AN EVALUATION OF THE PROBLEMS EXPERIENCED BY MARKET TRADERS DUE TO THE INCREASE IN ELECTRICITY TARIFF IN NIGERIA UNDER PRESIDENT TINUBU ADMINISTRATION. (A STUDY FOCUSED ON DUTSE MARKET, ABUJA).

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Since the dawn of humanity, people have been working hard to fulfil their needs. Human actions aimed at meeting their requirements necessitate the existence of markets as auxiliary facilities (Assor & Rusdianti, 2023; Vyas & Butakhieo, 2021). A market, in its general sense, refers to a distinct physical or virtual space where sellers and buyers engage in transactions. In the market, there are transactions where products, including both goods and services, are exchanged (Rangaswamy et al., 2020). 

Traditional markets have historically served as the focal point of economic transactions in communities across the globe. Within these markets, traders and buyers engage in a time-honored buying and selling process, where they interact with one another. Market traders play a crucial role in urban economies globally, providing convenient access to a diverse selection of affordable goods and services in public areas. Their range of products includes a wide variety of items such as fresh produce, prepared meals, construction supplies, clothing and handmade goods, as well as consumer electronics, automotive services, and hairdressing (Nate et al., 2019). According to Oni (2018), market traders play a vital role in the socio-economic structure of Nigeria, making substantial contributions to both the country's economy and community. Their work encompasses a wide range of areas, including economic development, employment creation, social cohesion, and cultural preservation (Ogaga, 2022). Market traders in Nigeria have numerous obstacles that affect their day-to-day operations, profitability, and long-term viability. These issues stem from economic, infrastructural, and societal factors, with the most recent addition being the hike in electricity rate.

Tariff, as defined by Olugbenga (2017), is a mechanism used by the government to generate money for the purpose of enhancing the well-being of its citizens or to provide protection for emerging businesses. Tariffs decrease imports by increasing prices. An electricity tariff is the billing system that calculates the cost of the electricity you use. The tariff you have is dependent on your geographic location and the type of metre you have. Tariffs comprise multiple components, including supplier charges. The cost of electricity use is variable depending on the time of day or the season (ThisDay, 2024). 

Electricity is an essential and indispensable resource for economic operations, particularly in market systems. President Bola Tinubu's administration in Nigeria has implemented substantial increases in energy tariffs. These increases are intended to tackle long-standing problems in the power sector, including insufficient budget, inefficiency, and inadequate service delivery (NERC, 2024). Although the government expects that these tariff hikes will result in enhancements in electricity provision and infrastructure, they also present significant difficulties for market vendors, especially in locations such as Dutse Market in Abuja. The Nigerian government has defended the rise in energy tariffs as essential for ensuring the financial sustainability of the power industry, attracting investments, and enhancing overall service provision. It is anticipated that increased rates will result in improved infrastructure maintenance and a more dependable electricity supply. Market traders, who often operate with narrow profit margins, are especially susceptible to rising operational expenses (Moses et al., 2024). Electricity constitutes a substantial portion of these expenses, and any increase in pricing can promptly and unfavourably impact their enterprises. Gaining a comprehensive understanding of these difficulties is crucial in order to develop strategies that can effectively reduce the adverse effects. This study aims to assess the challenges faced by market traders in Nigeria as a result of the rise in electricity tariffs during President Tinubu's administration. A study conducted on the Dutse market in Abuja. 

1.2 Statement of the Problem

The presence of an affordable and reliable electricity supply is commonly recognized as essential for the long-term viability of any business (World Bank Enterprise Surveys, 2023). Traditional market traders operate with slim profit margins, and increased electricity expenses could worsen the financial strain they experience. Increased tariffs lead to a clear connection with higher operational costs, which in turn reduce profit margins and limit the allocation of resources for growth and long-term sustainability. Market traders must develop techniques to effectively manage this financial strain. 

Delmar, Davidson, and Gartner (2023) state that scholars employ several metrics, including assets, market share, physical production, and earnings, to evaluate business performance. Market traders can only transition into larger organizations, known as contemporary markets, by having a strong desire to expand their firm. The expansion is integrally linked to the creation of employment prospects (Davidsson, Achtenhagen & Naldi, 2020). The expansion of a firm can be classified into two primary forms: organic growth, which involves increasing the overall customer base, output per customer, and new sales; and inorganic growth, which involves expansion through mergers, acquisitions, or takeovers. The primary goal of any firm is to maximize earnings for its owners or stakeholders while maintaining social responsibility. Market traders operate with slim profit margins, and increased electricity expenses could further their financial strain. Increased tariffs lead to a clear connection with higher operating costs, which subsequently reduce profit margins and limit the resources available for growth and long-term sustainability. Market traders must develop techniques to effectively manage this financial burden. 

Furthermore, Finance is essential in all types of economic activities. The growth of any organization is highly dependent on the prompt availability of enough financial resources (Sushma, 2021). Market traders are already facing fierce competition from larger, more sophisticated marketplaces such as supermarkets. The increased electricity prices could worsen this situation. Market traders encounter difficulties in assimilating increased expenses due to their constrained financial means, leading to a notable disadvantage in terms of price, marketing, and overall competitiveness (Adade, 2022). During such situations, it is crucial to develop methods to uphold competitiveness in the market. Therefore, the necessity for this investigation arises.

Objectives of the study

The primary objective of this study is to critically evaluate the problems experienced by market traders due to the increase in electricity tariff in Nigeria under President Tinubu administration. (a study focused on Dutse market, Abuja). Specific objectives of this study are to:

To find out whether there is a relationship between increased electricity tariff and operations of market traders.

To determine the extent increase in electricity tariff affects the market traders under President Tinubu administration

To assess the impact of electricity tariff hike on overall market operations.

To offer strategies to design more equitable and effective electricity tariff policies that consider the unique challenges faced by market traders

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

What is the relationship between increased electricity tariff and operations of market traders?

What is the extent increase in electricity tariff affects the market traders under President Tinubu administration?

What is the impact of electricity tariff hike on overall market operations?

What are the strategies to design more equitable and effective electricity tariff policies that consider the unique challenges faced by market traders?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: There is no impact of electricity tariff hike on overall market operations.

Ha: There is impact of electricity tariff hike on overall market operations.

1.6 Significance of the study

Market traders hold a crucial position in the socio-economic fabric of Nigeria, contributing significantly to the nation's economy and community life. Their role spans various domains, from economic development and employment generation to social cohesion and cultural preservation. The study will serve as a baseline for policymakers, market traders, students and scholars.

The study will provide empirical data that can guide policymakers in designing balanced and inclusive electricity tariff policies. By highlighting the specific needs and challenges of market traders, the study aims to ensure that future tariff adjustments do not disproportionately burden these vital economic players.

Additionally, the findings will help develop targeted interventions and support programs to mitigate the adverse effects of electricity tariff hikes on market traders, promoting economic stability and growth. Also, by understanding the impact of tariff hikes on market traders, the study contributes to broader efforts to promote economic development and reduce poverty. It underscores the importance of considering the unique context of market environments in national policy planning.

Furthermore, future scholars will utilise it as a thorough examination of the current body of literature. Consequently, other students with an interest in investigating this subject will have the opportunity to utilise this work as existing knowledge that may be thoroughly evaluated. 

1.7 Scope of the study

Broadly, this study focus is to evaluate the problems experienced by market traders due to the increase in electricity tariff in Nigeria under President Tinubu administration. (a study focused on Dutse market, Abuja). Specifically, this study seeks to find out whether there is a relationship between increased electricity tariff and determine the extent increase in electricity tariff affects the market traders under President Tinubu administration. 

Further, this study will focus on assessing the impact of electricity tariff hike on overall market operations and it also seeks to offer strategies to design more equitable and effective electricity tariff policies that consider the unique challenges faced by market traders.

The study is carried out in Dutse, Abuja.

1.8 Limitations of the study

As is common in all human endeavours, the researchers faced minor limitations when conducting the study. The main limitation was the lack of extensive literature on the subject, as there is limited data available for an evaluation of the problems experienced by market traders due to the increase in electricity tariff in Nigeria under President Tinubu administration. (a study focused on Dutse market, Abuja). Consequently, a significant amount of time and effort was necessary to locate the appropriate materials, books, or information and to gather data. 

Additionally, this study is constrained by its small sample size and narrow geographical scope, focusing just on Dutse, Abuja. Consequently, the results of this study are not applicable for generalization, thereby leaving room for further research. 

Additionally, the researcher's limitations were primarily due to financial constraints, as they are a student and do not have a source of income to sustain themselves. It was challenging to afford transportation expenses to and from the study location due to the high cost of transportation, which is influenced by inflation in Nigeria today.

Furthermore, the researcher faced a time constraint due to the need to do this research while also fulfilling the obligations of attending lectures and other educational activities.

1.9 Definition of terms

Electricity: Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwell's equations. Common phenomena are related to electricity, including lightning, static electricity, electric heating, electric discharges and many others.

Tariff: Tariff is a means of generating revenue for the government for the improvement of the welfare of her citizenry or serves as a protection for infant industries. Tariff reduces import by raising prices.