•Says 30% interest rates make manufacturing difficult
•Recalls textile losses, 8,000 job cuts
NIGERIA: Africa’s leading industrialist, Aliko Dangote, has identified unreliable electricity, inconsistent government policies and high borrowing costs as major obstacles to Nigeria’s industrialisation.
Dangote raised the concerns in an interview with ARISE News, where he spoke about the challenges of building and sustaining large-scale businesses in Nigeria and the conditions required for the country to develop a competitive manufacturing base, reports Publicspherelive.
According to him, manufacturers cannot compete effectively when they are forced to contend with inadequate electricity, expensive financing and unpredictable changes in government policies.
Dangote said the power situation remains one of the biggest constraints on industrial production, noting that businesses are often compelled to generate their own electricity at significant cost.
The additional cost of diesel, gas and alternative power infrastructure, he suggested, ultimately raises production costs and makes Nigerian manufacturers less competitive.
The concern is particularly significant for the Dangote Group, whose operations include cement, fertiliser and petroleum refining, all of which require substantial energy.
The industrialist has previously advocated greater investment in infrastructure and is developing projects that incorporate their own power and other facilities to support industrial production.
Dangote also criticised policy inconsistency, arguing that businesses making long-term investments require a stable regulatory and economic environment.
He noted that manufacturing projects often involve billions of naira or dollars and may take years to recover their investment.
Frequent changes to tariffs, import rules, taxes, foreign exchange arrangements and other government policies, he said, can undermine the viability of such investments.
Dangote cited his experience in the textile industry as an example.
He described his textile investments as his biggest business mistake, saying the businesses eventually collapsed amid what he described as inadequate policy protection and competition from imported products.
According to reports, the industrialist said nearly 8,000 workers were eventually laid off across his textile operations, including 6,920 workers at Nigerian Textile Mills in Ikeja.
Dangote also attributed part of the difficulties experienced by the textile industry to what he described as dumping of textiles from countries including China and India.
The textile industry was once a major source of employment and industrial activity in Nigeria, particularly in Kano, Kaduna and other parts of the North, but several factories have closed over the years amid infrastructure problems, financing constraints, competition from imports and other structural challenges.
Beyond electricity and policy uncertainty, Dangote identified the cost of credit as another major impediment to industrial development.
He said it was difficult to build manufacturing capacity when interest rates were around 30 per cent.
Manufacturing requires substantial upfront capital, meaning high borrowing costs can make the establishment or expansion of factories significantly more expensive.
The burden is potentially greater for small and medium-sized manufacturers, which generally have fewer financing options than large corporations.
Dangote’s comments come as his conglomerate deepens its presence in Nigeria’s energy sector, with the Dangote Petroleum Refinery operating at large scale and the company seeking to raise about ₦2.15 trillion through its public offering.
The refinery, which represents a major private-sector investment in domestic petroleum refining, is part of Dangote’s broader strategy of producing locally products Nigeria previously imported.
The industrialist has similarly invested heavily in cement and fertiliser production, arguing for greater domestic manufacturing and value addition.
However, Dangote’s latest intervention suggests that private investment alone cannot resolve the structural constraints facing Nigerian industry.
For manufacturers to expand, he argued, the wider business environment must provide dependable electricity, affordable financing, predictable regulation, infrastructure and conditions that allow locally produced goods to compete.
The issue is particularly important as Nigeria seeks to reduce dependence on raw-material exports, expand manufacturing and create more jobs through domestic production.
Where electricity and financing costs remain high, manufacturers face higher production expenses, potentially affecting prices, investment decisions and their ability to compete with imported goods.
Dangote’s experience also raises questions about the sustainability of industrial investments when companies are required to provide infrastructure that would ordinarily form part of the broader economic environment.
His textile experience contrasts with the later development of his cement, fertiliser and refining businesses, which have involved massive investments and, in some instances, significant private infrastructure.
The industrialist’s central argument is that Nigeria’s industrial ambitions require policy continuity.
Investors making 10-, 20- or 30-year decisions need greater certainty that the economic and regulatory framework underpinning their investments will not be radically altered without adequate consideration of the impact on existing businesses.
As Nigeria seeks to attract more investment, expand exports and move further into value-added production, the issues raised by Dangote place electricity, financing and policy stability at the centre of the country’s industrialisation debate.
