The price of smaller generators commonly called ‘I Pass My Neighbour’ has risen from less than N10,000 to over N100,000 within the last two decades, showing how hyper-inflation and foreign exchange volatility is putting basic commodities out of the reach of many Nigerians.
While owning a generator is commonplace in Nigeria, high-power capacity generating sets are the exclusive preserve of the rich, leaving small generators of less than 1KVA capacity that can power basic appliances like television, fan or laptop, for people at the lower rungs of the economic ladder.
But now they are struggling to afford it amid worsening public electricity supply, as Africa’s largest economy barely distributes 4,000MW of power for a population estimated at over 200 million people.
“I came back home empty-handed from Ebute-Metta market when I was told that “I better pass my neighbour (Tiger TG950)” is floored at N48,000,” said Adam Adigun, a barber in Lagos.
Adigun said he got a similar generator for N9,500 in 2010 and N15,000 five years later. This accounted for a 58 percent increase in that period.
“I will service and keep managing the one I got in 2015 because I can’t afford to pay that amount for a small generator,” he said.
Owners of small retail stores, barbers and other very small businesses are feeling squeezed over the rising cost of petrol generators. Owoyale Wasiu, a generator set retailer in Oyingbo Market, Lagos, said that patronage has dropped due to high generator prices.
According to the recent Nigeria SME Survey by PricewaterhouseCoopers, electricity is responsible for the highest cost of operations, followed by rent and capital costs.
A market survey conducted by this reporter found that the prices of small petrol generators exceeded N100,000. Some third-party vendors on Jumia, an online shopping platform, sell Tiger TG1550/1580 for N110,000.
At Sumec Plaza in Apapa, the cost of a 1.1 KVA petrol generator in the showroom was priced at N109,000.
The small generator market, which stood at an estimated 22 million units in 2018, is expected to increase by three percent annually to 2030 to service a growing population and economy, the latest report by Access to Energy Institute (A2EI), a german-based energy think-tank, has shown.
According to A2EI, the demand for the product is expected to increase by eight million units by 2030.
“Primarily, the population growth of 2.5 percent per year will see demand from households and small businesses increase,” the report read.
“Rising incomes will also enable more people to buy generators, either for the first time or as a back-up for existing generators.”
Analysts say poor government’s policies are driving inflation, foreign exchange volatility. High import tariffs were also identified as a major cause for concern.
“The upsurge in the cost of petrol generators is a result of demand and supply and the value of the naira in relation to disposable income,” said Adewale-Smatt Oyerinde, director- general of the Nigeria Employers’ Consultative Association (NECA).
He said small businesses are struggling fundamentally because the business environment is not friendly (not just power but the number of taxes to pay, inhospitable disposition of some regulators etc).
“Small businesses are an endangered species in this environment,” said Oyerinde.
Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise, said that the emphasis should be on policies or interventions that will reduce the cost of generators and help small and micro businesses that create jobs thrive. “Because the government is still unable to provide adequate electricity for the masses, it should assist those who provide electricity on their own.”
According to the International Labour Organization (ILO), SMEs in Nigeria contributed 48 percent of the national GDP, 96 percent of businesses, and 84 percent of employment in the last five years helping significantly to alleviating poverty and increasing job creation.