This article will not be saying anything new about the deleterious effect of poor power supply on the manufacturing sector but it will sure prick the consciences of the power that be. This is because the premise here is that government is a key actor in triggering the inflationary environment and a catalyst for the slip into the last recession.
The sorry state of affairs was highlighted not long ago by the sordid news that manufacturers spent a whopping N130 billion to generate power to produce their wares in 2016 alone. The immediate effect of this leakage from the manufacturing system is a shave in their bottom lines or profits. When producers have to contend with spiraling costs, they often pass on the burden to consumers, thus laying the foundation for inflation. At the company level, it effectively stunts a company’s potentials for growth and further investments. When a company makes profits, it either invests on expansion or gives it out to shareholders or both. A prosperous company is more likely to offer better products and pay better wages. They are also more likely to engage in corporate social responsibility among many endeavours that contributes to societal advancement.
But where a company’s ability to invest in growth opportunities is stunted, unfortunately they progressively face decline. When companies are down in their numbers, the economy goes down and a recession or a depression may be in the offing. This is a classic case of self-destruction or apotheosis. The other side of the coin which is reflected in low or no pay-out to shareholders translates to lower income to investors. Low income produces the hydra of low savings and low investments, which ultimately destroys entrepreneurship and innovation, two vital ingredients for economic growth.
Apart from shaking the belief of local enterprises in the system, such an environment of value attrition would cast doubts in international investors and scare away old ones. The story of the tyre industry aptly illustrates the situation as companies have fled to more clement economic environments like neighbouring Accra even if the major inputs required of the industry thrives in Nigeria-rubber.
It is the same way Nigeria overflows with inputs for power supply, water for hydroelectricity, Sun for solar energy and wind for wind energy, among many others. What about garbage for renewable energy? Nigeria is the home of waste! Yet the country is unable to generate more than 4,000 megawatts after it was claimed that more than $16 billion was expended by a past administration power projects between 1999 and 2007 alone, a testament to the level of corruption in the land.
It is a shame that this country with a population of nearly 200 million generates just 4,000 megawatts while South Africa, a smaller economy of 55.6 million generates 34,000 megawatts, nearly nine times what the giant of Africa generates. It is even laughable that despite this insignificant level of power generation, Nigeria till exports power to other West African countries. Isn’t it about time we set our priorities straight in this area?
But government had offered the refrain that the country can generate as much as 8,000 megawatts given the proven gas reserves but the problem is that “the transmission grid could not support such quantum of power without complications”. What a shame for a government that has constantly harped on building infrastructure with a preachy slant.
Power generation and exploitation is sine quo non to economic development. The most developed countries, which now take power generation for granted are producing such dizzying power levels that expose how much of pretenders we are in this clime. The United States, which is arguably the most developed nation on earth and consumes 4,144.3 Terawatt hours of electricity annually. Is it any surprise then that humongous companies like GE, Ford and Caterpillar originate from there?
More than anything else, government should deepen power infrastructure as rapidly as possible in order for the country not to be left behind in the development game. It should align the roles of the Gencos, Discos and Transiscos to the overriding objective of jerking up power to the eternal good of individuals, industry and the economy.
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