Summary: Nigeria’s chronic power shortages have birthed a booming generator economy, powering everything from roadside stalls to corporate towers. With households and businesses spending billions annually on fuel and maintenance, generators have become both a lifeline and liability.
In many cities across Africa’s largest oil producer, one sound is inescapable: the incessant hum of generators. From the high-rises of Victoria Island to the congested stalls of Alaba market, nearly every home and business in Nigeria depends on generators to keep the power flowing.
Despite its vast oil wealth, Nigeria’s energy infrastructure remains dangerously fragile. So widespread is the reliance on backup power that an entire shadow economy has emerged around it– one worth billions of dollars.
A nation powered by generators
Nigeria’s national grid is chronically unreliable. Though the system has an installed capacity of over 12,000 megawatts (MW), actual generation rarely exceeds 5,000 MW, woefully inadequate for a country of more than 200 million people. Blackouts can last days or even weeks.
This persistent failure has turned generators into an indispensable lifeline. The International Monetary Fund (IMF) estimates that Nigerians spend $14 billion annually on petrol for generators, surpassing the nation’s entire education and health budgets combined.
Between 2015 and 2019, Nigerians imported $499.4 million worth of generators, according to the UN Comtrade database. Peak imports occurred in 2018, with $208 million in purchases, while the lowest was $27 million in 2016.
The International Finance Corporation (IFC) reports that Nigeria is among the top six countries globally—alongside India, Iraq, Pakistan, Venezuela, and Bangladesh—with the highest backup generator usage. The IFC estimates Nigeria’s installed generator capacity at 15–20 gigawatts (GW), compared to just 5–15 GW from the grid.
A study by Dalberg, a development consultancy, found that the collective capacity of small petrol generators in Nigeria is eight times the capacity of the national grid. The firm estimates that around 22 million households and businesses rely on such units, with annual spending on acquisition and fuel reaching $12 billion.
Global imports fuel a domestic necessity
Most generators sold in Nigeria are imported from China, India, and Europe. The small and medium generator market is dominated by brands such as Honda, Tiger, and Elepaq, while larger industrial sites depend on Caterpillar and Perkins machines to maintain operations.
In markets like Idumota and Ikeja, rows of glistening generators attract customers desperate for dependable electricity. Chinedu Okeke, who has sold generators for over a decade, says the business remains lucrative.
“Every home, every shop needs one,” he said. “Even when people say they can’t afford it, they find a way. Without power, everything stops.”
This demand has spurred a vibrant second-hand market. Used generators from Europe—refurbished and rebranded as ‘tokunbo’—are resold at half the cost of new units. Mechanics across Nigeria now specialise in generator repairs and resale, ensuring even low-income families can participate in this parallel energy economy.
The cost of staying powered
Operating a generator is an expensive proposition. Petrol prices have surged following the removal of fuel subsidies in 2023. A litre now sells for around N900 ($0.97), making daily operation a financial strain.
For small entrepreneurs like Mama Nkechi, who runs a restaurant in Surulere, the cost-benefit tradeoff is stark.
“If I don’t use my generator, my food will spoil, and customers will leave,” she said. “But fuel costs are eating up my profits. Sometimes I spend more on petrol than ingredients.”
Industrial users fare no better. Large manufacturers spend millions of naira monthly on diesel, and some have opted to relocate to neighbouring countries like Ghana, where electricity supply is more consistent. These exits have cost Nigeria thousands of jobs.
A recent report by Sustainable Energy for All (SEforALL), in partnership with the Lagos State Government, found that Lagos residents alone spend $10 billion annually on fuel and generator maintenance. The average small business spends between N20,000 and N40,000 monthly just on petrol.
Environmental and health toll
The economic cost of Nigeria’s energy crisis is only part of the story. The health and environmental consequences are equally dire. The World Health Organisation (WHO) estimates that generator emissions are responsible for more than 20,000 premature deaths annually, largely due to respiratory complications.
Noise pollution is another issue. In affluent neighbourhoods such as Ikoyi and Banana Island, residents often install soundproof enclosures for their generators. In poorer areas, families endure the constant din just to access basic electricity.
Industrial pain points
Manufacturers are under growing pressure as energy costs continue to spiral. The Manufacturers Association of Nigeria (MAN) reported that industry spending on alternative power rose by 42.3% year-on-year to N1.11 trillion in 2024, up from N782 billion in 2023.
“Addressing energy insecurity is critical to unlocking our industrial potential,” said Francis Meshioye, president of MAN. “Without a reliable power supply, we cannot build competitive industries or generate sustainable jobs.”
The association’s annual energy summit underscored the urgency for reform. For Nigeria’s economy to thrive, experts agree that grid reliability must improve, and the nation’s dependence on fossil-fuelled generators must be phased out. (BusinessDay)
