positive impact on the profitability of microenterprise. The study therefore recommends that government should intensify action in providing rural communities with reliable and affordable electricity services.