Lack Of Electricity Killing Industries In Nigeria, Says AfDB President

The President of the African Development Bank Group, Dr. Akinwumi Adesina, has said that the poor power supply in Nigeria is killing the country’s quest for industrialisation.

The AfBD Boss said this at the 50th Anniversary of the Manufacturers Association of Nigeria ( MAN) which held on Tuesday in Abuja.

Delivering the Adeola Odutola lecture themed: ‘Overcoming binding constraints to competitive manufacturing for intra-regional trade,’ Adesina identified inconsistent electricity supply as a major challenge facing Nigeria’s manufacturing sector.

Other bottlenecks, according to him, include load shedding and lack of adequate investment in power value chain.

These challenges, he stated, had stifled capacity utilization of Nigeria’s factories to around 40 per cent as against the desired utilization capacity of 70 per cent.

He said the capacity under-utilisation is what is making many firms to move to neighboring countries, where there is greater macroeconomic stability, enabling environments, and a much better framework for ease of doing business.

Quoting statistics to back his assertion of worsening state of electricity in Nigeria, he said the International Monetary Fund estimated that Nigeria loses $29bn annually, representing 5.8 per cent of its Gross Domestic Product to poor power supply.

He also stated that Nigerians spend $14bn annually importing generators and fuel.

The AfDB Boss said, “A lack of electricity is killing Nigerian industries, something Chief Odutola was concerned about in 1971.

“According to the Manufacturers Association of Nigeria, industries spent N93.1bn on alternative energy in 2018, 47 years after Odutola. Today, no business can survive in Nigeria without generators. Consequently, the abnormal has become normal.

“Traveling on a road one day in Lagos, I saw an advertisement on a billboard which caught my attention. It was advertising generators, with the bold statement ‘we are the nation’s number one reliable power supplier!’

” Compare that with the situation of South Korea which has diversified its exports into high-value manufacturing. On a trip to South Korea few years ago, I visited the Korea Electric Power Corporation (KEPCO).

” While being briefed, I was told that the country experiences only 2 minutes of power outage. Not sure I heard correctly, I asked whether they meant 2 minutes per hour, 2 minutes per day, 2 minutes per week or month. The response was quick and resolute: 2 minutes per year.”

Adesina called on the government to take some decisive steps to come out of the power sector crisis or risk a situation where its industries will remain uncompetitive.

“There should be massive investments in variable energy mixes, including gas, hydropower resources and large scale solar systems to ensure stable base-load power for industries, to direct power preferentially to industries, and to support industrial mini-grids to concentrate power in industrial zones.

“In addition, we should develop more efficient utilities, reducing technical and non-technical losses in power generation, transmission and distribution systems”.

He said the Africa Development Bank has invested massively in the power sector in Nigeria to support the implementation of the Power Sector Recovery Program.

The bank, he noted, has provided $200m for the Nigeria electrification project, designed to fill the electricity access gap in Nigeria.

This, according to him, was in addition to $210m the AfDB invested in Nigeria’s transmission project, to strengthen the grid power evacuation and regional interconnection.

To further support Nigeria’s power sector, the AfDB Boss said the bank also launched the $20bn Desert to Power initiative meant to provide electricity for 250 million people across 11 countries of the Sahel, including Northern Nigeria.

Akinwumi also noted that industrial development is constrained by the poor state of transport, ports and logistic infrastructure in Africa.

For instance, he said it costs $35,000 to export 100 tons of produce from Nigeria compared to just $4,000 in Ghana.

About 90 per cent of passenger and freight movements in Nigeria, according to him rely on roads but only 18 per cent of the roads are paved while its seaports are gridlocked.

In his address of welcome, MAN President, Engr. Mansur Ahmed, said the manufacturing sector was severely hit by the Covid-19 pandemic.

He said the government’s prompt interventions by way of stimulus packages saved job losses and helped in rescuing small businesses.

However, the MAN President lamented that the economy is still fragile and much still needs to be done to sustain growth and restore its resilience.

He said the manufacturing sector must continue to be supported and encouraged to scale-up capacity, reduce cost of operations and improve competitiveness.