Power Supply And The Performance Of Small And Medium Scale Industries
The power supply plays a critical role in influencing the performance of small and medium-scale industries (SMEs). Reliable and stable electricity provision is essential for powering machinery, equipment, and other operational processes crucial for production. Inadequate or inconsistent power supply can lead to disruptions in manufacturing processes, reduced productivity, increased downtime, and higher production costs due to the need for alternative energy sources or investments in backup systems. Moreover, unreliable power can hamper the adoption of technology and innovation in SMEs, hindering their competitiveness in the market. Conversely, improved access to consistent and affordable electricity can enhance the efficiency, output, and quality of products in SMEs, driving growth, profitability, and sustainability. Thus, ensuring a dependable power supply is imperative for fostering the growth and development of small and medium-scale industries, particularly in emerging economies where challenges related to energy access persist.
This research work centers on the power supply and the performance of
small and medium scale industries in Nigeria from 1986 – 2010. carrying out this study, secondary data were collected and empirical analysis was made to achieve these objectives, multiple regression were used in anglicizing the data. In investigating this problem, the researcher introduces 2 hypotheses that power supply changes has no significant in Nigerian econometric mode were used for evaluation and testing of the hypothesis. The researcher made use of the ordering least square (OLS). The out come of the model shows and confirms that power supply changes has a negative impact on Nigerians. And that a unit change in power supply has a positive impact on both the gross domestic product and balance of payment in Nigeria. Based on the findings, certain recommendations were made which include government increasing its efforts in tackling the issue of corruption and fraud.
Title page
Approval page
Dedication
Acknowledgment
Table of contents
Abstract
CHAPTER ONE:
1.0 INTRODUCTION
1.1 Background of the study
1.2 State of research problem
1.3 Objective of the study
1.4 Hypothesis
1.5 Justification of study
1.6 Scope of study
1.7 Plan of the project
CHAPTER TWO:
2.0 LITERATURE REVIEW
2.1 Introduction
2.2 Theoretical issues
2.3 Empirical studies
2.4 Theoretical framework
CHAPTER THREE:
3.0 METHODOLOGY OF STUDY
3.1 Method of data analysis
3.2 Model of specification
3.3 Techniques of model
3.4 Evaluation of model
3.4.1 Evaluation based on statistical criteria
3.4.2 Evaluation based on econometric criteria
3.5 Sources of data and collection
CHAPTER FOUR:
4.0 DATA PRESENTATION, ANALYSIS OF RESULT
4.1 Presentation of result
4.1.1 Interpretation of result
4.2 Evaluation based on economic apriori criteria
4.3 Evaluations based on statistical criteria
4.3.1 T-Test
4.3.2 F-statistics
4.4 Evaluation based on econometric criteria
4.4.1 Normality test
4.4.2 Test for heteroscedasicity
4.4.3 Test for multicollinearity
CHAPTER FIVE:
5.0 SUMMARY, CONCLUSIONS AND RECOMMENDATION
5.1 Summary
5.2 Conclusion
5.3 Recommendations
Bibliography
INTRODUCTION
1.1 Background of the study
The economy is a complex dynamic factor, requiring greater attention in terms of its analysis and efficient management for productivity, stability growth and increased standard of living of people operating Nigeria.
Since 17th century efforts was made to promoting economic growth and have focused on the small and medium scale industries (SMIS) as the keys and the development of an economy and manufacturing sector in general. The role of small and medium scale industries in the overall growth and development of an economy‟s manufacturing sector in particular and the economy in general cannot be over emphasized. Small and medium scale industries are indeed high potentials for development in term of employment generation and wealth creation in any economy. Empirical studies have shown that the small and medium scale industries (SMIS) have in many state has enhanced greater employment opportunities per unit of capital in vested
and aided the development of local technology. This explains the deep interest which developing nation has shown in the promotion of small and medium scale industries since the 1970s.
Moreover, the potentials of small and medium scale industries in contributing substantially to the economic growth and development of Nigeria has been hampered by various constraints, inducing long term capital inadequate financing unavailability of information for potential investors, poor management practices and low entrepreneurial skill, over bearing regulatory and operational environmental, unfavorable tariff policy and infrastructural deficiencies such as inadequate power supply.
These constraints also limit the performance of small and medium scale industries in Nigeria.
Although, it is a widely held view that the availability of credit as the most critical to the performance of small and medium scale industries (SMIS), but some studies have shown that a large number of small and medium scale industries fail because of non financial reasons such as infrastructural deficiencies (Liedhorm et al 1994). One of the
infrastructual facility affecting the performance of the SMIS in Nigeria is power supply (electricity). Due to inadequate provision of power supply constitutes one of the greatest constraints in SMIS development. The current situation whereby each investor is too provide electricity is, to say the least, tasking to the SMIS investors who generally lacks adequate capital for the business and the result of this is low return on investment due to high operations cost. Therefore, adequate power supply is necessary to ensure cost effectives in vestments in small and medium scale industries (Charles Soludo, 2005).
It is however, noteworthy, there is need to objectivity access the Nigeria and impact of power supply on the performance of the SMIS sub-sector of the Nigeria manufacturing sector.
1.2 Statement of Research Problem
Small and medium scales industries in both developed and underdeveloped nations plays an important role in the process of economic development and industries. In spits of the relevance of the
small and medium scale industries to Nigeria economy and industrial development, on that sector faces a lot of problems.
Although there are various factors affecting the performance of small and medium scale industries sub sector ranging from inadequate capital to unfavorable tariff policy, however, the poor state of power supply in Nigeria is one of the significant factors militating against the performance of small and medium scale industries.
The equality and quantity of a country‟s power supply determines its ability to create competitive industries. Since the performance of SMIS in any state is greatly influenced by the electricity supply. Given the pathetic state of power supply in Nigeria it is no wonder that the contribution of the development the state, manufacturing sector and the economy in general is very negligible or unsupported by the government.
An overview of the performance of the small and medium scale industries in Nigeria shows that past policies made limited impact on the sector for example, it is estimated that SMIS account for about 80
percent of the total industries employment in Nigeria, but only contribute 15-20 percent of total manufacturing output.
Power supply has remained unreliable and power out-age load shedding and rationing have become very frequent. Power supply had been erratic and unreliable that many businesses have resorted to purchasing private generators at prohibi -ost. The substantial investment in private generating plants is estimated to be of capacity of over 250mm, which is almost half of power holding company of Nigeria (PHCN) available capacity.
1.3 Research Questions
The study would therefore provide answers to the following fundamental questions.
(1) How does power supply affect the performance of small and medium scale industries in Nigeria?
(2) Are there linkage between power supply and the performance of small and medium scale industries in Nigeria?
(3) What contributes to failure of power supply and manufacturing sector?
1.4 Objective Of The Study
The objectives of this research study are to provide a clear picture on the activities of effects of power on the performance of small and medium scale industries. The specific objectives of the study are:
(i) To examine the impact of power supply on the performance of small and medium scale industries in Nigeria
(ii) Solutions polices options and recommendation
(iii) To identify the problems of that might be against the effectiveness of small and medium scale industries in Nigeria.
1.5 Hypotheses
The broad objective of this study is to assess the performance of power supply to small and medium scale industries in the state. The specification objectives of the study a
re as follows:
(1) (Ho; No significant dependence) the performance of small and medium scale industries is not dependant on the quality and availability of adequate power supply in Nigeria.
(2) (H1; Have significant dependence) the performance of small and medium scale industries is dependent on the quality and
1.6 Justification of Study
This study is significant of selected growths. It will add to the available literature on the study area. Power supply is a problem to the state government and its citizens. From experiences our various industries, there is no doubt that the small and medium scale industries over the year have been at the receiving end of the economic environment in the state. Infact, the contributions of the sector has been declining over the years. Hence, this study will create awareness to the government to see the extent to which neglect of infrastructural facilities such as electricity is hampering the performance of SMIS in meeting their potentials of the providing employment per unit
investment capital, facilitating the development of indigenous entrepreneurships, enhancing local resources utilization and value added expanding non oil exports at competitive prices, improving balance of payment position and bring about disagreed overall growth and development of the state economy.
The lack of power supply in the state serves as external dis-economics for SMIS adversely affecting their performance, productivity and profitability.
1.7 Scope of the Study
The research work is concerned basically with the roles to lay emphasis on power supply and the performance of small and medium scale industries in the state and will cover those SMIS in state that have electricity as relevant infrastructural for their production process. The analysis covers a period of 1986-2010.
The basic limitation of this study is the completing nature of sources of statistical inputs. The data obtained from the annual bulletin, journal, and statistical data text books, magazines and seminars reports
etc. consequently the information given is extracted from the CBN and others sources of secondary data.
1.8 Plan of the Project
This study will be structured into chapters. Chapter one will cover the introduction of study statement of the problem, objectives of study, hypothesis, justification of the study, scope and limitation of the study.
Chapter two also will be review of the relative literature which will include the conceptualization of terms, the theoretical framework and empirical literature.
Chapter three also is research methodology of the study which includes the sources from which data will be collected and the method of data collection is field survey. This chapter also highlights how the sample will be designed, in terms of the technique questionnaire as an entrustment of data. Chapter four will include the presentation of result and analysis which will follow the objectives of the study and nature of the results obtained and also the testing of hypothesis.
Chapter five also consists of summary, conclusion and recommendation based on the finding of the research.
Power Supply And The Performance Of Small And Medium Scale Industries:
The power supply is a critical factor that can significantly impact the performance of small and medium-scale industries (SMEs). SMEs play a vital role in economic development, employment generation, and industrialization in many countries. However, their growth and productivity are often hindered by challenges related to power supply. Here’s how power supply can affect the performance of SMEs:
- Reliability of Power Supply:
- SMEs often rely on a continuous and reliable power supply to operate machinery and equipment. Frequent power outages or voltage fluctuations can disrupt production schedules, leading to downtime and reduced productivity.
- Production Costs:
- Unstable power supply can lead to increased production costs. SMEs may need to invest in backup power sources, such as generators or UPS systems, to mitigate the impact of power disruptions, which can be expensive to purchase and maintain.
- Quality of Products:
- Fluctuations in power supply can affect the quality of products produced by SMEs, especially those involving precision manufacturing or sensitive processes. Inconsistent power can result in defects or variations in the final product.
- Loss of Orders and Customers:
- Inability to meet delivery deadlines due to power interruptions can lead to loss of orders and customers. This can have long-term consequences on the growth and sustainability of SMEs.
- Competitiveness:
- SMEs may find it challenging to compete with larger companies that have more stable and reliable power supplies. This can hinder their ability to expand and grow in the market.
- Innovation and Technology Adoption:
- SMEs often struggle to adopt advanced technologies and automation due to power-related constraints. This limits their ability to modernize and improve efficiency.
- Employee Productivity and Job Security:
- Frequent power disruptions can demoralize employees and lead to job insecurity. Employees may be concerned about the stability of the company and their own job prospects.
- Environmental Impact:
- In some cases, SMEs resort to using environmentally harmful power sources, such as diesel generators, to compensate for unreliable grid power. This can have negative environmental consequences.
To improve the performance of SMEs, governments, utility providers, and business owners can take several measures:
- Invest in Infrastructure: Governments should invest in improving the reliability and capacity of the power grid to ensure consistent and stable electricity supply to industrial areas.
- Energy Efficiency: SMEs can adopt energy-efficient technologies and practices to reduce their energy consumption and lower operating costs.
- Diversification of Energy Sources: Encourage SMEs to explore alternative and renewable energy sources to reduce dependence on the grid.
- Support for Backup Systems: Provide financial incentives or support for SMEs to invest in backup power systems like generators or renewable energy installations.
- Regulatory Reforms: Simplify and streamline regulations related to power supply connections and ensure fair and transparent billing practices.
- Skill Development: Train SME owners and employees in energy management and conservation techniques.
- Collaboration: SMEs can collaborate with each other or with larger companies to share resources, including backup power sources.
In conclusion, a reliable and stable power supply is essential for the growth and competitiveness of small and medium-scale industries. Addressing power supply challenges through infrastructure development, energy efficiency, and supportive policies can lead to improved performance, increased employment, and economic development in the SME sector.