Blackouts: Nigeria spending N22tr annually fueling generators – Economist

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By Omeiza Ajayi

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ABUJA: Constant blackouts and inadequate grid supply are costing Nigeria approximately ten per cent of its Gross Domestic Product (GDP) annually, according to an economic brief released by a financial expert, Martins Itua.

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​Mr Itua, the Director of Arthur Group, stated that the immense financial burden of self-generated electricity has become the primary barrier preventing the nation from doubling its economic output, overshadowing conventional challenges like inflation, public debt, and currency volatility.

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​He said the policy focus on macroeconomic indices overlooks the structural root cause of the country’s economic stagnation.

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​”The biggest obstacle to national prosperity remains the fact that millions of Nigerians must wake up every morning and generate their own electricity before they can begin creating value,” Mr Itua said. “This structural deficit forces the country to operate far below its potential, sacrificing roughly ten per cent of its annual GDP simply to keep the lights on.”

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​The report noted that Nigeria’s national grid typically distributes only between 4,500 and 5,500 megawatts daily for a population exceeding 220 million people.

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Citing data from the African Development Bank AfDB, Mr. Itua noted that more than 70 per cent of Nigerian businesses are forced to own or share fossil-fuel generators to remain operational.

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​The brief projects that if five million households and small enterprises consume a conservative average of four litres of petrol daily, the collective fuel bill surpasses ₦26 billion each day.

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When factoring in the heavy industrial diesel used by banks, supermarkets, and manufacturing plants, the national daily fuel bill for self-generation approaches ₦60 billion. This translates to roughly ₦1.8 trillion every month and nearly ₦22 trillion annually.

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​”Nigeria has created a system in which millions of people spend a significant portion of their time and income generating electricity before they can begin creating value,” Mr Itua said.

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The report further calculates that when factoring in wider systemic issues, including disrupted production lines, damaged equipment, and spoiled agricultural goods, the broader economic cost of unreliable power exceeds ₦48 trillion annually.

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At current exchange rates, this represents a yearly loss of over $35 billion. With the federal budget standing at approximately ₦55 trillion, Mr. Itua pointed out that the nation is losing an amount nearly equivalent to its entire federal spending package every single year.

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​The brief compares the infrastructure deficit to continental peers like Egypt, which operates an electricity system exceeding 60,000 megawatts of installed capacity, allowing its factories to focus entirely on production and market expansion.

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​”Before producing a single item, the Nigerian factory is already carrying capital and operating costs that its Egyptian competitor does not bear,” Mr. Itua said, adding that these overheads are ultimately passed on to consumers through higher prices, driving domestic inflation and making Nigerian exports uncompetitive globally.

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​itua urged policymakers to view electricity as the absolute bedrock of national productivity rather than an isolated social service or a seasonal campaign promise.

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Mr. Itua maintained that the fastest path to reducing poverty, creating jobs, and strengthening the local currency lies in resolving the power crisis rather than adjusting tax policies or increasing external borrowing.

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​”A nation cannot industrialise in darkness,” Mr Itua said. “A country cannot become globally competitive when millions of its citizens spend productive hours solving an infrastructure problem that should have been resolved by the state.”

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The Arthur Group director added that upgrading the national electricity supply to a stable 25,000 megawatts within four years would unlock massive latent growth across manufacturing, digital services, and agricultural processing, creating a viable path to double the size of the Nigerian economy from $400 billion to $800 billion within a single presidential term.

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