AfDB: 70.7% of Nigerian Firms Depend on Generators to Run Businesses 

Emmanuel Addeh in Abuja

The African Development Bank (AfDB) has revealed that 70.7 per cent of firms in Nigeria own or share generators due to persistent electricity shortages, with power outages causing businesses substantial losses in annual sales.

The disclosure was contained in the bank’s 2026 African Economic Outlook report, which examined fiscal policy, tax systems and public service delivery across the continent.

According to the report, the widespread reliance on generators underscores the severe infrastructure deficit facing Nigeria and highlights the hidden costs businesses incur as a result of inadequate public services.

“…Because of this, generator reliance is widespread, with 70.7 per cent of firms in Nigeria, 63.3 per cent in South Africa, and 38.7 per cent in Tanzania owning or sharing generators,” the report stated.

The AfDB noted that unreliable electricity supply has compelled many businesses to provide their own power, significantly increasing operating costs, reducing profitability and weakening competitiveness.

It argued that households and businesses across Africa are increasingly forced to privately fund services that governments are expected to provide, including electricity, water, security and logistics, effectively creating what it described as “parallel levies”.

According to the bank, these additional expenses diminish household incomes and raise production costs, while also undermining confidence in government institutions and tax systems.

“Higher domestic resource mobilisation without corresponding improvements in public service delivery imposes large implicit tax burdens on households and firms, which undermines the legitimacy and effectiveness of taxation and leads to a breakdown in the social contract,” the report said.

The AfDB stressed that improving the delivery of critical public services, including electricity, healthcare, education, water supply, sanitation and public administration, would reduce the burden of self-provision and strengthen trust between citizens and governments.

“By reducing the need for households and firms to self-provide these services, strengthening performance in these priority areas can enhance taxpayer trust, improve voluntary compliance, broaden the formal tax base, and reinforce the fiscal social contract,” the bank added.

The report further highlighted the scale of Africa’s revenue mobilisation challenge, noting that the continent loses an estimated $469 billion annually in potential revenue due to weak tax compliance, poor administration and ineffective policy frameworks.

In addition, the AfDB said more than 40 per cent of public investment spending across Africa is lost to inefficiencies, depriving countries of resources needed for growth-enhancing projects.

“More than 40 per cent of public investment is currently lost to inefficiencies, and closing this gap could generate up to $299 billion each year for growth-enhancing investments,” the report stated.