The Energy Challenges and way forward for MSMEs in Nigeria

In the quest to finding lasting solutions to the energy challenges that befall Small, Medium and Micro Enterprises in Nigeria (MSMEs), one of the solutions to this menace is the adoption of clean energy sources, such as solar and wind energy, which serveas mitigation strategy for all countries, including the developing ones, where Nigeria falls under, according to global development index.

Today, we are still faced with challenges on how our Micro Small and Medium Enterprises (MSMES) should grow their businesses. According a recent survey conducted by Climate Transformation and Energy Remediation Society (CLIMATTERS), there is poor power available, which is unreliable, the bills are very high to pay, businesses often make little or no profit, in most cases, businesses fold up. The small businesses depend on the use of fossil-powered generators, which has proven to pollute the environment. Also, fueling and maintenance of the generators are very expensive. The generators make plenty noise and the smoke affects our health dangerously. 

According to the report on poor power supply by the Electricity Power Distributor in Nigeria, the average power supply in Nigeria is 3,851MW. The peak average power supply was fixed in January 2017 and was around 4,425MW. Out of the farthest reaches of the city of Lagos, you may see the real problem of unstable power supply in Nigeria. 

Though there have been programmes and events for a global campaign and call for a clean and sustainable energy generation and consumption. The international response to climate change was launched at the earth summit in Brazil in the year 1992 with several conventions on climate change and other summit that led to the 2015 Paris Climate Conference, where 195 countries, including Nigeria adopted the first ever legal binding global climate change agreement.But ever since then, nothing tangible has been put in place in Nigeria towards meeting those pledges. 

The whole energy sector is still mostly dependent on the fossil fuel which slows down the development of alternative forms of energy in the country. At least, 30 percent of our populations depend on kerosene for their energy needs, exposing this fraction of our population to kerosene’s health hazards. The world health organization (WHO) estimates that breathing kerosene fumes is the equivalent of smoking two packets of cigarettes a day and two- thirds of adult females with lung cancer in developing nations are non-smokers. Indoor air pollution by kerosene fumes kills 1.5m people per year. Nigerians have spent over N17.5 trillion on the purchase, maintenance and fuelling of generators in the course of five years, which is an expenditure of N3.5 trillion in a year. This includes the sum spent by government agencies, blue chip companies, small and medium scale enterprises, banks, other corporate entities and traders across the country, which have no other option but to rely on generators. 

The ever worsening power supply has led so many companies to fold up in Nigeria and consequently increasing the rate of unemployment and insecurities. Many manufacturing companies in Nigeria have chosen to relocate to neighboring countries to reduce their expenditure on energy. Not only is the high cost of procuring private energy and a substantial increase in the industrial tariff for electricity affecting Nigerian manufacturers and Micro, Small and Medium Enterprises (MSMEs). According a report, titled “Pushing Off-Grid Renewables for Micro, Small and Medium Enterprises (MSMEs) in Nigeria” published by CLIMATTERS IN 2018;a barber who spends N180,000for electricity bill, generator fueling and maintenance, his power expenses in 3years will be doubled to N540,000.But in a form where we have solar panel to replace this form of energy, he will have only to spend less and no much maintenance is required. A cyber café that spends N366, 000 in per year on power expense will be spending N1, 098,000 in 3years on power expenses, too, but with a ‘Pay-as-you-go’ option on renewable energy,he will be offered on a lease to own basis, allowing thecustomers to make initial deposits and spread the repayments of balance costs of the products over an agreed period. 

We call on our government to suspend the current 5 percent import duty and 5 percent VAT levied on solar components that make the product beyond the purchasing capability of many rural dwellers that stand to gain the most from their use. Federal government should consider establishing a national clean/renewable energy fund to be deployed to promote the use of solar panels, energy efficient appliances and other clean energy equipments. It could also be deployed to provision and distribution of clean stove for rural women as a means to alleviate the dangers of inhaling dangerous fumes from firewood which is another fossil fuel. Clean cook stove is a better option. With clean cook stoves, our mothers do not need to suffer from the health related sicknesses that come out from kerosene. 

Federal government should consider the removal of fuel subsidy and part the savings can be used to finance clean energy source, the government should also consider in the form of low tariff, import duty waivers, should be extended to raw materials for the local manufacture of renewable energy machineries and parts i.e solar panels, inverters, small hydro machines, wind propellers, etc. and the government should also consider extending tax credit, holidays and pioneer status to companies producing renewable energy components. With this, MSMEs in Nigeria can have a conducive environment to do their businesses with energy that is clean, cheap and sustainable.

Climate Transformation and Energy Remediation Society (CLIMATTERS)

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