Nigeria

With a population of approximately 238 million—around 15% of Africa’s total—and an estimated nominal GDP of US$377 billion in 2026, Nigeria is both the continent’s largest national market and one of its largest economies. Its economy is substantially more diversified than its export base suggests: services generate close to 60% of GDP, led by trade, telecommunications, finance, real estate and other consumer-facing activities, while agriculture remains a major source of employment. Oil and gas, by contrast, account for only around 4% of GDP, but typically generate more than 80% of merchandise exports and approximately 40% of government revenues.

This imbalance makes energy central to both Nigeria’s macroeconomic stability and its development prospects. Hydrocarbons remain the principal source of foreign exchange and an important anchor of public finances, requiring renewed investment in oil production, gas development, export infrastructure, refining and the reduction of losses and operational bottlenecks. At the same time, Nigeria’s much larger non-oil economy and rapidly expanding population require a fundamental increase in domestic energy supply. With only 62.5% of the population having access to electricity in 2024—and many connected businesses and households still relying on costly self-generation—the overriding priority is to expand reliable and affordable power at a scale commensurate with the country’s demographic and economic weight.

Nigeria’s energy agenda must therefore advance on two fronts simultaneously: maximising the value of its oil and gas resources to protect exports, fiscal revenues and foreign-exchange earnings; and converting its abundant gas, hydro, solar and other energy resources into electricity, industrial fuels and downstream products for the domestic economy. The strategic challenge is not simply to produce more energy, but to redirect a greater share of Nigeria’s resource base towards powering cities, industries, transport systems and a population approaching a quarter of a billion people.

Nigeria's electricity system is built overwhelmingly around natural gas and hydropower, reflecting the country's exceptional domestic resource endowment. Nigeria holds Africa's largest proven natural gas reserves at more than 215 trillion cubic feet (Tcf) and possesses an estimated 14 GW of economically exploitable hydropower potential, yet only a fraction of these resources has been converted into reliable electricity supply. As of 2026, gas-fired plants accounted for approximately 64% of grid electricity generation, with hydropower contributing the remaining 36%, making Nigeria's power system one of the cleanest among major hydrocarbon producers.

The principal constraint is therefore not resource availability but system performance. Nigeria has approximately 14 GW of installed grid-connected generation capacity, yet only around 4.5 GW was available on average during the first quarter of 2026, while average electricity generation reached just 4.1 GW. Plant outages, gas supply disruptions, transmission bottlenecks and commercial weaknesses across the electricity value chain continue to prevent existing assets from operating at their potential.

For a country of 238 million people and Africa’s third biggest economy, this translates into one of the lowest levels of grid electricity availability among the world's major economies. Large segments of industry, commerce and households therefore rely on self-generation—principally diesel and petrol generators—making Nigeria one of the largest captive power markets globally. The country's power challenge is consequently less about expanding generation alone than restructuring the entire electricity system to improve transmission, distribution, metering, collections and market liquidity while unlocking substantially higher utilisation of existing assets.

Successive governments have pursued reforms across the sector, culminating in the Electricity Act 2023, which decentralised the market and opened the way for state-level electricity markets, greater private participation and embedded generation. In parallel, the Federal Government has sought to address the sector's accumulated financial liabilities through the Power Sector Recovery Programme (PSRP) and the Power Sector Bond Programme, under which the government has issued bonds to refinance historic payment arrears and liquidity shortfalls inherited from the electricity market. Alongside tariff reforms, mass metering programmes, World Bank-supported DISREP investments, and continued transmission expansion, these measures aim to restore the financial sustainability of the Nigerian Electricity Supply Industry and create the conditions for substantially higher private investment.