Feature/OPED
Still on Nigeria’s Electricity Crisis
By Jerome-Mario Chijioke Utomi
Similar to history, which according to historians, is an unending dialogue between the present and the past through a continuous process of interaction between the historian and his facts to assist the anxious enquirer improving the present and future based on a clearer understanding of the mistakes and achievements of the past, the conversion on electricity power supply challenge in the country has like history, become neither unending nor abating.
Essentially, the first half of this recurring circle was captured recently in my piece titled FG’s Assurance on Generation of 25,000MW Electricity, as it explains why Nigerians are no longer comfortable with assurances from the federal government, the present piece which qualifies as the beginning of something new was elicited as a response to a declaration by Garba Shehu, the presidential spokesperson.
Shehu, who spoke in an interview on a Channels Television programme, Sunrise Daily, among other things stated; that President Muhammadu Buhari has greatly improved electricity generation in the country, he concluded.
Let’s face the fact; he spoke convincingly with actual authority that flows from the position that he occupies. However, the only difference here is that, unlike history, his run on fact, particularly his fervent belief that the outlook of the nation’s electricity remains good, in the face of the current epileptic power supply and unjustifiable high tariff regime in the country, has not in any way advanced our conversation on or assisted the nation’s quest to find a quick solution to its electricity/energy crisis.
Let’s face the fact; it is true that the 2005 Power Reform Act (EPSR, ACT of 2005), which provided for the privatization of the power sector did not go far before President Olusegun Obasanjo administration left office in 2007. Yes, it is also true in parts that the present frustration in the sector was further fed by the reality that the current federal government as noted by Garba Shehu during the interview, inherited reckless privatization of the power sector done by the Goodluck Jonathan administration (the roadmap for power sector reform of 2010), Despite the validity of these claims, yet, Shehu’s analytics for reasons did not go without opposition.
First, enough evidence supports the fact that no administration in the country, not even the present Muhammadu Buhari led federal government can boast of clean hands when it comes to Nigeria’s electricity crisis.
Without going into analysis to establish how culpable each of these administrations appears in this case, one point, in my view, that mustn’t be overlooked when discussing the power/electricity crisis in Nigeria is that the challenge has nothing to do with privatization. It is neither fuelled by the desire to fashion an authentic roadmap for restoring the health and vitality of the sector nor is it the function of the current effort to bring about a new tariff regime.
Rather, it’s simply and squarely a conceptual problem of what successive federal government has been doing which has never been in the best interest of the people, the nation and the sector.
Very fundamental of the challenge is the operation of the obsolete grid system, an arrangement where the power generated in the country is pooled/assembled or channelled to a control/switch centre before it is finally distributed to consumers across the nation.
Aside from qualifying as a clumsy arrangement and operated in an environment laced with outmoded transmission lines and facilities that cannot hold supplies over time, the practice itself, going by what industry watchers are saying, is not only out-fashioned, old-schooled but visibly runs contrary to the global vision/model which presently favours decentralization of energy generation and distribution.
In my view, energy/power centralization has never assisted the socio-economic development of any nation desirous of making headway industrially.
There exist yet another frustration, this time around fuelled by painful consciousness that instead of acting as energy sector regulator, successive administrations’ for yet to be identified reasons choose to function in the nation’s power sector as both ‘ captain and coach’,- owning shares in Gencos, Discos and TCN.
This state of affairs occurred in spite of part breaking studies that suggest that the private sector is likely to better understand the location and nature of market failures/bottlenecks/barriers that inhabit the energy sector.
It was also argued elsewhere that the government capacity to design and execute an appropriate resolution of identified market failure/bottlenecks is the sector is often always laced with controversy.
From this ‘unrelenting’ failures/failings on the part of policymakers to define the business of power generation and distribution in the country and lack of clear strategy for penetrating it profitably, or allow conventional market forces to determine electricity tariff regimes in ways that will lead to the realization of economic rights of the investors while expanding fundamental freedoms and choices of the individual consumers; and with government, unwillingness to follow swiftly, the ‘changing needs of time’, which of course are the sufficient ingredients of foresighted decision making and condition that every leader desirous of success must constantly fulfil, it obvious that the nation’s handlers have finally left the survival of the sector to chance.
As we know, anyone that fails to search for his potential leaves his survival to chance
Again, it is weak regulations and untidy oversight such as these, that largely promotes a situation where according to a commentator, an electricity consumer buys pole, cables, meter and contributes money to buy or replace the community transformer; and, as soon as that is done, they automatically become the Disco property and the electricity distribution companies will, without taking the meter reading, send outrageous estimated bills he/she never consumed.
That is not the only apprehension. There exists also some unforgivable abuse of trust within the sector.
The first that comes to mind is the recent report that the Senate Committee on Public Accounts has begun the investigation of N14.7 billion proceeds of privatization of the defunct Power Holding Company of Nigeria (PHCN) allegedly hidden in commercial banks by the Bureau of Public Enterprise (BPE).
The committee is acting on an audit query in the ‘Auditor-General for the Federation’s Annual Report on Non-Compliance/Internal Control Weaknesses Issues in Ministries, Departments and Agencies of the Federal Government of Nigeria for the Year Ended 31st December 2019.’
Before the dust raised by the above worrying/worrisome development could settle, another was up. This time around has to do with a new awareness of how TCN, DISCO’s Inefficiencies Caused Electricity Generating Companies to about N120.25 billion to stranded power which averaged 2,448.50 megawatts every month in 2021.
According to industry data cited by Business Standards, an average of N13 billion was lost every month by generating companies. This is the total monetary value of the volume of electricity generated by generating companies but which unfortunately could not get to consumers either due to infrastructural problems or because they were rejected by distribution companies for fear of not being able to recover the money from consumers.
What the above development tells us is that it is a difficult venture to implement meaningful changes when institutions are the cause of the problems in the first place.
It also suggests that engineering prosperity without confronting the root cause of the problem and the politics that keeps them in place is unlikely to bear fruit as the institutional structure that creates market failure will also prevent the implementation of interventions.
To catalyse the process of serving the sector, we must recognize that what we need today, perhaps, is not a new theory, concept or framework, but people who can think strategically with a balanced perspective.
Utomi Jerome-Mario is the Programme Coordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA), a Lagos-based Non-Governmental Organization (NGO). He could be reached via Je*********@***oo.com/08032725374.
Feature/OPED
What Does Nigeria’s $51bn Reserves Milestone Mean if Most New Foreign Money Can Leave Quickly?
Nigeria’s foreign reserves have climbed to about $51 billion, a decade-plus high, according to the Central Bank of Nigeria (CBN). EBC Financial Group (EBC) notes that this reflects stronger investor confidence, but the second half may show whether it holds, as the build rests on three cyclical drivers: oil earnings, short-term foreign money and a narrowing official-to-street naira gap.
Reserves rose from about $32 billion in April 2024, during a dollar shortage, to about $51 billion now, near the CBN’s target. Much came from two cyclical sources, strong oil earnings and money chasing high-yielding naira assets, so EBC expects the pace to slow or reverse. Fitch Ratings, a major international credit rating agency, expects a marginal decline to about $47 billion by the end of 2026, citing higher spending and external pressures.
David Precious, Senior Market Analyst at EBC Financial Group, said, “Nigeria’s reserve build is real but may not be durable yet, because nearly all of the new money is the kind that can leave quickly. Of the $10.37 billion that came in over the first quarter, the overwhelming majority was short-term portfolio funds rather than long-term investment, so a shift in oil prices, global interest rates or confidence in the naira might pull a large part of it straight back out.”
Most New Money Can Still Leave Quickly
The composition of the foreign inflows explains the caution over how long the build can last. The country attracted $10.37 billion in foreign investment in the first quarter of 2026, up 83.83 per cent year-on-year, according to the National Bureau of Statistics (NBS). Of that, $9.86 billion or 95.09 per cent, was portfolio money, largely short-term naira debt such as Treasury bills that investors can sell at the next auction, while foreign direct investment, the long-term kind that builds factories and jobs, was $135.08 million, or 1.30 per cent. Put simply, of each dollar coming in, about 95 cents can leave quickly, and barely one cent stays.
That money supports reserves while it stays. Dollars brought in to buy naira assets add to market supply, letting the CBN hold more reserves and steady the naira. It leaves when conditions change. Nigeria earns most of its export dollars from oil and gas, so lower oil prices mean fewer dollars, and as a member of the Organisation of the Petroleum Exporting Countries (OPEC), it cannot simply produce more, output capped by quota and reduced by theft and ageing fields. Higher global interest rates draw money toward safer returns abroad, and a weakening naira prompts investors to sell early. When oil fell in 2016 and 2020, foreign investors withdrew and could not convert naira to dollars as supply dried up, leaving the CBN to clear more than $7 billion in trapped obligations into 2024.
The Oil Boost is No Longer Certain
Oil looked like a dependable source of the dollars behind the reserves only months ago. Earlier in 2026, concern over disruption around the Strait of Hormuz lifted crude prices, and stronger receipts flowed in, with crude oil export earnings of $8.11 billion in the first quarter in the CBN’s balance-of-payments data. That support is now easing. The tension has subsided, and Brent traded near $72 on June 29, down about 24 per cent over the month, back to pre-conflict levels. With the price boost gone and output constrained, reserves are more exposed, leaning on non-oil earnings and investor patience rather than oil.
The Naira Still Trades at Two Prices
The naira has traded at two prices, an official rate and a higher parallel-market rate, and closing that gap into one trusted price is what many investors might watch most. Before committing funds, they may want assurance they can convert naira to dollars at a fair rate when they exit, and a wide gap revives the fear of being trapped that lingers from earlier shortages. The gap has narrowed to roughly N20 to N30, with the CBN’s official rate near N1,380 per dollar on June 26 against parallel-market quotes around N1,400. The International Monetary Fund (IMF) 2026 Article IV review urged Nigeria to depend less on this fast-moving portfolio money and to keep phasing out its multiple exchange-rate practices. The CBN’s Foreign Exchange Manual, in force from 1 June, is intended to make the market clearer, though such rules build confidence only once investors can freely trade dollars at the posted rate.
What could Make the Build Durable
A few signs that may show the build turning durable include a smaller gap between the official and street naira rates, more long-term foreign investment, and steadier oil earnings. A gap that stays small, now roughly N20 to N30, may mean investors trust the official rate and no longer need the street market. A clear rise in foreign direct investment, only $135 million last quarter against $9.86 billion of short-term money, might mean lasting capital is replacing funds that can leave at the next auction. Oil earnings that hold up, rather than sliding from the low $70s, should help keep reserves steady, since oil and gas bring in most of Nigeria’s export dollars.
“Reserves built on money chasing high yields can fall as fast as they rose, as they did after the last two oil shocks, when investors left, and the CBN spent years clearing a foreign-exchange backlog,” Precious added. “What holds through a downturn is slower money, direct investment, steady oil and non-oil export earnings and one credible naira rate, and that is the shift Nigeria has yet to make.”
By Olajumoke Bello
Across Nigeria, small and medium enterprises remain the backbone of economic activity. They drive trade, create jobs, and sustain millions of livelihoods. Yet, despite their importance, many SMEs continue to operate below their full potential due to persistent structural challenges.
Access to finance remains one of the most cited constraints. However, the issue today goes beyond the availability of capital. Many businesses struggle with financial readiness, weak documentation, and limited understanding of what lenders require. This often leads to missed opportunities, even when funding options exist.
At the same time, SMEs face gaps in market access and visibility. Business owners operate in highly localised environments, with limited exposure to broader networks that can unlock partnerships, new markets, and growth opportunities. This isolation can constrain scalability and reduce long-term competitiveness.
Equally important is the capability gap. Many entrepreneurs grow through resilience and experience but lack structured knowledge on critical areas such as financial management, export readiness, and digital adoption. Without this, even well-capitalised businesses can struggle to sustain growth.
These challenges point to a clear need for a more practical and integrated approach to SME support. It is no longer sufficient to offer standalone solutions. SMEs require ecosystems that combine knowledge, access, and direct engagement in ways that reflect how they actually operate.
A key shift is the move from centralised interventions to localised engagement. SMEs are deeply influenced by their immediate environments, whether markets, industrial clusters, or trade corridors. Solutions must therefore be brought closer to where these businesses function, allowing for more relevant support and stronger relationships.
Another important shift is from awareness to action. Business owners do not only need information; they need insights that they can apply immediately. This includes understanding how to structure their finances, how to access trade opportunities, and how to connect with the right partners to scale their operations.
There is also a growing need for continuity. Many SME-focused initiatives deliver strong initial impact but lack follow-through. For support to be effective, it must extend beyond one-off engagements into sustained relationships, with clear pathways for onboarding, advisory, and growth.
For financial institutions, this presents both responsibility and an opportunity. Supporting SMEs now requires moving beyond transactional banking to deeper partnership models. It requires understanding businesses at a granular level and co-creating solutions that evolve with their needs.
At Stanbic IBTC, this perspective continues to shape our approach to SME development. Our focus is on delivering practical support that translates into real business outcomes, helping enterprises grow, compete, and contribute more meaningfully to the economy.
As part of this commitment, we are extending our SME engagement to the regions through the Nigeria Business Summit Regional Tour. The tour will take structured, on-ground activations into key commercial hubs, where SMEs can access funding guidance, trade insights, advisory support, and direct engagement with financial experts.
The regional tour will take place across five strategic locations, bringing these solutions closer to business owners in Aba, Onitsha, Ibadan and Kano.
This approach reflects an important principle. When support moves closer to businesses and when solutions are delivered in ways that are practical and continuous, SMEs are better positioned to grow sustainably. In turn, this strengthens not only individual enterprises but the broader economy.
Olajumoke Bello is the Head of Enterprise Banking at Stanbic IBTC Bank
By Winston Osuchukwu
The average Nigerian borrower is widely considered high-risk – a claim repeated in credit committees, priced into retail loans, and largely treated as settled fact. Every credit market accepts that an individual loan may not be repaid; this is ordinary, priced risk. The high-risk claim, however, is applied to whole segments – the informal trader, the gig economy earner whose income is steady but split across several accounts, the remote worker paid by an overseas client into a fintech FX wallet. What the assessment establishes is not whether they are likely to repay, but how they fit into an arbitrary segment. Having spent years building decisioning systems for this market, my thesis is a specific one: “high-risk” does not mean “no credit” – it simply requires that the lender embrace alternative datasets to price the risk appropriately.
This is not a criticism of the institutions that built their frameworks around collateral and documentation; those were rational responses to the tools available at the time. When data is scarce, prudence means defaulting to the status quo. The limitation is not that this approach is wrong, but that it leaves a blind spot – excluding fundamentally sound borrowers whose economic lives simply are not captured on the bank’s ledger. A market trader who has moved consistent, growing volumes of cash through mobile money for three years is not, in any meaningful sense, unknowable. Their financial behaviour is observable and patterned; it simply occurs outside the traditional banking system, rendering it invisible to conventional underwriting.
This is the gap technology is now positioned to close – not by replacing institutional judgment, but by augmenting it. When AI-driven analysis is applied rigorously to the financial behaviour these borrowers generate, a far more complete picture of their repayment ability emerges – and a meaningful share presents a risk profile that compares favourably with segments the traditional system has long considered safe. The “high-risk” label, applied broadly to an entire category of borrower, was never a risk pricing tool so much as the limit of what the available tools could see.
For banks, this is the opportunity to extend capital with confidence beyond the borrowers who fit their stringent criteria. Nigerian banks are highly liquid; the constraint on credit growth has rarely been capital, but the ability to assess and price the borrowers who sit outside the traditional file. Close that gap, and the whole ecosystem strengthens: banks grow their loan books into segments they have long wanted to serve, and the real economy gets the capital it needs to expand.
This is precisely what we focus on at Mathesis Analytics: building AI-powered credit decisioning that gives lenders a fuller, more defensible picture of the individuals long excluded as high-risk when they were simply misjudged. The Nigerian credit gap has never been a non-lendable population problem, but one of incomplete visibility. By unifying varied data sources and partnering with the institutions that hold the capital and scale to move the market, we translate out-of-ecosystem behaviour into reliable, bank-grade risk scores. Closing this gap is one of the clearest, highest-leverage opportunities in Nigerian financial services today.
Winston Osuchukwu is the founder & CEO of Mathesis Analytics
