DISTORTED ELECTRICITY SUPPLY AND THE PROFITABILITY OF SMALL AND MEDIUM SCALE ENTERPRISES: A SURVEY OF SELECTED INHABITANTS IN SOUTHWEST NIGERIAN STATES

Abstract

Electricity is a significant component of virtually all enterprise production processes. Hence, distorted or uncertain electricity supply has potential effects on the economic activities of firms, directly or indirectly; as it hinders business growth and development. This study examined the effect of distorted electricity supply on the profitability of small and medium scale enterprises in southwest, Nigeria. The population of the study consisted of two hundred and eighty five (285) employees and owners of nine (9) different enterprises in southwest Nigeria. A ramdom sampling technique was used to select 277 respondents for the study. The correlation coefficient and simple regression analysis techniques were used to analyze the responses from the respondents. Findings from the study showed that effective power supply (EPS) exhibited a significant positive impact on the profitability of business enterprises and the cost of maintaining mechanical generators (KHZ) as an alternative source of power has a negative effect on the profitability of the enterprises. The study concluded that power supply has a significant influence on the profitability of SMEs in Nigeria. It recommended that government at all levels should formulate policies that would encourage effective power supply in other to boost productivity of the SMEs and increase profitability.