Power is Vital for Economic Development in Nigeria

Nigeria is undergoing economic recession. But despite the inspiring short and long-term economic forecasts, the nation has a number of power supply challenges, many of which can be solved with renewable energy.

power and energy sector
SASOL power Station in Secunda, Mpumalanga. PHOTO: ANTONIO MUCHAVE/16/04/2013/SOWETAN

First among the sustainable energy options is hydropower.

However, the major problem with hydropower and similar large, capital intensive power projects is its vulnerability to stiff resistance in the development stage of global economies. This highlights the fact that small- and medium-sized projects are mostly less disruptive, cheaper and easier to establish. The truth is: Nigeria, like every other country, needs more power generation options that are affordable and eco-friendly. This is more so because businesses and personal lives revolve around electricity, and the increasing risks of environmental gradation indicates need for an urgent action. According to evidence-based data from the World Bank, over 600 million Africans (about 45% of the entire population) have no available access to electricity. Remarkably, a total of 236 GW of grid-connected generation capacity was installed in Africa during the fourth quarter (Q4) of 2018. But electricity generated from the continental project has failed to accommodate growing demands on power supply. The situation in Nigeria is equally disheartening.

Recent data from the United Nations, as indicated in its 2015 world population prospect report, estimates that African population will reach 2.5 billion by the year 2050. In addition, the global institution highlights the need for reliable and affordable electricity to facilitate economic development if Nigeria continues urbanizing, industrializing, and becoming a strong continental and global economic force. Whether the Nigerian business ecosystem (specifically the power sector) is conducive for investments is a rhetoric question. The answer is glaring enough. Systemic corruption and policy issues are a major challenge faced by multinationals, global financial donors and investors.


Nigeria is in desperate need of constant electricity supply. Other African countries are facing same challenge of epileptic or inaccessible power, but only few among the 54 countries are responding to the huge setback with regional cooperation—the proven collaborative action towards increasing the capacity of generated electricity. Hydropower projects have featured prominently on the list of available options pursued by Independent Power Providers (IPP) in Nigeria.

Further, findings show the Nigerian government and multinational corporations are increasingly turning to private sector investors to help sustain and boost electricity generation projects within the country. The processes start from the early planning stage and continues through to construction and operations. But the power generation objective cannot be achieved without creating a conducive business environment for both public- and private-sector companies to invest towards developing the Nigerian economy. To achieve this purpose, IPPs should hire a team of experienced engineers and align business objectives with the interests of stakeholders in the financial, legal, technical/structuring domains. Governments in the West African sub-region should also close the energy infrastructure gap by providing more incentives and implementing proven policy strategies in country-specific models to spearhead growth.

Nigerians currently living without constant electricity are found in both rural and urban areas. Their isolation from the national electricity power grid is one of the greatest challenges to economic development. Additionally, disruptions in power distribution has huge financial implications for companies and individuals whose survival depends on constant power supply. However, the huge land distances from major electricity power distribution companies (Discos) sometimes make it too expensive to build the initial transmission infrastructure to connect small communities to the electricity grid. Moreover, large-scale power projects are typically financed on a limited-recourse project finance basis. This implies that private investors are required to provide around 30% of the capital required as equity while the balance comes from international and local financial institutions (development finance institutions, commercial banks etc). Again, the issue of systemic corruption is a cancer eating deep into Nigeria’s economic system and the challenge requires immediate stakeholder action to improve the quality and span of life.

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