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2.1. The Statement of the Problem
Access to up-to-date reasonable power services in third world countries is necessary for the accomplishment of the globally recognised development objectives, such as the Millennium Development Goals, and for attaining viable development (United Nations,2013a).
Malawi is presently experiencing the worst power or electricity catastrophe initiating a huge demand-supply gap. In addition to the unstable security circumstances, the insufficient provision of power services is one of the foremost difficulties that citizens and businesses are encountering. On a daily basis, the country is undergoing power outages with some districts having blackouts up to 18 hours. Subsequent to several years of declined government administration and high rise of corruption at public-sector parastatals, one may assume that it appears there shall be no immediate solution for the energy difficulties, and that electricity provision will persist to be severely limited into subsequent years and beyond.
3. The Objective (s) of the Study
The general objective of this study is to explore the experiences of energy consumers specifically the Micro-economic enterprises (see Appendix II) concerning power interruptions in Lilongwe, the capital city of Malawi using diverse methodologies, contribution ideas and theories from numerous sources. The particular SMART objectives of the study are:
? To explore the foremost factors and causes of power outages in Lilongwe/Malawi using a widespread analysis research.
? To build an understanding of the demographic and socio-economic effect of the power outages on the Micro-economic enterprises in Lilongwe, Malawi.
? To comprehend the challenges, they face and how they live to enable the engagement of diverse stakeholders and authorities to understanding how to improve their situation.
It is significant to observe that each of the above exclusive objectives will have a methodology to attempt to attain it as will be depicted in the later sections. The author’s enthusiasm and motivated of research are based on an understanding of how these small business consumers are coping up with prevailing blackouts and also his residing personal experience in Lilongwe, an area with higher power blackouts.
4. The Research Questions
The author’s motivation and interest led to the emergence of asking the following question; amongst rampant electricity interruptions “Does the current electricity power outages problem have a socio-economic cost on Micro-economic enterprises in Lilongwe, Malawi? which further led to the derivative of the following research questions guiding this overall study:
? What is the extent of the power outage problem in Malawi?
? how do the Micro-enterprises manage to run their production activities with no electricity and no alternative power sources?
? and if blackouts have a negative impact on ME’s, how may the problem of power outages be addressed from a long term and sustainable perspective?
5. The Significance/Justification
Selection of the perfect level of reliability to target for involves a comprehensive perception of the socio-economic costs of power provision disruptions, which may be extremely diverse contingent on the timing and nature of the consumer. For instance, despite the reality that a home may possibly not become aware of a power disruption for the duration of office hours, a business corporation incapable to electronically send a tender document in due course may possibly lose millions in Kwachas. The same may be valid to a functional malfunction of the hospital’s oxygen machine on a dying patient attributable to power interruptions.
There is limited detailed research while many suppositions on how ME’s in Lilongwe are coping with power outages; this study, therefore, seeks to contribute knowledge of the nexus between the electricity interruptions and the socio-economic impact on the Micro-economic enterprises (Reister D B. (1987).
Furthermore, it is anticipated that the study will impart useful information to the Ministry of Energy and Mining; The Ministry of Health, ESCOM and EGENCO Parastatals on the perceptions of ME’s on electricity interruptions. The insights may aid the government of Malawi to comprehend where the foremost drawback is and learn how to improve the status quo. It should be perceived that ME’s are the one of the crucial consumers of electricity and a key element to economic growth in Malawi and therefore they ought to not be disregarded. Every citizen may not need other professional involvement such as a lawyer or a blogger in their line of business but they shall definitely need to conduct business with ME’s once or several times in their lifetime hence the relevance. The government of Malawi may also utilise the information from this study and distribute resources to advance generation, diffusion and provision of power to the Lilongwe City, therefore, assisting the Micro enterprises in the line of business.
In addition, it is anticipated that the outcomes of this study would offer positive recommendations to the government of Malawi to permit more competition and privatisation in the power generation, diffusion and provision. ESCOM is the main producer and supplier of electricity in Malawi which sets a monopolistic atmosphere and complacency to supply their service. Consequently, in advancing the power service to the consumers, the nation might engross additional corporations in the energy sector (Smith J.C. 1985).
6. The Scope of the study
6.1. The Study area: Lilongwe City’s CBD.
This study is narrowed in Lilongwe District particularly the Central Business District Area (CBD’s) where there are recurrent disruptions in electricity. According to ESCOM, Lilongwe has the largest power demand in contrast to other districts due to the industrial Kanengo area and also because of the large number of urbanisation currently its experiencing for its growth in infrastructure development. This study will be further restricted to the central business district of Lilongwe which according to the NSO, hubs a numerous number of Micro-economic enterprises. The selection of the ME’s field was founded on the ME’s dependency on electricity as the only foremost source of energy for their operations. It is estimated that the study will have a sample size of about 381 to the ME’s population of about 50,000 with reference to the recommendations made by The NEA Research Bulletin, Vol. 38 (December 1960, p. 99).
7. Literature Review.
This chapter presents a brief assessment of significant up to date literature consecutively to better comprehend the contribution of electricity to the economic growth and development of a nation. It is necessary that the review focus on both macro and micro-level study examining the nexus between electricity supply and socio-economic development (Reister D B. 1987). Globally, the nations at large consider that the availability of electricity is an essential necessity for sustainable growth. The lack of access to electricity may possibly be an absolute indicator of poverty established contingent on the descriptions which signify living standards as for example, having adequate provision of electricity is encompassed in a newly distributed ‘Multidimensional Poverty Index’. (UNDP 2010) and as a perspicuous objective of national development strategies. It has also been observed that some of the reports that are available on the subject frequently have a deficiency of dependable approaches. (Meadows and Riley 2003). ADB (2005) and Estache (2010) expresses latest assessments of academic literature on the influence of infrastructure on poverty alleviation and mutually they deduce that most prevailing research on electrification influences are of ‘ vague value’ attributable to a sequence of inadequacies in the utilised approaches, for instance, the absence of control groups and/or before-after data and an overall failure to pursue the influences on the economy for long duration.
7.1. Characterising Interruptions
Preceding to approximating the costs of power disruptions process, it is beneficial to comprehend that the effects of power supply stoppages vary from one to another. Primarily, there are diverse varieties of end-users in the energy grid system. A power disruption in a health clinic has extremely diverse aftermaths than one in a factory, a household or as in our context a small business premise such as a shop.
7.2. Quantifying Power Interruption Costs
The economic literature delivers a well-defined difference of cost classifications connected with power outages. Damages because of power interruptions are usually categorised into three main classes: Direct costs; Indirect costs and Long-term costs of macroeconomic significance (Baarsma, B.E. ; Hop, J.P. 2009). According to Beenstock, M., E. Goldin ; Y. Haitovsky (1998), the general view or perception is that the direct economic damages are typically visible and easily recognised by consumers. They are a direct consequence of the failure, for instance, repair expenses for faulty electrical facilities. In spite of this, the direct economic damages are frequently partial and inferior to indirect economic costs. The indirect costs also result from in direct association with the blackouts, yet they are part of the overall costs ensuing from the lack of power supply in the after effects of the failure. Illustrations of such are the loss of productive activity, or the loss of value addition (Bental, B., ; Ravid, S. A. 1982). Nooij M., Koopmans C., Bijvoet C. (2007) argues that these indirect costs constitute a substantial amount of the total costs and the exploration of the losses inflicted on businesses in the case of power disruptions is dependent on that production information on the gross value added of businesses, industry and public management are integrated as a crucial gauge of economic movement. This is for the reason that economic endeavours are in utmost situations closely related to power provision. The price elasticity for electricity, described as the proportion of the incline of the price demand curve apportioned by the proportion of price over demand, has been computed by a several researchers from diverse republics (Baarsma, B.E. ; Hop, J.P. 2009). However, the author of this study expresses that the spread in elasticities is enormous, and it may be argued that there is no authentic elasticity and that even if it were feasible to attain a logical amount of the elasticity, it would vary substantially with time and is consequently of miniature assistance in deciding the impact of price on demand which are not essentially a social cost, but they may be regarded in the derivation of policy.
