Ajaokuta Steel Plant: Why Privatization is the Only Solution
The current attempt by the Nigerian government to inject additional funds into the long-dormant Ajaokuta Steel Complex is expected to face significant challenges, as suggested by experts. Shuaibu Audu, the Minister of Steel Development, has revealed the government’s intention to secure N35 billion from financial institutions to revive the complex and resume its operations.
Critics, however, contend that previous efforts to revitalize the complex have all been unsuccessful and recommend that the government explore the option of selling Ajaokuta to credible international investors. Despite an increase in budget allocation to the Ajaokuta Steel Complex in the 2024 budget, the plant has remained inactive for over 42 years, with personnel costs comprising over 90% of the allocation.
The Ajaokuta Steel Complex, commissioned by former President Shehu Shagari in 1979 with the ambition of making it the cornerstone of Nigeria’s industrialization, has been plagued by mismanagement and remains incomplete to this day. Despite various unsuccessful attempts at privatization, the government retook control of the complex in 2016, only to encounter further challenges, including international court proceedings and a significant settlement payout to a concessionaire.
The current plan to borrow additional funds from financial institutions to revive the complex has been met with skepticism. Critics argue that this approach would only serve to increase the national debt stock, without guaranteeing any tangible results. Instead, they urge the government to consider full privatization of Ajaokuta, with a focus on attracting reputable global steel sector players as core investors.
According to the National Bureau of Statistics, Nigeria imported iron, steel, and metals worth N837.76 billion in the third and fourth quarters of 2021, indicating the country’s reliance on imported steel products. In light of this, experts argue that the government’s persistent efforts to revive Ajaokuta are neither sustainable nor practical, given the nation’s heavy reliance on imported steel products.
In view of these challenges, privatization is deemed as the only viable solution for Ajaokuta Steel Complex. Allowing credible international investors to assume ownership and operation of the plant could finally unlock its potential and contribute to Nigeria’s industrialization goals.
In conclusion, the repeated attempts to inject funds into Ajaokuta Steel Complex have yielded little success, and hence, a new approach is imperative. Privatization, with a focus on attracting reputable global investors, is seen as the most promising path forward for Ajaokuta. This change in strategy could bring about the much-needed rejuvenation of the complex and position it as a key player in Nigeria’s steel industry.
