70% of Nigerian Businesses Self-Generate Power – AfDB Report

By Àkànní Olúwaségún Michael

More than 70 per cent of Nigerian businesses own or share generators as companies increasingly rely on self-generated electricity to cope with persistent power shortages, according to the African Development Bank (AfDB).

The bank’s African Economic Outlook 2026 report found that 70.7 per cent of firms in Nigeria own or share generators, underscoring the scale of dependence on alternative power sources amid unreliable electricity supply.

The report also revealed that electricity outages cost Nigerian businesses the equivalent of three per cent of their annual sales, highlighting the growing economic burden imposed by the country’s infrastructure challenges.

According to the AfDB, Nigeria ranks among the most generator-dependent economies on the continent, ahead of South Africa, where 63.3 per cent of firms own or share generators, and Tanzania, where the figure stands at 38.7 per cent.

“Electricity outage losses amount to 3% of annual sales in Nigeria and because of this, generator reliance is widespread,” the report stated.

The lender noted that unreliable power supply continues to affect business profitability, forcing companies to invest heavily in generators and other privately provided services that would ordinarily be supplied through public infrastructure.

Beyond electricity, the report said businesses are increasingly spending on private security, water supply and logistics services, adding to operating costs and reducing competitiveness.

“Enterprise surveys highlight the scale of these burdens: electricity outage losses amount to 3% of annual sales in Nigeria and 10% in Mali and Chad, and because of this, 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.”

AfDB described such expenses as “parallel levies” on businesses and households, arguing that they reduce disposable income, erode firm profitability and encourage informality within the economy.

“The widespread private provision of essential services reflects persistent gaps in public infrastructure and service delivery,” the report noted.

The bank warned that the growing cost of self-providing essential services limits resources available for expansion, investment and job creation, ultimately slowing economic growth.

According to the report, improving the reliability of public services could deliver significant economic benefits by lowering operating costs for businesses and increasing productivity.

The AfDB noted that business conditions improved during 2025, supported by stronger consumer demand and increased purchasing activity.

However, it stressed that sustaining investor confidence would require continued efforts to address infrastructure deficits and reduce the cost of doing business.

Recall an earlier report that  the Federal Government’s decision to cancel $717.7 million in undisbursed funding under the World Bank-backed Power Sector Recovery Performance-Based Operation, a programme designed to support reforms and improve the financial sustainability of the electricity sector.

The report comes against the backdrop of persistent challenges in Nigeria’s power sector, including inadequate generation capacity, weak revenue collection, tariff shortfalls and ageing infrastructure.

Nigeria Walks Away from $717.7m World Bank Power Loan amid N1.9 Trillion Sector Deficit