CPPE calls for accelerated reforms to improve electricity supply

By Damilare Adeleye

The Centre for the Promotion of Private Enterprise (CPPE) has called for urgent and accelerated reforms in Nigeria’s electricity sector following what it described as a disturbing contraction in power supply performance captured in the country’s Q1 2026 Gross Domestic Product report.

In a statement released on Thursday and signed by its Chief Executive Officer, Muda Yusuf, the economic think tank said the sharp 15.30% contraction recorded in the electricity and gas sector represented the weakest sectoral performance in recent years and posed a serious threat to sustainable economic growth.

The CPPE made the call while reacting to the latest Q1 2026 GDP figures recently released by the National Bureau of Statistics, which showed that Nigeria’s economy grew by 3.89 per cent year-on-year, compared to 3.13 per cent in the corresponding period of 2025.

The group noted that although the growth rate was slightly below the 4.0 per cent recorded in the fourth quarter of 2025, the overall performance reflected improving macroeconomic stability, stronger business confidence, and resilience across key non-oil sectors.

According to the CPPE, the services sector remained the major driver of economic expansion, contributing 57.73 per cent to GDP and growing by 4.31 per cent. It identified information and communications technology, financial services, entertainment, trade, and construction as the strongest-performing sectors during the quarter.

The policy group said the ICT sector grew by 10.98 per cent, while entertainment and financial services expanded by 11.25 per cent and 8.54 per cent respectively, underscoring the increasing importance of Nigeria’s digital economy.

It also highlighted the emergence of the trade sector as the single largest contributor to GDP at 17.89 per cent, attributing the development to improved foreign exchange liquidity, exchange rate stability, and easing inflationary pressures.

However, the CPPE warned that long-term economic transformation could not depend largely on commerce and services alone, stressing that Nigeria needed stronger industrial productivity and domestic value addition to achieve sustainable growth.

While acknowledging a modest recovery in manufacturing growth from 1.13 per cent in Q4 2025 to 3.29 per cent in Q1 2026, the organisation said the sector remained structurally weak due to persistent challenges, including high energy costs, poor infrastructure, elevated interest rates, and policy uncertainties.

The group described the electricity sector’s contraction as particularly alarming, noting that unreliable power supply continued to worsen operating costs for businesses already burdened by inflation, logistics challenges, and weak consumer demand.

“It is concerning because electricity is not merely another economic sector; it is the foundation upon which productivity, industrialisation, competitiveness, and inclusive growth depend,” the CPPE stated.

The organisation warned that heavy reliance on diesel and petrol-powered generators was eroding profitability across manufacturing, hospitality, agro-processing, SMEs, and digital enterprises.

To reverse the trend, the CPPE urged the Federal Government to fast-track reforms across the electricity value chain through stronger investment in transmission infrastructure, improved market liquidity, accelerated metering, reduction in technical and commercial losses, and governance reforms capable of restoring investor confidence.

The economic advisory group also raised concerns over the contraction in the aviation sector, which shrank by 7.62 per cent amid rising aviation fuel prices, exchange rate pressures, and mounting operational costs.

Similarly, it lamented the continued decline of the textile industry, describing the sector’s prolonged recession as evidence of worsening deindustrialisation and weakening domestic productive capacity.

On the oil sector, the CPPE observed that growth slowed significantly from 6.79 per cent in Q4 2025 to 2.57 per cent in Q1 2026, despite ongoing reforms and the strategic importance of oil revenues to Nigeria’s fiscal stability.

The organisation, however, commended the strong performance of the domestic refining sector, which grew by 37.46 per cent during the quarter, largely driven by operations at the Dangote Refinery.

According to the CPPE, the refinery’s expansion was increasingly reshaping Nigeria’s energy ecosystem by reducing dependence on imported petroleum products, strengthening local value addition, and supporting foreign exchange conservation.

Despite the positive GDP figures, the group maintained that the quality and inclusiveness of economic growth remained a major concern, arguing that improvements in macroeconomic indicators must translate into better living conditions, stronger purchasing power, and higher welfare outcomes for Nigerians.

“Economic growth must ultimately translate into improved living conditions, stronger purchasing power and better welfare outcomes for citizens. Growth without inclusion delivers limited economic and social dividends,” the statement added.

It, therefore, called on policymakers to prioritise productivity enhancement, industrialisation, export competitiveness, and power sector reforms as the foundation for sustainable economic transformation