Nigeria’s persistent power crisis continues to cripple its economy, with an estimated annual loss of $26 billion, according to a new report by Standard Chartered.
The report, released as part of the Africa Trade Barometer, highlights the devastating impact of unreliable power supply on businesses and individuals alike.
“In Nigeria, surveyed businesses must contend with a national grid that frequently collapses as it fails to meet a daily peak demand which is nearly four times its generation capacity,” the report reads.
The report further reveals that businesses in Nigeria spend a staggering $22 billion annually on off-grid fuel to compensate for the frequent power outages.
“Economic losses arising from Nigeria’s electricity shortages are estimated to be USD 26 billion annually, without accounting for spending on fuel for off-grid generators, which is estimated to be a further USD22 billion.”
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According to the report, power outages disrupt production, compromise the quality of temperature-sensitive goods, disrupt water supplies, and affect telecommunications infrastructure critical for payment systems.
The disruptions, the bank said, result in reduced sales and income for businesses.
“Across the 10 African markets, power supply infrastructure remains the most severe obstacle to surveyed businesses’ operations,” Standard Bank said.
“It is reported as one of the most poorly perceived infrastructural attributes as well as the one presenting the most severe obstacle to business operations.
“Blackouts cause a downtime of production, risk the quality of goods that require controlled environments, impact water supply, and affect telecommunications infrastructure which businesses may rely on for payments. The result is reduced sales and income.”
To address the challenges, the report said there was a need for a diversified energy mix to reduce dependence on the national grid.
Standard Bank also called for policy interventions to stabilise electricity generation and attract investment into renewable energy solutions.
In the report, Standard Bank highlighted that Nigeria experienced the largest decline in business confidence among businesses surveyed in Africa.
“This was primarily due to the significant depreciation of the Naira,” it said.
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