By David Favour
Nigeria is losing between N7 trillion and N10 trillion annually due to persistent electricity shortages, a development that continues to undermine productivity, weaken industrial growth, and erode investor confidence, the Centre for the Promotion of Private Enterprise (CPPE) has said.
The Chief Executive Officer of CPPE, Muda Yusuf, who disclosed this in Lagos, described the country’s power crisis as one of the most binding constraints to economic growth, warning that the cost of unreliable electricity is far higher than often acknowledged in official estimates.
According to him, businesses across key sectors of the economy are bearing the brunt of the inefficiencies in the power value chain, with many forced to rely heavily on self-generation through diesel and petrol-powered generators to sustain operations.
“The Nigerian economy is losing between N7 trillion and N10 trillion annually due to inadequate electricity supply. This is a huge economic burden, reflecting lost productivity, higher cost of doing business, and reduced competitiveness,” Yusuf said.
He explained that the impact cuts across manufacturing, agriculture, services, and small businesses, noting that erratic power supply has continued to stifle output and discourage investment, particularly in energy-intensive industries.
Yusuf further noted that the situation has worsened inflationary pressures, as businesses pass on the high cost of alternative energy to consumers, thereby driving up prices of goods and services.
Stakeholders in the real sector share similar concerns, warning that Nigeria’s aspiration for industrialisation may remain elusive without urgent reforms in the power sector.
Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said manufacturers are among the worst hit, as energy costs now account for a significant portion of production expenses.
“Manufacturers are spending huge amounts on alternative energy. In some cases, energy cost accounts for over 40 per cent of total production cost. This is not sustainable for industrial growth,” he said.
Ajayi-Kadir added that the situation has forced some firms to scale down operations or shut down entirely, leading to job losses and reduced capacity utilisation across the sector.
Similarly, the National President of the Nigerian Association of Small and Medium Enterprises (NASME), Abdulrashid Yerima, said small businesses are struggling to survive under the weight of rising energy costs.
“Many SMEs cannot afford the cost of diesel or petrol. Some operate only a few hours daily, while others have closed shop. This has serious implications for employment and economic stability,” he said.
Energy experts argue that despite ongoing reforms, including the unbundling of the power sector and privatisation of distribution and generation companies, structural challenges persist, particularly in transmission infrastructure, tariff frameworks, and liquidity within the market.
Yusuf stressed the need for a comprehensive approach to power sector reform, including increased investment in generation, transmission, and distribution, as well as policies that encourage private sector participation and improve regulatory efficiency.
He also called for accelerated deployment of renewable energy solutions, especially for underserved and rural communities, noting that decentralised power systems could help bridge the electricity access gap.
While acknowledging recent efforts by government to improve power supply, CPPE insisted that more decisive action is required to reverse the huge economic losses associated with the current state of electricity in the country.
As Nigeria continues to grapple with sluggish growth and rising cost pressures, stakeholders warn that resolving the power crisis remains critical to unlocking productivity, boosting competitiveness, and driving sustainable economic development.
