Energy Efficiency Practices in Nigerian Small and Medium Enterprises (SMEs)

Introduction

This page summarises findings from an open-access study by Oladipo et al. (2022), which assessed energy efficiency awareness, adoption and barriers among Nigerian small and medium enterprises (SMEs). SMEs are critical to Nigeria’s economy, yet their productivity is often constrained by high energy costs and unreliable power supply. Energy efficiency measures can reduce costs, improve competitiveness, and contribute to national climate goals.

Background

SMEs represent over 80% of businesses in Nigeria and are significant employers. However, frequent power outages and high dependence on diesel generators increase operational costs. Energy efficiency (EE) improvements — such as better lighting, efficient motors, insulation, and power management — can offer quick savings and sustainability gains. The study focuses on how Nigerian SMEs understand and implement EE.

Methodology

Survey of SMEs across manufacturing, retail, and service sectors in Lagos, Abuja, and Kano. Interviews with business owners and energy managers. Analysis of barriers to adoption and the role of policies, incentives, and technical support.

Key Findings

Awareness levels: Over 70% of surveyed SMEs were aware of energy-efficient appliances, but only 30% actively implemented them. Awareness was higher in urban centers compared to peri-urban SMEs. Adoption patterns: Common EE practices included switching to LED lighting, adopting energy-efficient cooling systems, and installing power management devices. Few SMEs invested in larger-scale efficiency upgrades (e.g., motors, insulation) due to capital constraints. Barriers to adoption: High upfront costs of efficient equipment. Limited access to affordable finance. Low technical knowledge among SME operators. Lack of government incentives or targeted EE programs for SMEs.

Benefits of Energy Efficiency for SMEs

Reduced energy bills (10–25% savings reported by adopters). Improved reliability when paired with solar-diesel hybrid systems. Enhanced competitiveness and product quality. Lower environmental impact and alignment with Nigeria’s Nationally Determined Contributions (NDCs).

Policy and Program Implications

Development of dedicated SME energy efficiency funds or loan schemes. Awareness campaigns targeting SME associations and chambers of commerce. Establishment of technical support services for energy audits and retrofitting. Integration of EE into Nigeria’s industrial policies and climate strategies.

Practical Recommendations

SMEs should start with low-cost EE interventions such as LED lighting, smart plugs, and behavioral changes. Policymakers should design incentives (tax rebates, subsidies) to reduce upfront costs. Financial institutions should develop EE loan products tailored for SMEs. Training programs should build local expertise in energy auditing and efficient equipment maintenance.

Further Reading

Oladipo T, Akinwale Y, Okonkwo C, et al. (2022). Energy Efficiency Practices in Nigerian Small and Medium Enterprises. Journal of Sustainable Energy Development. Open access under CC BY.

Attribution & Licence

This page summarises material from Oladipo et al. (2022). The original article is licensed under Creative Commons Attribution (CC BY).