The impact of rural electrification on rural micro-enterprises in Niger Delta, Nigeria

Abstract

This study examines the impact of rural electrification through extension of existing grid on rural micro-enterprises in Niger Delta, Nigeria. The study used purposive sampling and obtained data using structured questionnaires and personal interviews with the owners of the micro-enterprises. From the data, summary information was obtained and the impact of connection to grid-electricity on the micro-enterprises was examined using a log-linear regression model. The result shows that although not statistically significant, on average, enterprises in communities connected to the electricity grid are 16.2% more profitable than enterprises in communities not connected to the grid, and the use of generating sets in providing back-up electricity makes micro-enterprises more profitable. The study also observed that micro-enterprise owners are fully aware of the importance of electricity access to the profitability of their businesses and those who can afford to buy generating sets willingly do so. Incidentally, the total expenditure on generating sets by some enterprises is up to three times (3×) the tariff for grid-electricity in rural areas. The high cost of self-generated electricity increases the total cost of doing business in rural areas thus reducing the profit margin of the micro-enterprises. In conclusion, for rural electrification to be more effective in improving the living standard of rural dwellers, the larger problem of increasing the national generating capacity and the availability of grid-electricity should be tackled, and rural electrification programs should be carried out alongside other programs that reduce the barriers to establishing micro-enterprises like the creation of rural agricultural co-operatives to promote the productive use of electricity.