The African Development Bank has stated that 70.7 per cent of companies in Nigeria either own or share power generators because of continuous electricity deficits in the country. The bank noted that the persistent power outages cost businesses approximately three per cent of their yearly sales. This information was detailed in the 2026 African Economic Outlook report released by the financial institution, which evaluated the fiscal policies and taxation systems across the African continent. The report cautioned that poor delivery of public services continues to place hidden financial weights on citizens and corporate entities. The report stated, "Electricity outage losses amount to three per cent of annual sales in Nigeria, and because of this, generator reliance is widespread, with 70.7 per cent of firms in Nigeria owning or sharing generators,"
The financial institution explained that the massive dependence on alternative power supply exposes severe infrastructure and governance deficits that are negatively impacting productivity, reducing business profits, and weakening public trust in tax systems. The publication revealed that citizens and enterprises across Africa are increasingly forced to fund basic services that should be provided by the government, such as water, logistics, security, and electricity. The bank categorized these private expenditures as parallel levies that deplete disposable income and escalate the cost of running businesses. The AfDB stated, "Higher domestic resource mobilisation without corresponding improvements in public service delivery imposes large implicit tax burdens on households and firms, which undermines the legitimacy and effectiveness of taxation and leads to a breakdown in the social contract,"
The report emphasized that many commercial entities in Nigeria have turned to generating their own power due to the unreliable nature of the national grid, observing that this situation drives more businesses into the informal sector and discourages voluntary tax payments. The African Development Bank noted that enhanced provision of essential public administrative services, sanitation, healthcare, water supply, education, and electricity would foster public trust in the government and boost tax revenue collection. The report stated, "By reducing the need for households and firms to self-provide these services, strengthening performance in these priority areas can enhance taxpayer trust, improve voluntary compliance, broaden the formal tax base, and reinforce the fiscal social contract,"
Furthermore, the institution highlighted that revenue generation challenges in Africa remain massive despite growing financial pressures triggered by expanding development needs, dwindling external funding, and rising costs of servicing debts. Based on the report, almost $469bn in prospective revenue remains uncollected across the continent owing to poor policy formulation, weak tax administration, and low compliance levels. The bank also disclosed that a significant portion of public investments is wasted. The report stated, "More than 40 per cent of public investment is currently lost to inefficiencies, and closing this gap could generate up to $299bn each year for growth-enhancing investments,"
The financial institution added that the African continent possesses the potential to unlock as much as $1.43tn in extra annual funding if resource utilization and mobilization inefficiencies are adequately tackled. It stressed the necessity for sustained economic expansion to combat poverty and generate employment. Speaking in the foreword of the report, the President of the African Development Bank Group, Dr Sidi Tah, said, "Africa must raise annual growth to 7 per cent or higher, sustained over decades, to enable large-scale job creation and accelerated poverty reduction," The publication concluded by pointing out the heavy reliance of the continent on indirect taxes, including customs duties, excise duties, and Value Added Tax, which constituted 59.9 per cent of total tax revenues in 2023. It noted that resource wealthy nations like Nigeria depend largely on corporate income taxes connected to the extractive sectors, illustrating the unbalanced structure of direct taxation across the region.
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