Shock Value

Shock Value

The Nigerian economy, like any other, experiences “shocks”— events or policy decisions that can send a ripple of changes through the system. This column zooms in on these ripples in a range of sectors to explore how and why these shocks matter.

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Missing the Forest for the Trees

Ebehi Iyoha

Ebehi Iyoha

Ebehi is an avid reader seeking insights in unexpected places. Her research interests include economic development, political economy and trade.

The theme of this year’s Calabar Carnival? Climate change. While this is a commendable effort by Cross River state to generate more support for environmental protection in the wake of the recently concluded Paris climate change conference, it may not be very effective. For one thing, it is likely to be a sour topic at the moment given its role in the recent ban on the importation of mini-generators. Depriving people of their primary source of electricity on the basis of air pollution represents hypocrisy of biblical proportions given the large sums guzzled by Aso Villa generators. The ban, coming just weeks before the president was scheduled to fly to Paris, made many citizens wary of any talk of “cutting carbon emissions”. Nevertheless, the aggregate use of small generators is indeed responsible for a large proportion of Nigeria’s carbon emissions. But will the ban actually reduce air pollution? Shock Value investigates. 

More than Good Intentions

The answer, as it turns out, is no. Why? Generator use will not decrease, it will only become more expensive. The most obvious reason is that Nigeria’s unreliable power grid makes mini-generators a necessary evil for many households and small businesses. This makes demand inelastic. Furthermore, the restriction is a prohibition by trade which limits the importation of these mini-generators in commercial quantities. As the policy is not retroactive, the importers fortunate enough to bring in shipments before the ban are now faced with excess demand in the market, allowing them to charge higher prices to shift their remaining stock. These higher prices create an incentive for smuggling, which in turn places a further burden on the Customs service and creates opportunities for bribe-seeking among unscrupulous officials. The reality is that in order to get rid of mini-generators, a cheap and reliable energy alternative will need to be provided to willing consumers. 

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