AfDB president says electricity bane of Nigeria’s manufacturing industry

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Akinwunmi Adesina, the President of the African Development Bank (AfDB), has highlighted the lack of electricity as a major factor limiting industrial manufacturing in Nigeria. Speaking at the Business Day Chief Executive Officers (CEO) Forum in Lagos, Adesina emphasized that the low capacity utilization of factories, which currently stands at around 40% compared to the desired 70%, is due to various constraints, with the high cost and unreliability of electricity supply being a significant challenge.

Adesina noted that many manufacturing companies in Nigeria resort to self-provision of energy through generators, diesel, and heavy fuel oil, which not only increases manufacturing costs but also contributes to environmental pollution. He highlighted that the International Monetary Fund (IMF) estimates Nigeria’s annual loss at $29 billion, or 5.8% of GDP, due to the lack of reliable power supply. Additionally, Nigerians spend $14 billion annually on generators and fuel, while industries spent N93.1 billion on alternative energy in 2018.

To address this issue, Adesina called for massive investments in gas-to-power projects, stable baseload power for industries, increased utilization of hydropower resources, large-scale solar systems, and the development of industrial mini-grids. He emphasized the need for more efficient utilities and the reduction of technical and non-technical losses in power generation, transmission, and distribution systems.

Adesina also highlighted the AfDB’s investments in Nigeria’s power sector, including the Nigeria Electrification Project and the Nigeria Transmission project, aimed at improving electricity access and strengthening grid power evacuation and regional interconnection. He mentioned the AfDB’s Desert to Power initiative, a $20 billion project aimed at providing electricity to 250 million people across 11 countries in the Sahel, including Northern Nigeria.

In addition to the electricity challenge, Adesina highlighted the poor state of transport, ports, and logistics infrastructure as constraints to industrial development. He emphasized that the Africa Continental Free Trade Area (AfCFTA) presents a significant opportunity for Nigeria to drive export-driven industrial manufacturing and urged the country to take advantage of the opportunities within the AfCFTA to diversify its economy.

Addressing the electricity deficiency and improving infrastructure will be critical for Nigeria’s industrial sector to become more competitive, attract investments, and drive sustainable economic growth.

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