Unlocking the potential of the power sector for industrialization and poverty alleviation in Nigeria

UNCTAD Research Paper No. 6

Nigeria is the biggest economy in Africa, and now has the potential to play a more active role in the global economy than in the past.

Actualizing this potential will depend largely on the degree to which it can achieve industrial development and create the conditions for long term sustained growth and poverty reduction.

So far, Nigeria has made very modest progress in terms of manufacturing development due to domestic policy failures, structural and infrastructural constraints and a challenging global economic environment.

There is huge potential for expansion of the manufacturing sector that is currently not being exploited as evidenced by the high domestic demand for consumer products that is currently being met through manufactures imports and the availability of skilled and semi-skilled workforce.

Unlocking this potential will require lifting the binding constraint imposed by poor access to affordable and stable power supply.

This paper examines the role of poor power supply services in the challenge of industrialization in Nigeria and identified three main channels through which poor power supply has had a deleterious impact on industrialization in the country:

  1. Low manufacturing capacity utilization

  2. Lack of competitiveness

  3. Lack of firm growth

It also reviews recent reforms implemented by the Nigerian government to address the power problem and makes policy recommendations on what needs to happen for the power sector to play a more supportive role in the industrial development process.

28 Aug 2017