Inspenet, July 22, 2023.
African Development Bank President Akinwunmi Adesina noted that power failures, along with other factors, are restricting industrial production capacity in Nigeria. These statements were made during his participation in a conference at the Business Day Chief Executive Officers, CEO Forum in Lagos.
“Today the capacity utilization of the factories is around 40% compared to the desired 70%,” he said at the conference entitled: The day the lion roared! Make Nigeria a global industrial and economic giant.”
“The reality is that companies are moving to other neighboring countries, where there is greater macroeconomic stability and a conducive environment, with greater ease of doing business.”
“The biggest challenge facing the industry is the high cost and unreliability of the electricity supply.”
Electrical failures: the great challenge to overcome
Akinwunmi Adesina explained that frequent disconnection of the electrical load and unreliable supply have significantly raised manufacturing costs, making them uncompetitive.
He also highlighted that most of the manufacturing companies in Nigeria rely on generators, diesel and heavy fuel oil for self-supply of energy. This practice results in polluting emissions , classifying these industries as “brown” instead of being “green” in terms of sustainability and care for the environment.
He said: “The International Monetary Fund (IMF) has estimated that Nigeria loses $29 billion a year due to lack of and unreliable energy supply or 5.8% of its GDP. Plus, Nigerians spend $14 billion a year on generators and fuel.”
“Unless Nigeria decisively addresses its energy deficiency and reliability, its industries will remain uncompetitive.”
Akinwunmi Adesina stressed the need to make significant investments in the gas sector in order to generate power on a stable basis. This would ensure a reliable base power supply for industries, as well as for hydroelectric systems, large solar installations, and preferably direct power for industries.
In addition, he stressed that these investments would support the creation of industrial mini-grids to concentrate energy in specific areas of industrial activity.
The president of the African Development Bank also called for improving the efficiency of public services and reducing technical and non-technical losses in energy generation, transmission and distribution systems. In that regard, he mentioned that the bank has made considerable investments in the Nigerian power sector to support the implementation of the Power Sector Recovery Program.
Likewise, he pointed out that the industrial development of Nigeria has been restricted by the deficient conditions of the transport, port and logistics infrastructure. Regarding the African Continental Free Trade Area (AfCFTA), he stated that this initiative provides a great opportunity for Nigeria to stimulate the growth of its manufacturing sector through an export orientation.
In this regard, he urged the country to take advantage of the opportunities offered by AfCFTA to boost its economy and encourage industrial development.
Source: https://newsdigest.ng/afdb-president-says-electricity-bane-of-nigerias-manufacturing-industry/
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