PricewaterhouseCoopers (PwC), in its latest PwC MSME Survey 2024, titled ‘Building resilience: Strategies for MSME success in a changing landscape,’ has shown that Micro, Small and Medium Entreprises (MSMEs) struggle with high electricity costs and other factors.
The surveyed MSMEs reported that the top factors hindering their growth include inadequate access to finance, poor electricity, decreased demand, financial constraints, operational challenges, multiple taxes and levies, inadequate manpower, insecurity and government policies.
According to the report, over 60 per cent of MSMEs deal with high electricity prices due to grid reliance and unreliable electricity. This survey was administered online in 2022 to 557 MSME operators and conducted with MSMEs operating across 13 sectors in 29 states in Nigeria.
Poor infrastructure, especially epileptic power supply, accounted for about 21 per cent of the key challenges affecting business growth. They highlighted this as the most significant cost to their daily operations.
Nigeria’s power sector is overwhelmed by a myriad of challenges, including deteriorating plants/units’ capacities, poor maintenance, inadequate gas supply, limited distribution network, and the commercial viability of DisCos operations, among others. These challenges have adversely impacted the business environment in Nigeria and consequently contributed to significant economic costs to MSMEs and economic growth.
The International Monetary Fund (IMF) states that the lack of access to reliable electricity costs the Nigerian economy an estimated US$29 billion annually. PwC estimates that approximately one out of every seven firms exits the economy because of this. Other structural challenges, such as multiple taxation, inadequate manpower, and insecurity, require investment from the government and private sector to address.
Commenting on the report, Sam Abu, the Country Senior Partner at PwC Nigeria, stated, “As MSMEs suffer from lack of electricity and the cost of fuel–which in turn affects the productivity of employees who work from home, there is an increasing need for an affordable alternate source of energy.
“For economic prosperity, It is important that the Government funds initiatives that adequately support the pressing needs of SMEs both on paper and in reality.”