Electricity Supply and Firm Sustainability: Evidence from Small Medium Enterprises in North-Western Nigeria

This study is in furtherance of investigation into the nexus of electricity supply and SMEs sustainability in Nigeria. Anchored on system theory, we proposed that electricity supply is significantly related to SMEs sustainability (profitability and liquidity) when firm characteristics are controlled. To test this assumption, we applied multiple linear regression analysis on the cross-sectional survey data collected through mailed questionnaire administered to 225 SMEs owners operating in the cities of Kaduna, Kano, Katsina, Kebbi, Jigawa, Sokoto and Zamfara States in Northwest Nigeria. The SMEs are spread across manufacturing, hotel & restaurant and wholesale & retail sectors. The study employs multi-stage sampling techniques to collect data. Findings from the study show evidence of positive and statistically significant relationships between SMEs profitability and electricity supply whereas a weak but positive relationship exists between electricity supply and firm liquidity. On the basis of the findings, the study recommends that Nigeria should find a sustainable solution to its energy crisis in order to enhance sustainability of enterprises and by extension the economy. Increasing electricity access should involve optimal production and utilization of generation capacity and/or reduction of transmission and distribution losses. More importantly, reliable load shedding schedules should be provided to plan production around outages in order to reduce technical faults in existing transmission and distribution infrastructure so as to increase generation capacity. Above all, SMEs villages/clusters should be built to promote industrial activities on the basis that access to reliable electricity supply is collectively and affordably provided by the relevant host authorities to investors and operators.