“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 USD 22 billion,” the report said.
“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.
“Across the 10 African markets, power supply infrastructure remains the most severe obstacle to surveyed businesses’ operations,” the Standard Bank read.
It further added: “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.”
The report further noted that power outages disrupt production, compromise the quality of temperature-sensitive goods, disrupt water supplies, and affect telecommunications infrastructure critical for payment systems, which in turn, result in reduced sales and income for businesses.
To address the challenges, Standard Bank said there was a need for a diversified energy mix to reduce dependence on the national grid.
The bank also called for policy interventions to stabilise electricity generation and attract investment into renewable energy solutions.
It noted 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,” he said.
“The primary driver of this was the liberalisation of the exchange rate by the central bank to consolidate the multiple exchange rate systems into a unified market.
“This aimed to let supply and demand dictate the rates, but in June 2023, the naira fell further by 36% on the official market, showing notable devaluation amidst dollar scarcity and market unrest.
“Efforts to stabilise the naira were further compromised by the removal and later partial reinstatement of the fuel subsidy, which had stoked inflation and sparked nationwide protests over increased living costs”, the bank added.