Abstract
The paper examines the impact of the National Economic Empowerment and Development Strategy (NEEDS) on the private sector by looking at the contribution the power sector had made in realizing the goal of making private enterprise the engine of growth in Nigeria. NEEDS reform is to transform the power sector into one led by the private sector, with the role of government restricted primarily in policy formulation and establishment of an appropriate legal and regulatory framework. The paper discusses among many things: a n overview of power supply in Nigeria; the effect of power sector on private sectors; challenges of the sector; as well as the ways forward. The paper concludes that t here is need to put concerted effort to generate adequate power supply to enable the private sector thrives and serves as engine of growth in Nigeria.
1. Introduction
The aspiration of Nigeria is league of the 20 leading economies in the World by the year 2020.
This aspiration is based on the realization that the country is endowed with material and
human resources, thereby places her in good position to achieve greatness. Harnessing these
resources is expected to create a significant improvement in business opportunities in the
nation’s economy through implementation of the National Economic Empowerment and
Development Strategy (NEEDS).
The goal of National Economic Empowerment and Development Strategy
NEEDS is to reduce poverty in Nigeria and this can materialise only if the
NEEDS is to reduce poverty in Nigeria and this can materialise only if the
various sectors are thriving. One of the pillars of National Economic Empowerment and
Development Strategy (NEEDS) is promoting private enterprise. Its
essence is seeing the private sector as the engine of growth.
One of the pre-requisites of increased production is abundance of energy i.e. electricity which
is mainly utilized for driving machines for the production of various items. The private sector
stakeholders have always emphasized in their public policy advocacy, the need for
improvement in infrastructure, particularly, electricity which is the primary energy required
for production.
Power is a strategic sector, which represents the most important infrastructure requirement for
driving the private sector. However, Ngeria’s power system is so inadequate that it has held
back economic progress and social wellbeing.
NEEDS envisions reforms that will transform the power sector into one led by the private
sector, with the role of government restricted primarily in policy formulation and
establishment of an appropriate legal and regulatory framework. The purpose of this paper is
to discuss the impact of National Economic Empowerment and
Development Strategy (NEEDS) on the private sector and by looking at the contribution the
power sector had made in realizing the goal of making private enterprise the engine of growth
in Nigeria. Following the introduction is the National Economic Empowerment and
Development Strategy (NEEDS) policy thrust and target for power sector
in section 2. Section 3 discusses the contribution of sector to the achievement of
National Economic Empowerment and Development Strategy (NEEDS)
.
Section 4 presents an overview of power supply in Nigeria while section 5 examines the
effect of the power sector performance on the private sector. Section 6 discusses the
challenges and way forward while section 7 concludes the paper.
2. National Economic Empowerment and Development Strategy (NEEDS)
Policy thrust and targets for power Sector.
Policy thrust and targets for power Sector.
National Economic Empowerment and Development Strategy (NEEDS)
proposes the following targets for the power sector to meet before 2007:
Increase generation capacity from 4,200 MW to 10,000 MW (an increase of 138
percent).
Increase transmission capacity from 5,838 megavolt amperes (MVA) to 9,340 MVA, a
60 percent increase.
Increase distribution capacity from 8,425 MVA to 15,165 MVA (an increase of 80
percent).
Increase tariff collections from 70 percent to 95 percent.
Nigeria has an estimated population of about 125 million people and a land area of about 924 square kilometers, a large proportion of which is arable. It has large deposit of oil, gas and solid minerals and a sizeable educated and skilled workforce. Deposit these, the country has not been able to effectively harness its endowment to develop the economy sufficiently to improve the welfare of its people, with an estimated population growth rate of 2.8% and a GDP growth rate of about 2.5%, per capital income growth was negative for the greater part of the 1990s. Nigerian’s urbanization rate of 5.3% is one of the highest in the world, leading to loss of virile labour force for agriculture. Besides, the rate of job creation has been far less than the rate of growth of the urban labour force. This combined education system that is not attuned to the population of the appropriate manpower required to support robust growth has led to high levels of unemployment and underemployment. Income distribution in the country is also stewed high such that probably less than 15% of the population actually benefits from the GDP growth. The country has a debt overhang of about US $30 billion with light servicing requirements. Currently, about 65.7% of the population lives below the poverty line, half of which probably lives on less than half a dollar per day.
The situation rather than improve has been worsening over time. This has become a source of embarrassment for a country that is relatively so well endowed. The weakness of the Nigeria economy in the past three decades is not unrelated to its dependence on oil as the mainstay of its economy. Indeed, the country is a textbook example of economy under the “Dutch disease” with its deleterious impact on the development or other aspects of the real sector. Oil currently is 90% foreign exchange earnings and about 75% of government revenues. It contributes about 3% of the available labour force. For several years therefore, the development challenge for Nigeria because the diversification of the productive base away from oil. Successive governments took up these challenges in the design and implementation of several plans and policies. However, the attempts at achieving a more rapid growth of the industrial sector led to involve estimates in several projects, which turned out to be “white elephants”.