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Generator brands battle for market share amidst growing darkness in Nigeria

Manufacturers and distributors of generator sets seem to have discovered a new ‘comfort zone’ in the Nigerian market.

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Generator

Manufacturers and distributors of generator sets seem to have discovered a new ‘comfort zone’ in the Nigerian market. Figures from the United Nations Statistics Division on Genset Import/Export reveal that Cummins, FG. Wilsons, Siemens, and other major power firms brought different brands of generators worth $51.1 million into the country between 2014 and 2015 and the figure is projected to hit $450 million by 2020.

The breakdown further showed that Nigeria is the second biggest market for generators in Africa, after Egypt whose import stood at $58.6 million, followed by Ethiopia with $19.9 million, South Africa with $18.6 million and Congo with $6.9 million. Others are Zimbabwe: $5.4 million, Niger: $5.3 million and Mozambique: $4.4 million.

According to Mr. Segun Adaju, Chief Executive Officer of Consistent Energy Limited, and President of the Renewable Energy Association of Nigeria, between 60 and 70 million generators of different brands and sizes have been imported into the country, in the past few years.

On this week’s edition of product review, a weekly analysis where Nairametrics features products contending for leadership and prominence in Nigeria’s consumer market, we bring to you the various generator set brands and how they are competing for profitability in the market space.

The Brands in the Nigerian Market

The inability of successive administrations in the country to find a lasting solution to the epileptic power supply has made getting generators a necessity for most businesses and households in the country.

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The generator market has two segments: the household segment and the industrial segment. The household segment of the market has generators used by small business owners, residential houses and small offices while the industrial segment has generator sets deployed at hotels, banks, telecommunication, etc.

In the household segment of the market, major players include Tiger, Elepaq, Lutian, Thermocool, Sumec, Firman just to mention a few, while in the industrial segment, Mikano, Cummins, Perkins, FG Wilson and CAT, all battle for market leadership. The generator sets come in different power ratings from the 4.5Kva for small business offices and residential buildings, to the 15Kva, 30Kva, 45Kva, etc., for industrial and commercial usage.

Also, in the bid to extend and consolidate their hold on the highly competitive market, these brands have introduced models with additional features and capabilities to suit the pockets of the various segments of consumers, especially for consumers with low purchasing power. This includes new model generators with remote control, soundproof and automatic switch-over mechanisms when power is cut off, as well as generators with key and button starters. Product quality, durability, customer support services (for industrial generators), fuel economy, ease of maintenance, and availability of spare parts are some of the factors that most customers look out for when buying their generator sets.

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The Tiger Manual Gasoline Generator, popularly called “I better pass my neighbor”, is one of the most popular generators in Nigeria because it fits the power needs and budgets of most homes. It is relatively cheap and can power the essential electrical gadgets in most homes.

Mikano International Limited is another major player in the industrial generating set segment. It was established in 1993, to carry out the business of sales, servicing, maintenance, overhauling, and rentals of diesel and gas power generating sets. The company is the largest assembler of power generating sets from renowned generator manufacturers, Perkins and Stamford/Meccalte alternator U.K, providing quality generating sets ranging from 9kva to 2000kva for homes and industries.

SWOT Analysis of the market

Strength

The epileptic power supply to households and the growing population in the country has further boosted the market in the country.

Weakness

Exposure to exhaust fumes from generators has serious health implications. Several families have lost their lives as a result of inhaling the noxious fumes for long periods. Most of them pose great danger to the environment as well.

Opportunity

The seeming lack of political will by the government to address the power problem has made the importation of generator sets into the country a lucrative business.

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Threat

Attention is shifting to alternative power generation projects across the country. States now employ solar power generation to power public infrastructure. Some residential houses have also adopted solar as an alternative source of power supply.

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What Consumers are saying

Nairametrics spoke with some customers in both segments of the market who indicated preferences for their various brands.  Engr. Deolu, a telecoms engineer, noted that most telecommunication sites prefer Mikano because it is easy to maintain. He said:

“We use the Mikano brand. I think it is convenient for us; it is reliable and their after sales service is great.”

Mr. Bassey, an Engineer with a popular hotel in Ikeja, revealed his preference for CAT brand.

“From what I noticed, CAT is a quality generator with superior local support, it is environment-friendly.”

A distributor who spoke with Nairametrics noted that the current power situation has made the demand for generating sets to increase.

“Business is good and this is occasioned by the power outage in the country over the past few years. The increase in power consumption in Nigeria, coupled with inadequate power generation capacity and grid infrastructure, has made steady power supply a serious challenge and that has helped the demand for the products.”

A respondent on our Twitter poll revealed his preference for Haier Thermocool. According to him, the brand has an efficient customer support mechanism and they also have showrooms in major cities.

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Another respondent also lamented the proliferation of fake and substandard generators in the market. Noting that the popular “I beta pass my neighbor” is no longer reliable.

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Verdict

In a Twitter poll conducted by Nairametrics, industrial generator, Mikano, got 32% and other household brands trail behind. Firman got 27%, Elepaq got 20% while Tiger got 20%.

A review of these brands show that they generally have the same features. Most household generators between 3.5 – 4.5Kva are within the same price range, have key or button starters and fuel-efficient capabilities. Also, industrial generating sets have sound proof features among other features. These keep the competition close, meaning that any brand could overtake the other when it comes to market share.

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The demand for generator sets in the country has provided a thriving market for substandard brands to be imported into the country. Government agencies seem to have gone to sleep in this regard.

Brands wishing to gain more market share must come up with fuel-efficient models and additional features that will appeal to customers.

Fikayo has a degree in computer science with economics from Obafemi Awolowo University. ITIL v3 in IT service management. An alumnus of Daystar Leadership Academy. Prior to joining Nairametrics had stinct in Project management, Telecommunications among others. Also training in Consulting and Investment banking from Edubridge Academy. He has very keen interest in Politics, Agri-business, private equity and global economics. He loves travelling and watching football. You can contact him via [email protected]

1 Comment

1 Comment

  1. Emmanuel Nonye

    June 5, 2019 at 8:35 am

    Please do you know how much I can buy the small Tiger Generator?

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Reviews

COVID -19 saving Nigerians millions in wedding and burial costs 

As long as the pandemic persists, the ‘new normal’ is for ceremonies to remain subdued.  

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It was a sunny Saturday in May and like it had been for the better part of 8 weeks, the new normal was in force in Nosa’shousehold. The lockdown induced COVID-19 meant that all the hustle and bustle of giving attention to side hustles on weekends had all evaporated. Now he spent more time with his kids watching TV and playing video games. Whilst he has had to endure multiple weekends of lost revenue, staying indoors meant that his personal finance was still intact. But things would change dramatically this weekend. 

Nosa got a call that he had just lost his aged mother to a brief illness. He had been battling with a terminal illness for years, but things seemed to be under control so her death came as a surprise. Even as he grappled with the thought of losing his mother, Nosa knew that he had to start making preparations for the expenses that are bound to come with burials in an African setting.  

Thanks to the pandemic, and rules that came with it, Nosa ended up spending much less than he would have for his mother’s burial with most of the funds going towards mortuary expenses, transport and the direct cost of the actual burial itself.  

READ ALSO: Post COVID-19: The Challenges Ahead

“This COVID-19 is bad but it has saved me millions of naira that I would have spent in this burial,” he remarked.  

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“I wanted to give my mom a befitting burial but these are hard times and I may have borrowed money just to fund this. But with COVID-19 and social distancing in place I did not have to do any of this,” Nosa informs our reporter.  

Nosa’s gains translate to massive losses for a whole chain of service providers in the event management industry. Similar occurrences over the last few months have resulted in the loss of revenue for such businesses.  

Events in Nigeria often cost anywhere between half a million naira to over N100 million depending on the financial muscle of those spending. Burials, weddings, naming ceremonies and birthday parties, make a burgeoning industry that spans several sectors of the economy.  

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From mortuaries to casket makers, event planners, event Halls rentals, professional mourners, caterers, confectionaries, party rentals, photographers, video editors, tailors, newspapers , etc, its an entire value chain of businesses that provide one service or the other for this industry. 

Each of these events cost millions of naira to organize hosting as many people as the budget can support. According to a CNN article quoting a report from TNS Global, Nigerians spend as much as $9,460 for a wedding ceremony. The report also indicates the party industry could be worth as high as $17 million based on statistics in 2017. 

The math can be easily deducted. Assuming 50,000 ceremonies every weekend at an average cost of N1 million that is a N50 billion per weekend or N2.7 trillion ($6.75 billion) per annum. GDP data from the National Bureau of Statistics indicates sectors that support the ceremonies market in Nigeria, telecoms, transportation, Arts and Entertainment is worth a combined N18.4 trillion. 

Technology Ceremonies 

Chuks, a Partner at a top consulting firm in Nigeria admits were it not for the pandemic his wedding could have cost him about N15 million personally and another N20 million spent by family, friends, colleagues and well-wishers. He is in his forties and his wedding had been much anticipated. He went ahead with his wedding last weekend with less than a dozen people in attendance and over 140 others logging on via Zoom. He claims while he ended up not spending millions on food, drinks, wedding halls and other logistic costs, he still achieved his goal of getting married.  

Necessity they say is the mother of invention and has millions stay locked in their homes, they have resorted to apps such as Zoom, Instagram Live, Microsoft Teams to hold virtual events. These days Zoom themed parties now have their own rules and conventions. Friends from all parts of the world log in with each person taking turns to say nice things about the celebrants. Games are conducted to spice up the event and stories told by the celebrant. Music is also played by the Zoom host with participants dancing and having fun.  

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“It is like watching a live movie and also being part of it as the audience and participant” a wedding planner informed Nairametrics. Whilst one cannot underrate the connection physical socializing brings, virtual meetings are gradually becoming a lifestyle and the longer social distancing continues its cultural significance will only continue to increase.  

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AderonkeAdebamibola, CEO of  Unik Ushering Agency, an Event management firm, confirmed to Nairametrics that business has really slowed down in the last few months. “Even though the NCDC has now given rules to guide weddings and other events, the budget now is way less than it used to be due to the cap on numbers of guests” she explained.  

Now, most events are kept within the premises of family residences, depriving hall rentals, the money they could have made from leasing out their halls. Venue decorators also have much less on their hands to do, as they no longer have to decorate big halls.  

According to Adebamibola, every single business in the chain has been affected, from caterers to ushers.  

“Now, we even have to convince them to use one or two ushers for their events because they believe they don’t need ushers for 20 or 30 guests. Caterers cannot even cook a half bag of rice now because of the number of guests. This means that they are also paid less for their services, even if they expend the same energy and time” she said.  

The new normal in this industry means that the things that used to be prioritized are no longer priorities. Hand sanitisers, face masks and hand washing equipment are now compulsories in events, while the hand-shaking, and hugs that would have characterized such weddings.

READ MORE: Governor David Umahi of Ebonyi tests positive for COVID-19

Due to the nature of the industry, a large percentage of the staff are kept on contract basis, so the reduction has not really translated into lay-offs. However, the industry revenue has been badly hit. A contract staff with NPU Events, who preferred anonymity, noted that in the last three months, she has only been called twice for events.  

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Since this forms a major part of her income, it has caused a major dip in her resources. COVID-19 has brought unwanted hardship to the Nigerian economy with small businesses and workers in the informal sector suffering the most.  

A recent World Bank report indicates the Nigerian economy might contract by as much as 3% in GDP growth rate this year. This informed government’s latest decision to inject about N2.3 trillion into the economy to spur economic growth. The funds will be targeted at small businesses through non-collateralized low-interest loans.  Whilst all these initiatives are geared towards stimulating the economy, the spending power of Nigerians will remain pivotal and as long as the pandemic persists, ceremonies will remain subdued. 

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Business Half Hour

BHH Podcast: What 2020 holds for SMEs (2) – Ugodre

Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.

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BHH, Podcast, WAVE, entrepreneurs, business, Nigerian, concept, business, ethics, Goal, Setting, Actualization, Greymate Care, Chika Madubuko,, business ethics Femi Adeyemo, BHH Podcast, Fundall, Swift Medispark, Ugo Nwokoro, technology in healthcare, EazyHire, Data Science, Yvonne Alozie, Gitgirl, Verifi, CAMA and taxes for SMEs, Tayo Lekan-Agbaje, Dclutterng, Business half hour, BHH Podcast, Oluyomi Ojo, Taiwo Obasan, Nigerian shoes business

Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.

In this episode of #BHH, Ugodre gave an insight into how business climate would be for SMEs and an overall outlook on the global and national economy. Enjoy!

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Business News

Ikeja Electric, GRA Ikeja residents sign contract to deliver 20 hours daily power supply 

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Ikeja Electric (IE) announced it has signed a Power Purchase Agreement with residents of Ikeja GRA to deliver “up to 24 hours of supply daily”. The company tweeted this on Friday revealing that it is in line with the company’s Bilateral Power Agreement.

However, the company representatives explain that it is a minimum of 20 hours of power supply for residents of the association. Ikeja GRA includes streets like Oduduwa, Isaac John, Joel Ogunaike, Fani Kayode, etc.

In its previous Power Purchase deal with Magodo Residents, it stated that “with the agreement, IE will provide the residents with electricity supply beyond the existing standards, with guaranteed performance levels. In addition, there will also be access to dedicated Customer Care and Technical teams for prompt resolution of queries and/or technical issues within the estate.” 

Also, the Chief Operating Officer, IE, Mrs. Folake Soetan expressed confidence in the success of the trend-setting agreement, which she noted was in line with the Federal Government’s willing seller, willing buyer policy. 

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What this means: The Power Purchase Agreement suggests residents of the Ikeja GRA will enjoy a steady power supply when compared to non-residents. However, they will have to pay tariffs much higher than is provided for in MYTO. Residents in Magodo who currently enjoy a similar arrangement informed Nairametrics that they pay higher tariffs but have enjoyed regular power supply and often go days without a power cut. 

They also explain that even when the power cuts they get messages from Ikeja Electric explaining why the power was cut and indicating when it will return. We understand Ikeja Electric still relies on the grid to deliver this power as such power cuts will still be expected in the transmission and distribution end.

Backstory: In August, Ikeja Electric announced it signed a similar power purchase agreement with residents of Magodo, providing them a power supply of up to 20 hours daily. Residents of Magodo, have enjoyed steady power since then and are thought to be paying about N47 per kilowatt-hour of power compared to the MYTO tariff which is N23.10 for residential customers.

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Sources with knowledge of the transaction indicate Ikeja Electric is likely to extend this arrangement to other estates within Lagos, in a move that disrupts the power sector dynamics. Residents in the Eko Franchise area seeking regular power supply have also demanded a similar deal and are ready to pay for a tariff that is higher than the MYTO approved tariff for general customers.

It is however not clear if the Nigerian Electricity Regulatory Commission, NERC has approved this arrangement.

 

 

 

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