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Poor power supply is the biggest constraint on investment and growth in Nigeria – UK govt

The UK government has concluded that epileptic power supply is the single biggest factor hindering economic growth in Nigeria. While holds the view that security is more critical to economic growth than power supply, the UK position seems to be backed by research.

The UK’s Department for International Development (DFID) provided this view today while responding to a report by the UK Parliament’s International Development Committee on DFID’s work in Nigeria, which was published in July.

DFID stated that: “there is already strong survey evidence that poor power supply is the biggest single constraint on investment and growth, and this has heavily distorted the structure of the economy. 79% of energy use in Nigeria is residential and only 8.7% industrial. Industrial use is 23.7% in Bangladesh, 36.9% in Brazil, 23.4% in Indonesia and 35% in South Africa. Improved power supply will lessen this economic distortion, increasing employment and reducing poverty. In 2015 we commissioned a study on the impact of power reform on the manufacturing sector. This estimated that the increase in power supply between August 2014 and August 2015 in the short-term led to the creation of 23,300 jobs (on the same basis 67,000 jobs would result from the increase between January 2012 and January 2016). Since then supply has fallen, however, due to attacks by Delta militants on gas infrastructure. This study only looks at existing manufacturing businesses, and does not try to estimate the long term structural impacts we hope to see. It will be several years before robust conclusions will be possible on these effects”.

The evidence referred to by DFID is the World Bank, Investment Climate assessments for Nigeria, 2009 and 2011.

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