1. ELECTRIC POWER SUPPLY: AN INDISPENSABLE AGENT OF ECONOMIC GROWTH
Power generation dates back to 1606 when Spanish inventor Jerónimo de Ayanz y Beaumont
patented the first steam engine. That development was followed by the invention of a steam
pump by Thomas Savery in 1698 and an atmospheric engine by Thomas Newcomen in 1712.
By 1781, James Watt had patented a steam engine that performed continuous rotary motion
and that single invention fuelled the industrial revolution of the 18th/19th century. Although
Watt’s steam engine are no longer in direct use in the creation of mechanical motion and
power, the use of steam in electric power generation still remains the predominant means of
power generation, accounting for over 80 percent of world generation output. With the
invention of the electric motor and light bulbs in the 18th and 19th century respectively
coupled with technological advancement leading to manufacture of various consumer
electronics, human dependence on electric power has greatly increased that today, one can
safely say power is indispensable to our everyday life and economic growth. In this article, we
will consider the effects of stable power supply or otherwise on the economy and the
populace at large.
Why is Power so important to economic growth?
Just think about it for a moment. From homes, to offices, hospitals, schools, religious centres,
shops and malls, airports, hotels, recreation centres, right up to factories and manufacturing
plants, power is the one item people do not want to lose. Without power, factories shutdown,
hospitals lose many patients due to failure to operate certain life-support equipment and test
machines, many small and medium scale enterprises wind up due to high operating cost
relating to the use of generators and even at homes, the effect is seen on people’s faces and
on their skins. All these translate to more dependence on imported goods and services (as
opposed to locally manufactured/supplied ones), increase in the cost of goods and services
and general high cost of living. Millions of dollars that should ordinarily be spent in developing
local economy are spent on health/education tourism abroad. As a result of the closure of
many businesses, thousands lose their jobs and join the teeming population of skilled but
unemployed persons.
“Without heat, light and power you cannot build or run the factories and
cities that provide goods, jobs and homes, nor enjoy the amenities that make

2. life more comfortable and enjoyable. Energy is the “oxygen” of the economy
and the life-blood of growth particularly in the mass industrialization phase
that emerging economic giants are facing today as their per capita GDP moves
between approximately US $5,000 and US $15,000.” – Peter Voser, Chief
Executive Officer, Royal Dutch Shell, the Netherlands; Energy Community
Leader 2011, World Economic Forum.
As Voser rightly stated, energy (particularly power) has a direct effect on the economy and
the standard of living of any nation. The United Nations Industrial Development Organization
(UNIDO) reported in 2012 that about 1.3billion people worldwide still lack access to electricity
and that many of these ‘energy poor’ live in sub-Saharan Africa. Per capita electricity
consumption in sub-Saharan Africa is around 52 kilowatt-hour per capita while it is 2050
kilowatt-hour per capita in the state of New York in the United States of America, for example.
This means that the 19.5million inhabitants of New York State consume the same amount of
electricity in a year (40 Terawatt-hour) as the 791million people in sub-Saharan Africa
(International Energy Agency, IEA, 2010). In terms of access to electricity (power) around the
world, transition economies and countries belonging to the Organization for Economic Co-
operation and Development (OECD) have virtually universal access. Northern Africa has
almost universal access (roughly 99 percent), Latin America 93 percent, and the Middle East
89 percent. By contrast, southern Asia has an electrification rate of 60 percent, whereas sub-
Saharan Africa has a rate only around 29 percent. Together, the southern Asian and sub-
Saharan populations without electricity account for 83 percent of the world population
without electricity. Sub-Saharan Africa has by far the lowest urban and rural access rates, at
58 percent and 12 percent respectively (United Nations Development Programme/World
Health Organization, 2009).
The direct implication of the above statistics is that countries in sub-Saharan Africa obviously
witness lower rate of development and economic growth. As can be seen in Figure 1 below,
countries with higher percentages of electricity access have higher human development
index.

3. Another major effect of poor electricity access is the rate of unemployment. The rate of
unemployment in sub-Saharan Africa has for decades been said to be the highest in the world.
Figure 2 shows the world unemployment percentage by region and Figure 3 breaks down the
average employment percentage in 11 sub-Saharan African countries.
FIGURE 1: Electricity Access vs Human Development Index
FIGURE 2:
Unemployment
Percentage by
Region
Note: South-
Saharan Africa
references sub-
Saharan Africa.
Source: UN
ECA, 2005

4. Even among the employed, the standard of living of most people living in sub-Saharan Africa
cannot still be compared to that of people living in other parts of the world. As can be seen in
Table 1, an estimated 53.5% of the total number of people employed in sub-Saharan Africa in
2006 were ‘working poor’. This figure may even be an understatement since the working poor
work mostly in the informal sector and in agriculture where under-employment is the norm.
Workers in the informal sector tend to earn less than their counterparts in the formal sector.
Informal workers also tend to have little or no access to formal risk-coping mechanisms such
as insurance and pensions, or to services for production. They also lack the resources to pay
for housing, health care, education and training (International Labour Organization, ILO,
2002b).
FIGURE 3: Average Employment Percentage in 11 sub-Saharan African Countries
Source: Based on data from ILO LABORSTA online database.

5. Table 1: Proportions of Working Poor Internationally
Working Poor Shares (USD 1/day)
Region 1996 2006
WORLD 25.0 16.7
Developed Economies & European Union 0.1 0.0
Central & South-Eastern Europe (non-EU) & CIS 7.5 1.9
East Asia 19.5 9.5
South-East Asia & the Pacific 22.1 13.6
South Asia 56.6 33.5
Latin America & the Caribbean 12.1 8.0
North Africa 2.8 1.6
Sub-Saharan Africa 58.5 53.5
Middle East 2.3 4.9
Source: ILO, 2007.
Power Supply in Nigeria
In Nigeria, power generation dates back to 1898 when the first power plant was set up at
Marina, Lagos, to serve the need of the colonial masters. That was about 15 years after the
introduction of electricity in England. The plant had a total installed capacity of 60 kilowatts.
Following the amalgamation of Northern and Southern Protectorates in 1914, other towns in
the country started to develop electric power supply system on individual scale as follows:
Port Harcourt (1928), Kaduna (1929), Enugu (1933), Maiduguri (1934), Yola (1937), Zaria
(1938), Warri (1939) and Calabar (1939). These plants owned by the Government and by
Native Authorities remained separate operational entities under the supervision/control of
the Public Works Department until Ordinance no. 15 of 1950 brought into existence the
Electricity Corporation of Nigeria (ECN). Following Independence in 1960, the need to
increase electricity supply by harnessing energy from the country’s vast water resources led
to the creation of the Niger Dams Authority (NDA) in 1962. NDA was charged with the
responsibility of building dams for electricity generation and agricultural development. By 1st

6. April, 1972, NDA and ECN merged to form the National Electric Power Authority (NEPA) – the
state-owned sole generator, transmitter and distributor of electricity in the country.
Following years of neglect by the government leading to dilapidation of power facilities and
breakdown of the transmission and distribution networks, the need to privatize the power
sector became paramount. Nigerians were tired of incessant power outages with its earlier-
discussed negative effects. The first major step towards the privatization of the electricity
industry in Nigeria began with the signing into law of the Electric Power Sector Reform Act
(EPSRA) on 5th May, 2005 and that brought into being the Power Holding Company of Nigeria
(PHCN) which was to act in the interim pending successful sale-off of the key power assets.
PHCN as a company was unbundled into 11 distribution and 6 generation companies. By 1st
November, 2013, the Federal Government through the Bureau for Public Enterprises had
successfully sold off 80% and 60% shares in the generation and distribution companies
respectively. The transmission sector remained 100% government-owned.
Freedom at last!
It has been two years now and Nigerians are beginning to enjoy the benefits of privatization.
Industry experts are of the opinion that after independence and democracy, the third best
thing that happened to Nigeria was the privatization of her power sector. Many of the
dilapidated structures and abandoned facilities are coming back to life through vigorous
overhaul exercise. Thanks to their new owners. This has led to increased generation and
distribution capacity and Nigerians can now enjoy between 16hours to 18hours of
uninterrupted power supply in some regions daily.
Perhaps one of the most outstanding benefits of privatization of the Nigerian power sector
besides increased power supply is employment opportunities for thousands of jobless
graduates. Many of the generation and distribution companies are already engaging the
services of hundreds of fresh graduate in a bid to pump in zeal, creativity and innovation to
the sector while also increasing human capital base. It is estimated that with the ongoing
expansion of distribution networks, upgrade of existing power plants and setting up of new
ones, thousands of direct and indirect employment opportunities would spring up. All things
being equal, small and medium scale enterprises (SMEs) would equally bounce back due to
reduced operational cost brought about by steady power supply.

7. As I look into the future of the Nigerian power industry I see hope. I see smiles on the faces
of Nigerians. I see not just increase in GDP but tangible increase in the living standard of
people in interior villages. With barely 5,000 Megawatts on the national grid for about 180
million people the country indeed has not gotten to where it should be among the committee
of nations with universal access to electricity supply. However, I admit that steady progress
in getting things better is already on course and must be sustained. For power supply to be
stable and sufficient for the entire population and for the country’s economy to grow, all hand
must be on deck. The ongoing resuscitation of the industry must not be halted. Nigerians must
understand that if there was ever a time to have the best power supply in the world, it is now
and as such they should encourage every effort of the private sector in achieving that.
Government also must provide the enabling environment for more investors to come into the
sector and for existing investors to make good returns on their investments. Nigeria can be
the industrial hub of Africa and a steady, reliable and affordable electric power supply is a key
agent for her economic growth.
REFERENCES
UNITED NATIONS DEVELOPMENT PROGRAMME. BUREAU FOR DEVELOPMENT POLICY. (2012)
Integrating Energy Access and Employment Creation to Accelerate Progress on the MDGs in
sub-Saharan Africa. New York: U.N. Press.
Awosope C. A. (2014) Nigeria Electricity Industry: Issues, Challenges and Solutions. Public
Lecture Series Vol. 3 No. 2, Ota, Covenant University Press.
WORLD ECONOMIC FORUM. (2012) Energy for Economic Growth. Davos-Klosters. Available at
reports.weforum.org. [Accessed 20th September, 2015].