Nigeria is among the top 15 countries with greatest electricity infrastructure disruption utilisation rate losses in a World Bank report released on Wednesday. In the most affected countries, utilisation rate losses are a significant share of GDP.
The report indicated that Nigeria recorded present electricity infrastructure disruption utilisation rate loss, which was slightly higher than Rwanda 1.8 percent and The Gambia 1.8 percent.
Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said the poor state of electricity infrastructure and the lack of new investments to upgrade the electricity equipment across different segments of the industry were responsible for this.
“FSDH Research has recommended an adjustment to the electricity tariff so that the industry can access the required cashflows to upgrade the infrastructure and also deliver electricity for the power sector in order to accelerate the growth of the economy,” Akinwunmi added.
In Nigeria, there is a record of 13 percent sales loss by firms due to 230 hours power outage. It was 14 percent sales loss due to 54 hours power outage in Ghana, while firms in Angola are losing about 12 percent sales to 50 hours due to power outage, according to the report.
Quality infrastructure does not have to be reserved for rich countries. At low income levels, the difference is particularly large. For example, the reliability of electricity in Bhutan, whose gross domestic product (GDP) per capita is $2,500, is comparable to that of many middle- and high-income economies, whereas Nigeria, whose GDP per capita is $2,476, has some of the most frequent power outages of all countries.
In Africa and Asia, power outages have been shown to affect firms’ productivity significantly. A study based on a firm panel of 23 African countries estimates that a 1 percent increase in electricity outages would account for a loss in firms’ TFP of 3.5 percent on average.
Furthermore, unreliable power networks can drastically increase the initial investments required to start a business. In Nigeria, small firms have to spend between 10 and 30 percent of their start-up costs on power self-generation.
The net benefit on average of investing in more resilient infrastructure in low- and middle-income countries would be $4.2 trillion with $4 in benefit for each $1 invested, according to a new report from the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR).
The report, Lifelines: The Resilient Infrastructure Opportunity, lays out a framework for understanding infrastructure resilience, that is the ability of infrastructure systems to function and meet users’ needs during and after a natural hazard.
It examines four essential infrastructure systems: power, water and sanitation, transport, and telecommunications. Making them more resilient is critical, the report finds, not only to avoid costly repairs but also to minimise the wide-ranging consequences of natural disasters for the livelihoods and well-being of people. Outages or disruptions to power, water, communication and transport affect the productivity of firms, the incomes and jobs they provide, as well as directly impacting people’s quality of life, making it impossible for children to go to school or study, and contributing to the spread of water-borne diseases like cholera.
“Resilient infrastructure is not about roads or bridges or power plants alone. It is about the people, the households and the communities for whom this quality infrastructure is a lifeline to better health, better education and better livelihoods,” said World Bank Group President, David Malpass.
“Investing in resilient infrastructure is about unlocking economic opportunities for people. This report offers a pathway for countries to follow for a safer, more secure, inclusive and prosperous future for all.”
The World Bank says well-designed regulations, codes, and procurement rules are the simplest approach to enhancing the quality of infrastructure services, including their reliability and resilience.
Responding to the development, Taiwo Oyedele, head, Tax and Regulatory Services, PwC, said, Infrastructure is critical to economic development and electricity is a crucial component of infrastructural amenities. To gain maximum benefits and productivity from electricity it has to be available at all times or with minimal planned outages to enable users minimise the cost of alternative power supplies and contingencies.
“This means Nigeria needs to develop a robust plan to achieve constant and stable power supply sooner rather than later. Without this, the goal of lifting millions of Nigerians out of poverty will remain a dream”, Oyedele said.
HOPE MOSES-ASHIKE
