Nigeria’s Industrialization Hampered by Unstable Electricity and Inconsistent Policies: The Dangote Perspective
Nigeria’s industrialization journey has been fraught with challenges, and according to Alhaji Aliko Dangote, the President of the Dangote Group, unstable electricity supply and inconsistent government policies are the primary culprits. Dangote, Africa’s richest man, asserts that operating businesses abroad is significantly cheaper, roughly 30% less, compared to running the same businesses in Nigeria and other African countries. This cost disparity stems from the reliable electricity infrastructure prevalent in developed nations, starkly contrasting the erratic power supply that plagues Nigeria. He highlighted the stark reality of setting up industries in Nigeria, where businesses are forced to shoulder the substantial burden of building their own power generation infrastructure, a cost non-existent in developed economies with stable power grids. This stark difference creates a significant competitive disadvantage for Nigerian industries.
Dangote’s assessment is based on his extensive experience building and operating businesses across Africa. He cites his group’s most profitable cement factory located in Ethiopia as a prime example of how stable electricity fosters industrial growth. The Ethiopian government’s commitment to providing consistent and affordable electricity for a fixed five-year period allowed for predictable operational costs and facilitated robust planning. This predictable cost environment is crucial for long-term planning and sustained profitability in any industrial venture. This stands in sharp contrast to the Nigerian scenario, where businesses often grapple with unpredictable power costs, hindering their ability to plan effectively and compete globally.
The lack of reliable electricity in Nigeria has far-reaching consequences. Beyond the immediate financial burden of self-generating power, it undermines productivity, increases operational costs, and discourages both domestic and foreign investment. These factors collectively hinder Nigeria’s industrial growth and its ability to compete in the global market. The continuous struggle to maintain a stable power supply not only diverts resources that could be used for expansion and innovation but also creates an environment of uncertainty that deters potential investors.
Furthermore, Dangote emphasizes the detrimental impact of inconsistent government policies on Nigeria’s industrialization efforts. He uses a striking analogy of a footballer about to score a goal only to have the goalpost moved at the last minute. This unpredictable policy environment creates uncertainty and frustrates long-term investment planning, hindering the sustained growth required for industrialization. This inconsistency forces businesses to constantly readjust their strategies, diverting valuable resources away from core operations and hindering their ability to compete effectively.
Dangote argues that the government is a major stakeholder in industrial development, primarily through tax revenues. Using his cement business as an example, he illustrates how a significant portion of every Naira generated goes back to the government through various taxes, including corporate tax, value-added tax, education tax, and health tax. Furthermore, shareholders in profitable companies pay withholding tax to the federal government, in addition to taxes levied by state and local governments. This intricate web of taxation highlights the government’s vested interest in the success of industries. The interconnectedness of the government’s revenue streams and industrial success underscores the need for consistent and supportive policies to foster a thriving industrial sector.
He points out that when businesses thrive, the government benefits substantially from increased tax revenues. Conversely, business closures lead to significant revenue losses for the government. This reciprocal relationship underscores the importance of government creating a conducive environment for industrial growth. Dangote believes continuous engagement with the government, emphasizing the mutual benefits of industrialization, is key to reducing policy inconsistencies. Educating policymakers about the far-reaching impacts of their decisions, particularly on job creation and economic growth, is crucial for establishing a stable and predictable policy environment.
In conclusion, according to Dangote, Nigeria’s industrialization ambitions are severely hampered by two key challenges: unstable electricity supply and inconsistent government policies. Addressing these issues requires a concerted effort from both the government and the private sector. Investing in reliable power infrastructure and creating a predictable policy environment will not only stimulate industrial growth but also contribute significantly to national development. A stable and consistent policy framework that encourages long-term investment is paramount for attracting both domestic and foreign capital, ultimately driving Nigeria’s industrialization forward. The government must recognize its role as a partner in this endeavor and work collaboratively with the private sector to create a conducive environment for sustainable industrial growth.
