AACS Fortnightly
(Mondays)
3rd July 2023

From the Chairman’s Desk,

Setting The Economic Agenda Series – INFRASTRUCTURE (Power)

At AACS, the fifth of our six critical issues in setting the economic agenda is INFRASTRUCTURE https://lnkd.in/eiRE9A6S. The infrastructure gap in Nigeria as identified by The African Development Bank (AfDB) is about $100bn annually. The Federal Ministry of Budget and National Planning estimates that the current infrastructure stock amounts to around 35% ($167bn) of the GDP, falling short of the World Bank’s benchmark of 70%. President Bola Ahmed Tinubu has pledged to prioritise the upgrade of the nation’s infrastructure to propel the country to its potential.

AACS reiterates the fierce urgency of fixing the nation’s infrastructure needs to serve as the springboard of the required productivity surge, and at the heart of this is Power. The national grid with an installed capacity of 12,522 MW of electricity only dispatches 35% of its capacity, clearly minuscule in a country of over 210m people for both domestic and commercial sustenance. In comparison, the installed capacity in South Africa and Egypt (with populations of 59m and 102m) are 58,095 MW and 59,500 MW respectively. Generation is only a part of the issue, as transmission and distribution is also comatose. The DISCOs have in no way invested adequately in the distribution network to facilitate effectiveness, even if there was enough generation. The absence of this basic infrastructure is at the heart of debilitating poverty, as it hinders massive commercial activities, kills SMEs, and arguably contributes between 40-50% of the cost of doing business. The World Bank estimates that Nigerian businesses lose $29bn yearly to poor electricity. This is a conservative estimate that does not take into consideration the growth potential it stifles, the overwhelming health and environmental hazards of tens of millions of fumes emitting generators, and indeed the quality of life of the average Nigerian.

At AACS, we believe that even in the face of challenging revenue (some of which are thankfully being tackled) reallocating a significant portion to fixing the power problem is Primus. The prosperity and cost saving potentials beneath adequate power generation and distribution is humongous, and the relief it brings to every household and business activity is total. This product will be felt by every business, citizen and resident of the nation. In the spirit of the reforms as well, cost reflective tariffs will be insisted upon, and the hordes of millions evading these payments or engaging in illegal connections will be tackled.

We reiterate that if ever there is a silver bullet to dealing with the multitude of the nation’s issues, fixing the Power problem will be it. It simply makes everyone richer, healthier and more productive. Literarily everyone.

Falil Ayo Abina

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