Do power cuts affect productivity? A case study of Nigerian manufacturing firms

Abstract

The primary objective of this study is to examine the impact of power disruptions on firm productivity in the manufacturing sector in Nigeria. Using OLS and the Tobit models, results show that power outage variables (measured using hours per day without power and percentage of output lost due to power disruptions) have a negative and significant effect on productivity, particularly on small firms. The significance of power outage variables suggests that there is need for the Nigerian government to come up with ways of improving energy generation and supply, as well as proper maintenance of electricity infrastructure in the country. Deliberate efforts by the government to improve power infrastructure will result in the country’s being able to increase electricity production threefold and thus optimally utilize its installed generating capacity of 5900MW.