Electricity in Nigeria: Finding Feasible Solutions to a Complex Challenge

The electricity sector in Nigeria is inherently political. This project aims to identify pockets of the electricity sector where coalitions could be formed to reduce corruption and increase reliable electricity supply. It investigates the complex corruption issues affecting the entire electricity value chain, including generation, transmission, and distribution.

Corruption and inefficiencies in the main grid necessitate off-grid solutions, which were supported by policy changes allowing consumers to bypass the grid and distribution companies. Successful implementation of off-grid solutions need to be implemented within manufacturing clusters who can organise the collective action required to mitigate corruption. Existing incentives in the sector had created significant distortions.

Our solution aimed to break this network of collusive interests by giving productive stakeholders in the sector a sense of ownership of the policy solution. Focus was placed on locations central to Nigeria’s SME sector. While these areas are connected to the national grid, their primary power sources come from personal generators and private mini-generator operators. These informal generator-based arrangements were subject to less corruption and were more efficient than the national grid. The next step was to do a cost-benefit analysis demonstrating the advantages of shifting to off-grid solutions.

The research highlighted that merely providing off-grid options would not suffice. Effective institutional and contractual arrangements for their management and oversight are essential.
And off-grid solutions need to focus on the SME sector to increase economic productivity, along with the residential and commercial sector.

Based on this initial research, we have designed a field-based behavioural experiment to explore how SMEs respond to different group contracts with positive incentives, punishments, shared responsibility (joint liability) and peer monitoring mechanisms.

SOAS-ACE is currently undertaking research in Bangladesh and Nigeria, including in the education, health and power sectors, as well as on successful collective action that overthrew a corrupt autocracy. Moving beyond pure research, we are also monitoring the implementation of anti-corruption strategies our research has recommended, such as a strategy to reduce pharmaceutical companies’ overpricing of medicines.

Our partners on this project have included Energy Market and Rates Consultants (EMRC), Atmos Energy Solutions Professor, and Jibrin Ibrahim (Centre for Democracy and Development).