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1. Electrification in Nigeria: Challenges and Way Forward

Author:
Joseph Ishaku
Publication Date:
06-2017
Content Type:
Working Paper
Institution:
Centre for the Study of the Economies of Africa (CSEA)
Abstract:
Although electricity has been generated in commercial quantities in Nigeria for over a century, the rate of electricity infrastructure development in the county is low and power supply remains inadequate. Prior to reforms, the central challenges of the Nigerian power sector was the vertically integrated monopoly of government in power generation, transmission and distribution. While the reforms was successful in privatizing the generation and distribution segments of the Nigerian Electricity Supply Industry (NESI), the overbearing problems in the sector persists –with privatization only changing the dimensions of the challenges. Financing remain a major problem across all the segments of the NESI partly due to non-cost reflective tariff. Yet each segment of the NESI also faces its unique challenges. The generation segment is riffed with the problems of energy security and inefficiencies in other segments. The challenges in the transmission segment lies in the lack of modern transmission lines and equipment, gross mismanagement, poor maintenance of available infrastructure and inefficient grid design. Distribution companies face the problem of huge Aggregate Technical, Commercial, and Collection (ATC&C) losses. In terms of electricity access, 46.09 percent of the Nigerian population remains unconnected to the national grid, representing 83.98 million people. Further, electricity demand is estimated at 24,380 MW as at 2015 compared to NESI’s available generation capacity of 7,139.6 MW. In terms of energy use, Nigeria has the lowest in the world – 80 percent below its energy use based on income levels. In a bid to tackle aforementioned challenges, the Federal Government of Nigeria (FGN) set ambitious targets for the country’s energy mix. This should allow Nigeria exploit its potential for coal, solar, wind, biomass, as well as small and large hydroelectric power electric generation, while reducing the prevalence of self-generation, which constitute two-thirds of present energy mix. By 2020, the FGN targets to achieve up to 75 percent access to electricity by connecting 1.5 million households annually. While Nigeria’s energy mix targets are desirable, the prospect of success remain bleak on account of financial constraints, pricing policy and lack of policy coordination. Improving electricity supply in Nigeria and addressing barriers to achieving the energy mix targets will entail: addressing payment risk, financing power sector investment, as well as improving the pricing and tariff structure, gas pricing and allocation, and market regulation.
Topic:
Development, Markets, Infrastructure, Regulation, and Electricity
Political Geography:
Africa and Nigeria

2. Macroeconomic Impact of Capital Flight in Sub-Saharan Africa

Author:
John Weeks
Publication Date:
09-2014
Content Type:
Working Paper
Institution:
African Economic Research Consortium (AERC)
Abstract:
This paper assesses the impact of capital flight on growth in thirty-one sub-Saharan African countries. It first considers the “macro fundamentals” hypothesis that capital flight would be lower in a country whose government adhered to “sound” macroeconomic policies. Analytical considerations fail to support this hypothesis. Second, it develops a growth estimating equation derived from the Harrod-Domar framework. The growth estimations support the conclusion that capital flight had a major impact on growth over the last three decades, 1980–2010. The negative impact was greatest for the petroleum-exporting countries and those affected by internal conflict, but it was also substantial for the other countries, with a few exceptions.
Topic:
Economics, Markets, Global Markets, Economic Growth, Economic Policy, Macroeconomics, and Capital Flight
Political Geography:
Africa, Sudan, Nigeria, Angola, Chad, Cameroon, Global Focus, Gabon, and Republic of Congo

3. Are Borders Barriers? The Impact of International and Internal Ethnic Borders on Agricultural Markets in West Africa

Author:
Jenny C. Aker, Michael W. Klein, Stephen A. O'Connell, and Muzhe Yang
Publication Date:
04-2010
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper addresses two important economic issues for Africa: the contribution of national borders and ethnicity to market segmentation and integration between and within countries. Market pair regression analysis provides evidence of higher conditional price dispersion for both a grain and a cash crop between markets separated by the Niger-Nigeria border than between two markets located in the same country. A regression discontinuity analysis also confirms a significant price change at the international border. The international border effect is lower, however, if the cross-border markets share a common ethnicity. Ethnicity is also linked to higher price dispersion within Niger; we find a significant intranational border effect between markets in different ethnic regions of the country. This suggests that ethnic similarities diminishing international border effects could enhance international market integration, and ethnic differences could contribute to intranational market segmentation in sub-Saharan Africa. We provide suggestive evidence that the primary mechanism behind the internal border effect is related to the role of ethnicity in facilitating access to credit in agricultural markets. We argue that the results are not driven by differences in price volatility or observables across borders.
Topic:
Agriculture, Economics, Ethnic Conflict, and Markets
Political Geography:
Africa, West Africa, and Nigeria

4. Blood Oil in the Niger Delta

Author:
Judith Burdin Asuni
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
United States Institute of Peace
Abstract:
The trade in stolen oil, or “blood oil,” poses an immense challenge to the Nigerian state, harming its economy and fueling a long-running insurgency in the Niger Delta. It also undermines security in the Gulf of Guinea and adds to instability on world energy markets. The exact amount of oil stolen per day in the Niger Delta is unknown, but it is somewhere between 30,000 and 300,000 barrels. The loss to the Nigerian economy from illegal oil bunkering between 2003 and 2008 totals approximately US$100 billion. It is time for the international community to become more proactive in helping Nigeria address this complex issue. Efforts to control blood oil must be accompanied by actions against corruption, illegal arms importation, and money laundering. The enabling environment for illegal oil bunkering includes high levels of unemployed youth, armed ethnic militias, ineffective and corrupt law enforcement officials, protective government officials and politicians, corrupt oil company staff, established international markets for stolen oil, and the overall context of endemic corruption. The three types of illegal oil bunkering include small-scale pilfering for the local market, large-scale tapping of pipelines to fill large tankers for export, and excess lifting of crude oil beyond the licensed amount. The complexity of players in the illegal oil bunkering business, including local youth, members of the Nigerian military and political class, and foreign ship owners, makes it difficult to tackle the problem unilaterally. Previous attempts by the Nigerian government and international community to address illegal oil bunkering have had limited success in reducing the flow of blood oil. The problem of blood oil needs to be addressed multilaterally. Within the international community, the United States is uniquely positioned to take a leadership role in helping to dry up blood oil and address other issues in the Niger Delta.
Topic:
Conflict Resolution, Political Violence, Markets, Oil, and Armed Struggle
Political Geography:
Africa, United States, Nigeria, and Guinea

5. Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in Niger

Author:
Jenny C. Aker
Publication Date:
10-2008
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Due partly to costly information, price dispersion across markets is common in developed and developing countries. Between 2001 and 2006, cell phone service was phased in throughout Niger, providing an alternative and cheaper search technology to grain traders and other market actors. Weconstruct a novel theoretical model of sequential search, in which traders engage in optimal search for the maximum sales price, net transport costs. The model predicts that cell phones will increase traders' reservation sales prices and the number of markets over which they search, leading to a reduction in price dispersion across markets. To test the predictions of the theoretical model, we use a unique market and trader dataset from Niger that combines data on prices, transport costs, rainfall and grain production with cell phone access and trader behavior. We first exploit the quasi-experimental nature of cell phone coverage to estimate the impact of the introduction of information technology on market performance. The results provide evidence that cell phones reduce grain price dispersion across markets by a minimum of 6.4 percent and reduce intra-annual price variation by 12 percent. Cell phones have a greater impact on price dispersion for market pairs that are farther away, and for those with lower road quality. This effect becomes larger as a higher percentage of markets have cell phone coverage. We provide empirical evidence in support of specific mechanisms that partially explain the impact of cell phones on market performance. Robustness checks suggest that the results are not driven by selection on unobservables, nor are they solely a result of general equilibrium effects. Calculations of the four-firm concentration index suggest that the grain market structure is competitive, so the observed reductions in price dispersion are not due to greater market collusion. The primary mechanism by which cell phones affect market-level outcomes appears to be a reduction in search costs, as grain traders operating in markets with cell phone coverage search over a greater number of markets and sell in more markets. The results suggest that cell phones improved consumer and trader welfare in Niger.
Topic:
Agriculture, International Trade and Finance, Markets, and Science and Technology
Political Geography:
Africa and Nigeria

6. Rainfall Shocks, Markets, and Food Crises: Evidence from the Sahel

Author:
Jenny C. Aker
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
How do markets respond to extreme rainfall in West Africa? This paper examines the effect of weather on grain market performance in Niger, a country increasingly affected by drought and severe food crises over the past two decades. Using a dataset that combines information on rainfall, agricultural production, prices and transaction costs, I exploit rainfall variation to estimate the impact of drought on grain market performance between 1997 and 2006. Time series tests suggest that grain markets in Niger respond to supply shocks and that markets are more integrated during drought years. Exploiting the exogeneity of extreme rainfall in a difference-in-differences framework supports these findings: drought reduces grain price dispersion across markets. This impact is stronger as a higher percentage of markets are affected by drought, as was the case in 2004/2005, the year of a severe food crisis. The results suggest that early warning systems in West Africa should focus on the spatial impact of drought at the sub-regional level, as well as monitor prices in key forecasting markets during the harvest period.
Topic:
Agriculture, International Political Economy, and Markets
Political Geography:
Africa and Nigeria

7. Institutional Analysis of Financial Market Fragmentation in Sub-Saharan Africa: A Risk-Cost Configuration Approach

Author:
Machiko Nissanke and Ernest Aryeetey
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper examines the source of financial market fragmentation in sub-Saharan Africa in the framework of institutional economics. Based on fieldwork data from Ghana, Malawi, Nigeria, and Tanzania, it analyses financial risk management, the transaction costs for loan screening and monitoring, and contract enforcement. It shows how, faced with various institutional constraints, the range of clientele selected by formal and informal lenders becomes both narrow and at the extreme market-ends. It evaluates the prevailing state of managing risks for market structure, and binding institutional constraints for market transformation and deepening in sub-Saharan Africa.
Topic:
Development, Economics, and Markets
Political Geography:
Africa, Tanzania, Nigeria, Ghana, and Malawi