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Energy Policy as Ultimate Driver of Competitive Manufacturing
Following the launch of Nigeria Industrial Policy February this year, a former Director General of UNIDO, has made a case for an energy policy if Nigeria is to achieve its industrialisation ambition, writes Dike Onwuamaeze
Former Director General of United Nations Industrial Development Organisation (UNIDO), Dr. Kandeh Kolleh Yamkella, was on a familiar turf on Tuesday, October 6, 2026. The occasion was the 6th Adeola Odutola Lecture, which was organised by the Manufacturers Association of Nigeria (MAN) as part of its 54th Annual General Meeting. The topic of his lecture was “Leveraging National Industrial Policy to Position Nigeria as Africa’s Industrial Hub.”
As he mounted the podium, his audience was expectant. One, the distinguished guest lecturer, Yamkella, has spent more than two decades, studying, analysing, promoting, packaging, delivering and advising government and businesses on industrial policies. Two, the federal government in February 2026 launched Nigeria Industrial Policy (NIP), the first in the country’s history.
The kernel of Yamkella’s message was clear and direct: the federal government should back its NIP with a clearly defined energy policy for the country, stating that energy policy must be part of an effective industrial policy.
He said: “Energy policy is industrial strategy. If we do not fix that, industry will die because no industrial strategy can succeed without reliable electricity.” This is already killing industries in Nigeria as energy cost is reported to constitute between 30 and 40 per cent of manufacturer’s production cost. And for some manufacturers, the energy cost is as high as 60 per cent.
“You know the story. It (energy) is killing your industry. Manufacturers spent an estimated N1.3 trillion on self-generated power in 2025, up from N781 billion in 2023, with energy now accounting for as much as 35 to 40 per cent of production costs. Here, some people even say 60 per cent of their operating costs. Whereas energy makes up roughly between 5.0 and 15 per cent manufacturing costs in countries such as India, Vietnam, Indonesia, Turkey, Mexico and South Africa.”
He remarked that the strategic point where Asia is beating Nigeria and most of Africa, is energy cost which it subsidies for its manufacturers. For Asia, energy and water is subsidised but in factories have to generate their own power and have their own boreholes. “So energy policy has to be part of industrial policy.”
Yamkella stated that countries do not industrialise simply by producing policy documents. According to him, industrial policy matters only when it becomes productive capacity, investment, technology, competitiveness, pushes value addition and creates jobs. Otherwise, it is as good as a piece of paper.
He, therefore, tasked government on practical, deliberate implementation of industrial policy. Policy, he said, is one side of the coin. And government deciding that it will drive industrialisation another.
That is how the Asians have done it. Because the risks and constraints are many even though Nigeria has the essential foundations for an industrial powerhouse. Yet, he reminded his audience that potential is not performance. Otherwise manufacturing contributions should not be between seven and eight per cent of the Gross Domestic Product (GDP) as it is currently in Nigeria. In addition, manufacturing exports generate only 3.0 per cent of the country’s export revenue, which, he said, is far below several other African peers.
He pointed out that Nigeria’s biggest economic paradox has been that the country has a large market and abundant resources, yet imports dominate everyday consumption.
“I am aware of the government’s effort to change this narrative through the Nigerian industrial policy launched on February 17 this year. Nigeria’s industrial challenge is therefore not a shortage of ambition or enterprise. It is the need to convert scale into productivity, competitiveness, and exports. So we must ask ourselves what it will take to make this ambition a reality at a time that the world is changing,” he said.
One of the ways to realise Nigeria’s industrial ambition is for the government to ensure that its newly launched industrial policy must become industrial action.
The former UNIDO chief said, “Policy is only the starting point. The true test of any industrial policy lies not in its design alone, but in the execution. So there are key parameters that government must monitor deliberately to check if the policy is working. These parameters are how many new factories are being established because of the new policy? How many existing factories are expanding? How much domestic value is created? How much investment is mobilised?
“I say this because in my career at UNIDO, over 75 countries I went to, Bangladesh, Sri Lanka, the European countries, China, you name it, their governments are actually visiting factories to measures performance. If it is not going where they want it, the government will put public capital and change policy. The countries I know in Asia that made that break, like Bangladesh, Sri Lanka and others who are catching up, Vietnam, Cambodia, their governments measure how many new factories did we create?”
Yamkella said that rather than waiting for MAN to complain, governments in Nigeria should be asking MAN: how do we help your members grow? That’s how Indians grow.
He added, “That is why when the consultant came here to look at your textile sector, he looked at the cost of energy and water in Nigerian factories and said that even with cheap labour, you cannot compete because we find other ways to subsidise them by making electricity cheap. So government itself must want to measure and be a friend of MAN and the manufacturers on how to make them do better so that they can create jobs and wealth? It is deliberate policy. It is not just a paper. Government has to be deliberate. But there’s some hope.”
Apart from addressing the high cost energy, Yamkella said that Nigeria must think beyond its borders by become world’s dominant players in cement. fertiliser and electric car battery manufacturing. This, he stated, will require a new supply chain that will link the country with Togo and Congo.
“Now, fertilizer. Nigeria is producing urea. Togo has phosphate, and Congo has potash. Nigeria could be top five producer of fertilizer in five years. That is the aim, that is the dream. That is why Nigeria must think beyond its borders. You have the core already; your neighbours have the others. Morocco, Togo, Congo. It’s about you producing. But industrial policy should support that now to grow. How do we make that transform Nigeria into one of the leading fertilizer producers of the world? Because I tell you, from America to Europe, everybody’s struggling for fertilizer, ”he said.
Yamkella also believed that Nigeria can lead Africa in automobile manufacturing by using deliberate policy actions to drive production.
He said: “Nigeria’s industrial future cannot be defined by domestic market alone. Nigeria must manufacture for Nigeria, but also for West Africa, the rest of Africa, and in fact, the world. The opportunity before us is greater than the constraints. I know that, yes, Nigeria can be the powerhouse and the hub for West Africa, and in fact, for the rest of the continent as well.”
He recognised that Nigeria has one of Africa’s largest automotive markets and significant assembling capacity. But remarked that there is gap between license capacity and actual production that reminds us that license are not factories. According to him, “installed capacity is not production and assembly without local value chains is not industrial transformation.”
Nevertheless, the opportunity, however, is substantial in Nigeria to compete in electric motorcycles, battery swapping systems, buses, fleet vehicles, battery packs assembly, charging infrastructure, and other components for the automotive industry.
“But the biggest opportunity I see, and you are doing it already because your solid minerals policy on lithium that says if you want our lithium, you should process 30 per cent here,” he said, adding that Nigeria has “one policy already that is already attracting three, four companies to process your lithium. Put another policy to say now you make the batteries here.
“You become the battery hub for the region. That is industrial policy in action. But it has to be backed now by other policies,”he said.
Yamkella said that it is good that Nigeria has come back to embrace industrial policy after decades of deindustrialisation that was occasioned by wholesale embrace of the Washington Consensus that it is all about market liberalisation on the premise that industrial policy is not necessary anymore.
“And of course, Africa followed that doctrine. And a lot of industries died, especially here (Nigeria). UNIDO did studies here in Nigeria during my tenure to show the death of Nigerian industry. And we call it de-industrialisation because Nigeria suddenly opened its market. Well, when I went to Asia, it was the opposite. They were still supporting industry.” The Asians never listened. They continued to use public capital, public policy to directly support the industry,” he added.
