ENERGY ACCESS AND FINANCING FOR MICROENTERPRISES: A CASE STUDY OF IBADAN METROPOLIS

Abstract

Easy access to energy is significant to the socioeconomic development of any nation. In almost every nation of the world, microenterprises account for the majority of businesses and play a key role in developing economies. However, they are faced with greater financing obstacles as they enjoy less access to electricity and external finance and face higher transaction costs for smooth business operation. This study investigates the relationship between electricity access and financing for microenterprises in Ibadan metropolis using a survey methodology approach. The mono method, which employs quantitative data and data analysis procedure, was used to determine the level of access of microenterprises to electricity, their willingness to subscribe to renewable energy technologies, and access credit facilities to ensure reliable access to electricity. From the findings, it is revealed that the existing level of electricity access experienced by the majority of microenterprises is considerably low and significantly influences their decision to subscribe to a renewable energy technology, while the availability of credit facilities for the sole purchase of the technologies and the availability of electricity when needed at any point in time (as a result of the storage component of the technology) significantly influences their willingness to subscribe to the technology. Furthermore, from the result of the findings, an energy finance model showing the interrelationship existing among microenterprises, financial institutions, and energy providers is developed to improve reliable access to electricity and promote the usage of efficient energy appliances by microenterprises.