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Says business has been disrupted by weak naira
According to Standard Bank, Nigeria loses $26 billion a year due to nationwide power outages.
Standard Bank, in its ‘African Trade Barometer’ report, said electricity supply is a major barrier for businesses in Nigeria and across Africa, and that Nigerian businesses are taking steps to offset the impact of unreliable electricity. It noted that it spends about $22 billion annually on off-grid fuel.
The report said this is increasing the cost of operating businesses in Nigeria.
“In Nigeria, the companies surveyed have to contend with a national electricity grid that frequently collapses, unable to meet daily peak demand nearly four times its generation capacity,” the report said.
“Economic losses arising from electricity shortages in Nigeria are estimated at US$26 billion annually, and are estimated to rise to a further US$22 billion, not counting spending on fuel for off-grid generators.”
The report said power outages will reduce productivity in the country and disrupt production, water supply and communications infrastructure.
“Across 10 African markets, electricity supply infrastructure remains the most serious obstacle to the operations of surveyed companies,” Standard Bank said.
“It is reported to be one of the least recognized infrastructure characteristics and one that poses the most serious obstacles to business operations.
“Power outages cause production downtime, jeopardize the quality of goods that require a controlled environment, impact water supplies and even impact the communications infrastructure that businesses rely on for payments. As a result, sales and profits will decline.”
The report highlighted the need for a diversified energy mix to reduce dependence on the national grid and pointed to the need for government intervention in the power sector to stabilize power generation.
The report further pointed out that business confidence in Nigeria has declined significantly due to the depreciation of the naira.
