Power Outages Cost Nigerian Businesses 3% of Annual Sales – AfDB
By Aboki Forex —
The African Development Bank says frequent power outages are forcing Nigerian businesses to lose about three per cent of their annual sales. More than 70 per cent of firms now rely on generators to keep running because of the country’s unreliable electricity supply.
Generator reliance widespread
In its 2026 African Economic Outlook report, the AfDB revealed that 70.7 per cent of businesses in Nigeria either own or share generators. The bank said this reliance is a direct result of a weak power grid that fails to meet demand.
The report noted: “Electricity outage losses amount to three per cent of annual sales in Nigeria, and because of this, generator reliance is widespread, with 70.7 per cent of firms in Nigeria owning or sharing generators.”
Hidden taxes on businesses
The AfDB said Nigeria’s electricity problem is part of a larger issue where government has shifted the burden of basic services to citizens and businesses. Many households and firms now spend their own money on electricity, water, security, and transport infrastructure.
These extra expenses act like hidden taxes. They reduce disposable income and raise the cost of doing business. The bank warned that when governments increase taxes without improving public services, public trust weakens and tax compliance drops.
High cost of self-generation
For many Nigerian businesses, running generators is no longer a choice but a necessity. However, the cost of fuel, maintenance, and lost competitiveness is high. The AfDB said these pressures are pushing some businesses into the informal economy to cut costs and avoid regulatory obligations. This trend reduces government revenue and weakens tax collection.
Call for better public services
The African Development Bank urged the government to improve electricity, healthcare, education, water supply, and sanitation. Better public services would reduce the need for businesses and households to provide these services themselves. That would help rebuild trust in government, boost voluntary tax compliance, expand the formal tax base, and support long-term economic growth.
In a related development, President Bola Tinubu recently inaugurated an 11-member committee to create a Grid Asset Management Company. The federal government will own the company through the Ministry of Finance Incorporated. The initiative aims to address stranded power and improve electricity transmission across Nigeria.