PRODUCTIVITY GROWTH OF THE NIGERIAN ELECTRICITY DISTRIBUTION COMPANIES POST-PRIVATIZATION

Abstract

Since the unbundling and privatization of the Nigerian Electricity Distribution Companies (DisCos) in 2014, there has not been a robust productivity growth assessment using the firms’ inputs and outputs in the estimation process and within the nonparametric approach. This research fills this gap as it deploys the Biennial Malmquist Productivity Index (BMPI) to estimate the productivity growth of DisCos from 2014 to 2020. In addition, it also uses the Ray and Desli (1997) three-part decomposition to identify the sources of productivity change in the industry. The result of the estimation showed that the industry had a marginal growth of about 0.03% over the period, mostly from pure technical change (PTC), that is, through technology and innovation. Pure efficiency change (PEC), which typifies change in managerial capability had a neutral impact on the slight growth; this shows that their managerial capabilities neither contributed to the productivity improvement nor productivity regress. Based on the findings, this research, therefore, recommends that: DisCos proceed on process automation since technology is a major productivity driver. Also, innovations and innovative ideas should be encouraged and nurtured by DisCos, beginning from the staff recruitment process which should throw up the best. Since the impact of management is not felt on the productivity improvement, training, and retraining of management staff by the respective DisCos should also take centre stage while the regulator, the Nigerian Electricity Regulatory Commission (NERC), ensures subsequent recruitments into managerial positions are based on the track record of performance