Effect of energy price hikes on the survival of micro, small, and medium scale enterprises in Ekiti State
DOI:
https://doi.org/10.33003/fujafr-2026.v4i1.276.344-355Keywords:
Energy price, Fuel subsidy, Electricity tariff, MSMEsAbstract
Purpose: This study examined the effect of energy price hikes on the survival of Micro, Small, and Medium Enterprises (MSMEs) in Ekiti State, Nigeria, with a focus on electricity tariff increases and fuel subsidy removal. The aim was to understand how changes in energy costs influence MSME continuity and resilience.
Methodology: Data was collected through a structured survey administered to MSME operators, yielding 388 valid responses. Ordinary Least Squares (OLS) regression was employed to assess the relationship between energy price changes and MSME survival, allowing for a quantitative evaluation of the effects of electricity and fuel cost fluctuations.
Results and conclusion: The analysis revealed that increases in electricity tariffs have a positive but statistically insignificant effect on MSME survival, indicating that electricity price hikes alone do not substantially affect business continuity. Conversely, the removal of fuel subsidies has a negative and statistically significant effect on MSME survival, demonstrating that higher fuel costs pose a tangible threat to the sustainability of these enterprises. These findings suggest that while electricity pricing may not critically hinder MSMEs, fuel costs are a major operational challenge that could undermine business stability if not addressed.
Implication of findings: Policymakers should prioritize measures to mitigate the adverse effects of rising fuel costs on MSMEs, such as targeted subsidies, fuel cost management strategies, or promotion of cost-effective energy alternatives. By focusing on energy cost components that significantly impact business survival, interventions can strengthen MSME resilience, support local economic development, and inform energy policy decisions in Ekiti State.
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