Infrastructure Gaps Stifle Nigeria’s Economic Growth, Reveals Report

A recent report by the Centre for African Studies at Nanyang Technology University highlights critical infrastructure deficiencies as a major hindrance to economic growth in Nigeria. Titled ‘Back to Growth: Priority Agenda for the Economic Revival of Nigeria,’ the report, presented by Amit Jain, the Center’s Director, emphasizes the country’s lack of adequate ports, power, roads, running water, and health services. This infrastructure gap is exacerbated by an annual budget that falls below 5% of the estimated $100 billion needed for comprehensive development.

The report underscores the economic consequences of insufficient infrastructure, revealing that 40% of agricultural produce is lost due to transportation challenges. Workplace productivity suffers from traffic congestion on poorly maintained roads, while inefficient ports leave ships idle for extended periods. Small businesses resort to expensive diesel generators due to frequent power cuts, contributing to the overall economic drag. Despite the government’s promotion of Public-Private Partnerships (PPPs) to bridge the gap, financial challenges persist, and flaws in procurement processes hinder progress.

The energy sector is a focal point in the report, with unreliable power supply costing the economy at least 5% of its GDP annually (approximately $28 billion). Nigeria lags behind other African countries in electrification, with only 55% of the country having access to electricity. Businesses connected to the national grid often experience power cuts, receiving only five hours of electricity per day. The reliance on petrol generators by 30% of small and medium-sized businesses and 26% of households further exacerbates the issue, with these generators collectively providing eight times more power than the national grid. However, their high cost and associated health risks, leading to 1,500 deaths annually from smoke inhalation, contribute to the economic challenges.

Transport infrastructure emerges as another critical concern, with Nigeria having only 60,000 km of paved roads, making it one of the least connected countries globally. Years of inadequate investment, politically driven projects, and frequent mid-way abandonments due to financial constraints or administrative issues have led to this deficit. The poor road and rail networks result in frequent vehicle breakdowns, hindering efficient transportation and increasing the cost of doing business. Nigerian ports also face challenges, including abandoned cargoes due to administrative bureaucracy and high operational costs, further impacting trade competitiveness.

The information and communication technology (ICT) sector, a significant contributor to Nigeria’s GDP, faces its own set of challenges. While Nigeria accounts for a quarter of Africa’s internet users, it falls behind the global average with an internet penetration rate of around 40%. Service providers grapple with issues such as theft of telecom equipment, unstable power supply, various tax regimes, vandalism, legislative changes, safety concerns affecting network expansion, difficulties accessing currencies, and damage to underwater cables caused by marine transportation systems.

In conclusion, the report underscores the urgent need for addressing Nigeria’s critical infrastructure gaps to spur economic growth. Without comprehensive solutions to these challenges, building a competitive economy and fostering growth will remain unattainable.