SOCIO-ECONOMIC EFFECTS OF RURAL ELECTRIFICATION IN NIGERIA

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SOCIO-ECONOMIC EFFECTS OF RURAL ELECTRIFICATION IN NIGERIA

ABSTRACT

The Government has invested in rural communities with a sole aim of improving the social and economic lives of those living in the rural areas. This is through programmes and projects such as rural electrification. These projects are expensive both in design and implementation. One of these areas that has been earmarked by the government is  Otukpo Local Government Area In Benue State of  Otukpo County. But do these projects always deliver expected outcomes? The purpose of this study was to establish the socio-economic effects of the rural electrification programme in  Otukpo Local Government Area In Benue State of  Otukpo County in Lower Eastern Nigeria. The objectives of the study were to establish the distribution patterns of electricity in  Otukpo Local Government Area In Benue State, the uses at the community and household level of electricity, the social as well as the economic effects of rural electrification at both the household and community levels. The study adopted a descriptive design of the implementation. The target population was 4,780 households connected in 43 villages in the division through the programme. The stratified randomized sampling design was used. The total numbers of questionnaires dispatched were 473, of which 391 were returned making the response rate 83.3%. The data was analyzed quantitatively using statistical package for social sciences and presented through tables showing frequencies, percentages, means and t-scores. The changes in the responses have also been checked to establish whether the differences are significant enough. From the findings, majority of the households are headed by men at 81.8%, with 62.9% of the household heads being within the age bracket of 31 to 50 years.it is evident that over 93% of the electricity connections are within a radius of two kilometers from the main electricity grid as well as the tarmac roads. The households mostly use electricity for domestic appliances with lighting being 100% while few community facilities are connected with shops at 79% connection. The households felt that they are developed and rural electrification has had positive improvement in their lives but that there is need to either improve infrastructure in order to connect more villages or to review the guidelines on rural electrification. The study further shows that rural electrification is not sufficient to have increased disposable incomes but these infrastructural developments should accompany other initiatives such as provision of funds that would enable members of the communities to invest and make use of available electricity for production purposes to realize economic benefits from the connectivity. From the study, rural communities and households with easy access to tarmac road are connected faster to the grid. Most rural households spent less than one thousand Naira on electricity bills monthly which explains the basic electrical appliances used by the households. It is recommended from the study that the government should review the regulations governing the rural electrification in line with infrastructure development. In addition, the full economic benefits of rural electrification should be exploited in order to have meaningful development. Rural electrification is one of the ingredients of development, hence should be embraced by the government to enhance economic growth. The study is useful to the Nigeria government. It provides the required data that is necessary for planning purposes and justification for funding such projects. It is also important to researchers and academicians interested in the subject of rural electrification.

Background of the Study

CHAPTER ONE INTRODUCTION

Among the basic infrastructural services geared to developmental needs, electricity is a critical input. The use of electricity serves the economic as well as social needs. While in the context of much developed world, and possibly, in the urban areas of the developing world, the above statement may sound somewhat trite, the availability and use of basic services in rural areas of the developing world presents a completely different and more complex set of issues. There is, indeed, even a conflict in policy perceptions: are these inputs a basic need or a want? If the former, can the recipient respond effectively to the provision of the service; should service be subsidized; and finally, are the economic and social benefits that the electrification is meant to provide commensurate with developmental expectations. These issues have been the basis for a considerable amount of developmental debate. However, what is clear is that development policies will continue to stress investment in infrastructure. Given this fact, an understanding of the consequences that result from and the determinants that shape the use of any such basic input is imperative for the design of more effective future policies as well as for the analysis of those of the past. Rural electrification is one such infrastructural input (Bensch, et al, 2011).

It is universally accepted that electrification enhances quality of life at the household level and stimulates economy at a broader level. The immediate benefit of electrification comes through improved lighting, which promotes extended hours of study and reading and other household chores, and in turn contributes to better educational achievements. Lighting can also benefit many other household activities, such as sewing by women, social gatherings after dark, and many others. Communication devices such as radios and television also improve the access to information by rural households and can provide entertainment to family members. In addition, household’s economic activities both from inside and outside home benefit tremendously from electricity. For example, crop productivity can be increased by the application of electric irrigation pumps, businesses can be operated longer hours in the evening, electric tools and machinery can impart efficiency and production growth to industrial enterprises, and so on. The benefits of electricity have been discussed in a large body of literature (Cabraal and Barnes 2006; Barnes et al, 2003; Kulkarni and Barnes, 2004; Khandker, 1996; Filmer and Pritchett, 1998; Roddis, 2000; World Bank, 2002; Agarwal, 2006).

Given its substantial benefits, electrification together with other sources of modern energy has been identified as essential for fulfilling the Millennium Development Goals (MDGs) (UNDP 2005). The World Bank views electrification as an integral part of development and has supported electrification projects in many developing countries.

This study examines one such electrification project called Rural Electrification Project in Nigeria with specific focus of Otukpo Local Government Area In Benue State. Most of the electrification projects financed by the Bank in many developing countries often expand coverage of grid electrification with specific objectives in mind, for example, improving welfare such as income and education, establishing institutional mechanisms for rural electrification, providing inputs to power sector reform, formulating guidelines for tariffs, subsidies, and others. Among the multiple objectives, making a positive impact on the livelihood of rural people is the foremost.

There is need for a proper assessment of such projects to determine if, and to what extent, these objectives are achieved. Although there have been many general studies on rural electrification as it relates to development (Barnes et al, 2003; Barnes ,1988; Saunders et al, 1975), there have not been many systematic impact studies of particular rural electrification projects and this includes Nigeria. Most of the past evaluation works on specific rural electrification projects has concentrated on project outputs, mainly number of communities or households connected. Such assessments usually do not measure the nature and extent of the accrued benefits, let alone establish the causality as to whether the measured benefits are attributable to electrification.

While industrialized countries and rich developing countries have electricity access to their rural populations at nearly 100%, the access in rural parts of poor countries is to a large extent below 10%. A great deal of effort to improve the level of access is being made but the impact of the efforts is still minimal. (Abdalla, 2005)

Nigeria is not an exception in facing energy dilemma just like most countries in Sub-Saharan Africa (SSA), one of the key obstacles to the shift to modern energy consumption is the limited access to electricity for households, particularly in the rural areas. The overall electrification rates in SSA stand at 23%, with the urban and rural area figures standing at 51% and 8% respectively (International Energy Agency (IEA), 2002). However, Nigeria has electrification rates below the SSA average with 14% overall connection and a breakdown of 42% and 4% for urban and rural areas respectively (Nigeria National Bureau of Statistics (KNBS), 2000). One reason for this low level of electrification in rural areas is the lack of available finance to cover capital and operating costs for generation, transmission and  distribution of electricity, which are higher than in urban areas. The high connection costs coupled with low consumption of electricity and low incomes among rural households are further obstacles to the electrification of these households. Most rural households consume traditional energy sources derived from wood fuel, charcoal, agricultural residues and cow dung. In fact, the dominant energy source for non-electrified households in Nigeria is primarily fuel and charcoal. fuel provides 70% of the energy for all sectors in the country, except for the transport and commercial sector. Its use is common among  households in rural areas, because it is relatively cheap and widely available and in fact 80% of these households consume this type of fuel. The impact of these traditional fuels on rural households includes adverse effects, such as: indoor air pollution (IAP), poor lighting and deteriorating environmental and economic well-being.

There have been various policy programmes set up by the Nigerian government and other relevant institutions to increase rural electrification. One of the major areas has been the Rural Electrification Agency (REA). The Nigerian Rural Electrification Agency (REA) was created by the Electric Power Sector Reform Act in 2006. The agency exists to facilitate the provision of affordable power supply for residential, commercial, industrial and social activities in the rural and peri-urban areas of the country. REA has previously focused on grid extension investments but is now mandated to concentrate on providing off-grid solutions to rural dwellers such as minigrids and solar home systems. REA’s goal is to encourage and promote private sector participation in rural development using the nation’s abundant renewable energy sources while ensuring that Government Agencies, Co-operatives and Communities, actively participate in enhancing electricity service delivery.

Statement of the problem

Rural electrification has been the cornerstone of rural energy strategies in developing countries. It is also a source of controversy among development analysts. Advocates of rural electrification claim that it has major impacts on agricultural and industrial productivity, reduces rural-urban migration, creates more jobs and significantly raises the overall quality of life in rural areas. Critics claim that rural electrification may not have the hoped for effects on social and economic life and in its unequal incidence could contribute to social tension.

 

The United Nations has established the positive relationship between per capital energy consumption and the human development index (HDI) of many countries and there is empirical evidence to show that access to modern energy and human development are closely linked. (IEA, UNDP, 2005).

 

In Nigeria , the government through the Ministry of Energy formed the Rural Electrification Authority which is fully funded by the government of Nigeria. The mandate of the rural electrification agency is to implement rural electrification. The programmes focus on providing development assistance through the supply of electricity services to stimulate economic productivity and enhance the society of life in rural areas. These projects currently do not start with an assessment of the needs of the people they are meant to serve. They often fail to evaluate specific impacts resulting from these services on the target populations. The rural electricity evaluation programmes at present are confirmed to measure only qualifiedly variables such as number of households electrified. They are not designed to measure social development effects. This incomplete understanding of the programme impacts on members of the target community hinders the development of initiatives that respond to rural needs and have positive equitable and sustainable socioeconomic development impacts.

The reason that such research is important is that most successful rural electrification projects have solved problems that inevitably develop in implementation. The idea is to improve the quality of rural electricity projects so that they are sustainable. Without long-term sustainability, the benefits of rural electrification cannot be fully realized. The funding components of donors need justification and the development assistance is linked to project outcomes, hence need to develop local capacities to conduct evaluations.

Most studies on rural electrification are qualitative in nature. Literature has not used any special index to capture the effects of rural electrification. Studies by Abdalla (2005), Abdullah and Markandya (2007) have dwelt on the levels of accessibility and the benefits thereof. Attempts to segregate the impact of other social amenities from electrification in assessing the social and economic effects has been a challenge to many researchers. As such the credibility of exposing rural electrification as a main benefactor of rural socio-economic progress remains questionable. The researcher has identified this gap in knowledge and seeks to determine the socio-economic effects of rural electrification in Nigeria, with a special focus on  Otukpo Local Government Area In Benue State.

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