Nigeria’s Energy Access

Nigeria is Africa’s largest economy. Yet more than 80 million Nigerians -  nearly 40% of the population - still lack reliable electricity, equivalent to the entire population of Germany. 

The World Bank estimates that this shortfall costs the country $26 billion annually in lost productivity.

For decades, the strategy was straightforward: expand the national grid. But geography, rapid urbanisation, and entrenched inefficiencies have kept progress uneven. As a result, over 70% of small and medium-sized enterprises (SMEs) continue to rely on costly diesel generators, with fuel expenses consuming 30–40% of operating costs. This dependence undermines competitiveness and contributes to inflationary pressure.

A Decentralised Shift

In recent years, a new approach has emerged. Instead of waiting for large-scale grid expansion, Nigeria is turning to off-grid and decentralised solutions, particularly solar mini-grids and pay-as-you-go home systems.

The results are measurable:

• By early 2025, more than 170 mini-grids and 1.2 million stand-alone solar systems had been deployed, reaching approximately 6 million people.

• The Nigeria Electrification Project (NEP) alone has delivered 103 solar/hybrid mini-grids and ~46,600 verified connections, with hundreds of thousands more in development.

• In 2025, Nigeria signed a US$200 million agreement with WeLight and partners to deploy 400 new mini-grids and 50 MetroGrids, targeting up to 2 million additional people.

These efforts contributed to a rise in the national electricity access rate from 59% in 2023 to 64% by the end of 2024 - a meaningful gain within two years.

Beyond Access: The Multiplier Effect

The impact of decentralised energy extends well beyond lighting homes.

• Economic activity expands as markets operate later and SMEs power machinery.

• Education benefits when students study after dark with reliable lighting.

• Healthcare improves as clinics refrigerate vaccines and operate diagnostic tools.

• Households report income increases of 10–15% within two years of gaining access.

• Employment grows, from installation crews to customer service roles in new ventures.

These examples reinforce a core principle: energy access is an economic multiplier. It enables productivity, supports human capital, and strengthens resilience.

Barriers to Scale

Despite encouraging progress, significant challenges remain:

1. Financing constraints: Mini-grids and solar solutions demand high upfront capital, but long-term, low-cost financing remains scarce.

2. Policy uncertainty: Shifting tariffs, slow approvals, and weak regulatory enforcement limit investor confidence.

3. Utility inefficiency: Distribution companies struggle with revenue collection; more than half of customers are still billed by estimation. A government plan to deploy 3.5 million meters in 2024 aims to address this.

4. Affordability gaps: Even with pay-as-you-go models, costs remain out of reach for the poorest households without subsidy or blended finance.

What We Can Learn 

Nigeria’s case illustrates a broader lesson: energy access is not solely a social good. It is a foundation for economic growth and competitiveness.

Progress through decentralised solutions proves that innovation, when supported by enabling policy and targeted finance, can deliver measurable outcomes at scale. But incremental improvements will not suffice. To resolve this, Nigeria must align:

• Capital that is patient, blended, and impact-oriented

• Policy that creates clarity and incentives for private operators

• Ventures designed for local realities, not imported assumptions

Only then can Nigeria turn its energy gap into an energy dividend.

Conclusion

If capital, policy, and ventures can converge at scale, Nigeria could power not only homes and businesses, but also the broader economic future of Africa’s most populous nation.