The group’s Executive Director, Adetayo Adegbemle, said in a policy statement on the state of the power sector that unreliable electricity supply has moved beyond a utility challenge and now represents a structural barrier to economic growth and industrialisation.
He argued that Nigeria’s electricity crisis has become central to the country’s broader economic struggles, particularly in manufacturing, where firms are increasingly forced to rely on costly self-generated power.
“The electricity sector, he said, represents far more than a utilities problem; it is the backbone upon which Nigeria’s industrial renaissance must be built.”
Manufacturers Abandon Grid as Costs Surge
Adegbemle disclosed that more than 60 per cent of manufacturing firms have reportedly disconnected from the national grid due to inconsistent supply and escalating operational costs.
“Over 60 per cent of manufacturing firms have exited the national grid, representing an unprecedented abandonment of critical infrastructure by the very enterprises that should be anchoring economic growth.”
He added that companies are spending heavily on alternative energy sources to remain operational, despite still struggling to meet production targets.
Manufacturers, he noted, spent about ₦676.6 billion on alternative energy in the first half of 2025, compared to ₦708.1 billion in the second half of 2024.
“The paradox is stark: manufacturers are spending billions on generators while still operating below capacity and unable to reliably serve their customers.”
Rising Costs Feeding Inflation
According to the group, the high cost of self-generation is being passed on to consumers, contributing directly to inflationary pressure across the economy.
“Manufacturers spend several billions of dollars annually on alternative energy sources, an expense they in turn push to consumers. This cost pass-through is inevitable…”
He explained that this cycle—rising production costs, higher prices, reduced demand, and falling output—has become self-reinforcing, weakening overall economic performance.
Job Losses Mounting in Manufacturing Sector
The statement also linked Nigeria’s electricity challenges to worsening employment conditions in the industrial sector.
“The manufacturing sector recorded 18,935 job losses in the first six months of 2025, a direct consequence of firms reducing operations, relocating, or exiting the grid entirely.”
Adegbemle warned that these losses extend beyond statistics, affecting households, communities, and skilled workers forced into informal employment.
Billions Lost in Economic Output
The advocacy group estimated that Nigeria loses about ₦10.1 trillion annually due to inadequate electricity supply, with manufacturers bearing the brunt of the shortfall.
It also noted that power accounts for a significant share of production costs, with firms spending roughly 90 per cent of variable costs on infrastructure, half of which goes directly to energy.
Call for Policy Reset and Industrial Reconnection
Adegbemle urged the Federal Government to create incentives for large industrial users to return to the national grid, arguing that increased demand from manufacturers could improve efficiency and lower overall tariffs.
“If large-scale consumers return to the grid and large manufacturers spend their billions on the national grid instead of generators, the government could easily provide electricity at significantly reduced costs to all consumers.”
He maintained that Nigeria cannot achieve meaningful industrial growth without resolving its power challenges, stressing that electricity remains central to economic competitiveness.
Some Progress, But Structural Gaps Remain
While acknowledging modest improvements in the sector, the group said the gains remain insufficient relative to national demand.
Average generation capacity reportedly rose to 4,633.79MW in 2025, up from 4,050.07MW in 2020, while sector revenue increased by about 70 per cent to roughly ₦1.7 trillion in 2024.
However, Adegbemle argued that the underlying issues remain governance-driven rather than resource-related.
“The challenge is not merely technical. Nigeria has the resources… The challenge is governance, regulatory consistency, and the political will…”
Reform Urged for Sustainable Power Sector Recovery
The group concluded that without consistent policy direction, improved infrastructure investment, and stronger regulatory enforcement, Nigeria’s manufacturing sector will continue to decline under the weight of unreliable electricity supply.
It warned that sustained failure in the power sector would continue to constrain economic growth and deepen poverty, despite ongoing reforms and incremental improvements.