Nigeria’s persistent electricity shortages risk derailing the country’s economic progress unless immediate, systemic reforms are implemented, according to Bismarck Rewane, a prominent economist and Managing Director of Financial Derivatives Company Ltd. Speaking during an interview on Channels Television’s Business Morning program, Rewane highlighted the disproportionate impact of power outages on key industrial regions, warning that prolonged instability could shave billions off the nation’s economic output.
Lagos and Ogun states, which together contribute roughly 30% of Nigeria’s Gross Domestic Product (GDP), face outsized consequences from power failures, he explained. A one-month nationwide blackout, for instance, could erase an estimated 2.5% of annual GDP—equivalent to over $60 million under current GDP estimates—due to lost productivity and operational disruptions. “You cannot grow the economy with what we’ve seen today without a broad power solution,” Rewane asserted, stressing that temporary fixes are insufficient. “This must be resolved now—not with Band-Aids, but through comprehensive action.”
The power crisis, rooted in decades of underinvestment, mismatched tariffs, and structural inefficiencies, reflects deeper systemic challenges. Cultural resistance to cost-reflective pricing, alongside mounting debt in the energy sector, further complicates efforts to stabilize supply, Rewane noted. These issues persist despite Nigeria’s reported 3.13% GDP growth in the first quarter of 2024, with annual output hovering around $2.45 billion—a figure experts suggest may reflect methodological adjustments rather than tangible improvements in living standards.
Economic shifts are also reshaping the country’s trajectory. While manufacturing’s share of GDP has declined, agriculture has gained prominence amid rising food prices and policy focus. The service sector remains the largest driver of activity, though its resilience is tested by inflation and currency volatility. Meanwhile, global dynamics in oil refining—a sector Rewane describes as “high-volume, low-margin”—pose additional hurdles. With refineries increasingly concentrated in specialized hubs, operational efficiency and technical expertise are critical for profitability. “Profit isn’t guaranteed by scale alone,” he cautioned. “It comes from balancing revenue and costs with precision.”
For Nigeria, addressing the electricity deficit is non-negotiable, Rewane emphasized, calling for urgent reforms to unlock sustainable growth. As businesses and households grapple with daily outages, the stakes for Africa’s most populous nation—and its ambition to become a global economic player—continue to rise.
