Nigeria’s economic growth stifled by infrastructure deficit

Infrastructure is the foundation of any thriving economy, enabling businesses to operate efficiently, facilitating trade, and improving the quality of life for citizens. However, Nigeria’s significant infrastructure deficit poses a major threat to its economic stability, JOSEPHINE OGUNDEJI writes

Nigeria, once celebrated as the “Giant of Africa,” now faces a critical infrastructure deficit that threatens to derail its economic progress.

According to recent reports from the World Bank, the country requires an estimated $3trn over the next 30 years to bridge this gap.

This staggering figure underscores the scale of the problem and the urgency of addressing it. Inadequate infrastructure hampers productivity, raises the cost of doing business, and weakens investor confidence. Without strategic interventions, the country risks prolonged economic stagnation, high unemployment, and reduced global competitiveness.

A reliable infrastructure network is the backbone of any thriving economy, facilitating industrial growth, commerce, and trade. However, Nigeria’s persistent power shortages, dilapidated road networks, and inefficient transportation systems significantly constrain business activities.

The erratic power supply forces companies to rely on costly alternatives such as diesel generators, increasing production costs and limiting the scalability of enterprises.

Similarly, poor road conditions and congested ports lead to delays in the movement of goods and services, making Nigeria a less attractive destination for investors. These inefficiencies create bottlenecks that stifle economic expansion and erode public confidence in the country’s economic potential.

One of the most profound consequences of infrastructure deficits is their impact on job creation and poverty reduction.

With inadequate transport and energy networks, businesses struggle to expand, leading to limited employment opportunities. This is particularly evident in rural areas, where the absence of proper roadways and digital connectivity isolates communities from economic centres.

As a result, many Nigerians migrate to overcrowded urban areas in search of better prospects, exacerbating housing shortages, traffic congestion, and pressure on social services. If left unaddressed, these challenges will continue to widen socioeconomic disparities and undermine long-term economic stability.

Furthermore, Nigeria’s infrastructure crisis directly affects the government’s ability to generate revenue. Inefficient ports and outdated digital systems hinder the smooth collection of taxes and customs duties, reducing the financial resources available for public investments. Additionally, poor infrastructure discourages large-scale industrialisation, leading to a heavy reliance on imports rather than local production. This trade imbalance weakens the naira, fuels inflation, and increases the cost of living for millions of Nigerians.

Without a structured approach to infrastructure investment, the country will struggle to achieve sustainable economic growth.

Infrastructural shortage

According to the 2024 Infrastructure Industry Report, with a rapidly expanding and urbanising population, Nigeria faces a significant infrastructure deficit, projected to reach $878 bn by 2040.

It reported, “However, the country’s current infrastructure stock constitutes only 30 per cent of GDP, far below the World Bank’s benchmark of 70 per cent. Furthermore, the nation ranks behind 23 other African countries on the African Development Bank’s Africa Infrastructure Development Index. This considerable deficit hampers economic growth, sustainable development, and poverty alleviation.

“Despite reforms such as the National Integrated Infrastructure Master Plan and the Highway Development Management Initiative, critical deficits remain, with only 30 per cent of the country’s estimated 200,000 road networks paved. Also, Nigeria’s railway network, plagued by vandalism and funding gaps, is still undeveloped.

“Despite being the cheapest means of transportation and capable of moving freight and passengers across longer distances more efficiently, rail transport constituted less than one per cent of the transportation industry’s contribution to Nigeria’s gross domestic product in 2023, which further intensifies the load on roadways. To effectively address this deficit, increased private-sector investment is essential. However, private investment in Nigerian infrastructure has been low, totalling $8.4 bn from 2013 to 2023, compared to South Africa’s $17.2 bn.”

In an exclusive interview with The PUNCH, the Chief Executive Officer of Ace Hi-Tech Construction Co. Ltd., Adewunmi Okupe, said the country has an acute infrastructure shortage

He said, “We have an acute shortage of infrastructure, and also the infrastructure is in a derelict state as a result of a lack of a maintenance culture. We get excited when new infrastructure is put in place, but oftentimes we do not have a maintenance plan at all. The effect of this is that the little infrastructure we have continues to deteriorate at a great speed.

“The way forward is to improve on our maintenance culture and put in laws for enforcement. The government can also explore public-private partnerships to build, operate, and transfer to increase the availability of infrastructure.

“Infrastructure is the backbone of the economy. The backbone is the frame on which everything else rests. In fact, the shape of the backbone dictates the shape of the entity. When the backbone is unstable, the whole entity, including the economy, becomes unstable. The instability of our infrastructure development in virtually all sectors is a big threat to our national stability.”

The treasurer of the Nigerian Society of Engineers, Victoria Island Branch, Babatunji Adegoke, said Nigeria has an infrastructure deficit, especially in major cities.

He said, “The rate of infrastructure development does not match population growth, as most major infrastructures were built decades ago. Since then, there have been few significant improvements. A country’s economy is strongly linked to its infrastructural development. For example, heavy road traffic due to a lack of alternative routes reduces productivity, as valuable time that could contribute to economic growth is lost in transit. This also adversely affects health and safety.

“Similarly, inadequate electricity generation, transmission, and distribution infrastructure lead to high production costs, making it sometimes cheaper to import goods from countries like China than to produce them locally. The absence of potable water due to a non-existent public water supply system poses significant health risks. A healthy population is essential for productivity.”

According to the African Development Bank Group, Africa’s vast infrastructure deficit is a constraint on its growth, but also an opportunity to leapfrog to new, more efficient technologies.

Nigeria’s deplorable infrastructure

The Managing Director of Fame Oyster & Co. Nigeria, Femi Oyedele, said infrastructure is the physical structures like buildings, roads, bridges, dams, electricity national grid, telecommunication masts, silos for storing excessive agricultural produce, drainage, security, etc., necessary for human living.

He said, “They are man-made amenities that are necessary for modern living and on which the standard of living depends. The security situation in Nigeria, especially in the northeastern part of the country, is below acceptable standards.

“The state of infrastructure in Nigeria is nothing to write home about. The housing sector of Nigeria has about a 28 million unit deficit, the road situation is sympathetic, and the electricity national grid has collapsed about 26 times since 2023. The World Intellectual Property Organisation conducted a survey of 124 countries and placed Nigeria in 124th position out of 124 countries surveyed in innovation output. The Global Infrastructure Table of the World Economic Forum placed Nigeria in 123rd position in the infrastructure ranking of 186 countries in 2024. Nigeria has deficits in nearly all the various infrastructures necessary for a good standard of living. Globally, nations allocate higher budgets to the sectors that have low infrastructure.

“Nigeria cannot do this because of inadequate funds. There is a huge debt profile that must be serviced, so more debts are required to be able to provide more infrastructure. Public-Private Partnership, which some nations see as a catalyst and saviour of aggressive provision of infrastructure, is not popular in Nigeria because of low knowledge of PPP principles and how it works. Infrastructure development is directly correlated with economic development. Infrastructure like farms and agriculture equipment will ensure food security, while infrastructure like shelters ensure maximum standard of living and family cohesion. Happy people contribute maximally to production. Without infrastructure like good roads, commerce will be inhibited, and without infrastructure like transport, the movement of goods and services will be halted. Infrastructure is the lifeblood of the economy.”

Way forward

Adegoke noted that the way forward is to develop a robust maintenance plan for existing infrastructure to ensure it remains fit for purpose.

He added, “This has been successfully implemented in the past through agencies like the Federal Road Maintenance Agency. Additionally, the private sector must be fully engaged urgently and strategically through the Public-Private Partnership model for new infrastructure development. Private organisations can then recoup their investments over time. This model has already been adopted in some private residential estates in major cities like Lagos.”

Meanwhile, Oyedele stated that the way forward was for the government to create a Project Management Office that will be in charge of PPP and do monitoring and evaluation of infrastructure needs versus infrastructure provision.

He added, “Nigeria must improve its rule of law as the level of impunity in the country is unacceptable. We must also prioritise our infrastructure development drive and ensure we concentrate on the provision of infrastructure that will directly impact the efficiency of Nigeria. The efficiency of a country is measured by the number of people who are employed and are contributing to the economic development of the country. Infrastructure provision is not sustainable when the majority of people are not paying taxes.”

In Nigeria’s 2025 proposed budget, a significant allocation of N4.06 trn (approximately $8.75 bn) is earmarked for infrastructure development, focusing on key areas like rail, roads, and energy projects.