Electricity Outages and Firm Performance Across the Six Geo-Political Zones in Nigeria: The Role of Corruption

Adewuyi, Adeolu and Emmanuel, Zachariah (2018): Electricity Outages and Firm Performance Across the Six Geo-Political Zones in Nigeria: The Role of Corruption.

Abstract

This paper provides evidence on the role of corruption in mitigating the effect of electricity outages on firm performance across the six geo-political zones in Nigeria. In addition, this study also assessed effect of self-generation on firm performance across the six geo-political zones and comparison were made as to whether it is more profitable for firms to self-generate electricity during outage periods or bribe electricity officials to mitigates the effect of electricity outages on their performance. Using the World Bank Enterprise Survey (WBES), the study employed a cross sectional Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) techniques and the results of the findings indicate that, bribery does not mitigate the effect of electricity outages on firms across all the geo-political zones in Nigeria with exception of the North-East and the South-East geo-political zones. Although, electricity outage is relatively low in the North-East region, further findings revealed that; firms in the south-east region experience the highest outage intensity of an average of 122.025 times in a typical month, while those in the South-South region experience the lowest outage intensity of an average of 25.845times in a typical month. Lastly, contrary to the arguments in the literature that self-generation during power holidays improves firm performance, evidence from this study suggests otherwise for some geo-political zones in Nigeria. For instance, this study discovered that self-generation is a form of indirect tax which has a negative effect on firm performance especially the North-West, South-West and South-South geo-political zones. Also, while it is more profitable for firms in the North-Central, North East, and South-East regions to self-generate during power holidays, the findings for North-West, South-West and South-South geo-political zones reveal that firms in the zones are better off by relying on electricity supply from the public grid.

• Item Type: MPRA Paper
• Language: English
• Keywords: Electricity Outages; Bribery; Self-Generation; Firm Performance
• Subjects: D - Microeconomics > D2 - Production and Organizations > D20 - General; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply ; Prices

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