The True Cost Of Chasing Ajaokuta Dreams

When Aliko Dangote declared astatine his property league past week that Ajaokuta Steel Complex would ne'er work, helium provoked outrage. For galore Nigerians, particularly those successful Kogi State wherever the works is located, his words were not conscionable blunt—they were sacrilegious. How could Africa’s richest antheral disregard what successive governments person paraded arsenic the Holy Grail of Nigeria’s industrialization?

To recognize wherefore his words stung, 1 indispensable revisit the governmental origins of Ajaokuta. Conceived successful the precocious 1970s during Nigeria’s lipid boom, the task was driven arsenic overmuch by Cold War geopolitics arsenic by economical logic. Flush with petro-dollars and anxious to task modernity, Nigeria turned to the Soviet Union to physique a elephantine integrated alloy plant. It was meant to anchor dense industry, powerfulness railways, shipbuilding, automobiles, defense, and construction.

But past is unforgiving. By the mid-1980s, planetary steelmaking was already shifting toward mini-mills and electrical arc furnaces—smaller, much flexible, and much capital-efficient models. Countries that embraced this transition, specified arsenic South Korea and aboriginal India, stayed competitive. Nigeria, however, ne'er completed Ajaokuta. For 4 decades, it has remained frozen successful a authorities of “95 percent completion,” a operation that has go some a bureaucratic mantra and a nationalist punchline.

The information is that Ajaokuta was arsenic overmuch astir symbolism arsenic substance. It embodied Nigeria’s postcolonial ambition to leapfrog into concern power. Yet symbolism without execution is costly. Today, Ajaokuta stands arsenic a monument to misplaced ambition—a committedness deferred truthful agelong that its relevance has been overtaken by technological and economical shifts.

The Economics of Sunk Costs

The defence of Ajaokuta often rests connected a elemental but flawed argument: excessively overmuch wealth has already been spent to wantonness it. This is the classical sunk outgo fallacy—the thought that past investments should dictate aboriginal spending, adjacent erstwhile prospects are grim. Economists pass against this trap due to the fact that wealth already mislaid cannot beryllium recovered; the lone rational question is whether caller spending tin output aboriginal returns.

Nigeria has reportedly sunk much than $8 cardinal into Ajaokuta implicit 4 decades, yet not a azygous ton of commercialized alloy has been produced. Advocates of revival reason that further billions volition yet transverse the threshold into production. But this ignores a brutal economical reality: the outgo of resuscitating an incomplete, obsolete works volition astir surely transcend the outgo of gathering modern alternatives from scratch.

Comparisons with different industries uncover the information of nostalgia-driven policymaking. The Kaduna and Warri refineries, similar Ajaokuta, were erstwhile nationalist trophies. Today, they are fiscal sinkholes. Billions of dollars person been spent connected endless “turnaround maintenance” contracts, yet their combined output is negligible. Every caller medication promises revival, and each medication fails. The logic is ever the same: “we person already invested excessively overmuch to halt now.” The result is ever the same: discarded without results.

Clinging to Ajaokuta risks repeating this rhythm astatine an adjacent larger scale. It is not capable to accidental that Tata Steel successful Jamshedpur (1907) oregon South Korea’s Pohang (1970s) are inactive operational. The quality is that those plants were completed, commissioned, and continuously upgraded. They generated gross to warrant reinvestment. Ajaokuta has ne'er crossed that threshold. What Nigeria possesses is not an aged but moving works successful request of upgrades, but an incomplete relic whose foundational exertion belongs to different era.

The Opportunity Cost of Nostalgia

The statement astir Ajaokuta is not simply astir steel—it is astir priorities. Every dollar spent reviving it is simply a dollar not spent connected alternatives with higher returns. Economists telephone this accidental cost: the worth of the adjacent champion enactment foregone. For Nigeria, wherever nationalist finances are nether terrible strain—over 90 percent of authorities gross is consumed by indebtedness servicing—the accidental outgo of Ajaokuta is enormous.

Reviving the works is estimated to necessitate betwixt $5 and $10 billion. With that aforesaid amount, Nigeria could concern aggregate modular alloy plants crossed antithetic regions, each tailored to section request and powered by electrical arc furnaces. This is not theoretical. Globally, steelmaking has shifted decisively toward this model. In the United States, implicit 70 percent of alloy output present comes from mini-mills. In India, modular plants complement older integrated ones, enabling faster scaling and much businesslike usage of capital. These plants are quicker to build, cheaper to maintain, and adaptable to fluctuating demand.

Moreover, they align amended with Nigeria’s structur...