Power Outages Cost Nigerian Firms 3% of Sales – AfDB

The African Development Bank (AfDB) has revealed that power outages cost Nigerian businesses about 3% of their annual sales, forcing firms to spend heavily on generators and other private alternatives.

In its African Economic Outlook 2026, the AfDB noted that unreliable electricity supply has become a major drag on profitability, with companies increasingly relying on self-generated power.

The report stated: “Electricity outage losses amount to 3% of annual sales in Nigeria and 10% in Mali and Chad. Generator reliance is widespread, with 70.7% of firms in Nigeria, 63.3% in South Africa, and 38.7% in Tanzania owning or sharing generators.”

Beyond lost production, businesses face additional costs for private water supply, security, and logistics, which the AfDB described as “parallel levies” that erode disposable income and profitability.

The bank warned that these hidden costs weaken productivity, discourage investment, and encourage informality, effectively functioning as a hidden tax on economic activity.

It argued that improving public service delivery — in electricity, healthcare, education, water, sanitation, and administration — could boost growth, lower operating costs, and strengthen trust in government.

The AfDB noted that while business conditions in Nigeria improved in 2025, sustaining confidence will require reducing energy and logistics costs, addressing infrastructure gaps, and creating a more predictable environment for investors.

The findings come as Nigeria grapples with chronic electricity shortages, compounded by the recent cancellation of a $717.7m World Bank-backed power sector loan, which had aimed to restore financial sustainability in the industry.