When Aliko Dangote declared at his press conference last week that Ajaokuta Steel Complex would never work, he provoked outrage. For many Nigerians, especially those in Kogi State where the plant is located, his words were not just blunt—they were sacrilegious. How could Africa’s richest man dismiss what successive governments have paraded as the Holy Grail of Nigeria’s industrialization?
To understand why his words stung, one must revisit the political origins of Ajaokuta. Conceived in the late 1970s during Nigeria’s oil boom, the project was driven as much by Cold War geopolitics as by economic logic. Flush with petro-dollars and eager to project modernity, Nigeria turned to the Soviet Union to build a giant integrated steel plant. It was meant to anchor heavy industry, power railways, shipbuilding, automobiles, defense, and construction.
But history is unforgiving. By the mid-1980s, global steelmaking was already shifting toward mini-mills and electric arc furnaces—smaller, more flexible, and more capital-efficient models. Countries that embraced this transition, such as South Korea and later India, stayed competitive. Nigeria, however, never completed Ajaokuta. For four decades, it has remained frozen in a state of “95 percent completion,” a phrase that has become both a bureaucratic mantra and a national punchline.
The truth is that Ajaokuta was as much about symbolism as substance. It embodied Nigeria’s postcolonial ambition to leapfrog into industrial power. Yet symbolism without execution is costly. Today, Ajaokuta stands as a monument to misplaced ambition—a promise deferred so long that its relevance has been overtaken by technological and economic shifts.
The Economics of Sunk Costs
The defense of Ajaokuta often rests on a simple but flawed argument: too much money has already been spent to abandon it. This is the classic sunk cost fallacy—the idea that past investments should dictate future spending, even when prospects are grim. Economists warn against this trap because money already lost cannot be recovered; the only rational question is whether new spending can yield future returns.
Nigeria has reportedly sunk more than $8 billion into Ajaokuta over four decades, yet not a single ton of commercial steel has been produced. Advocates of revival argue that additional billions will finally cross the threshold into production. But this ignores a brutal economic reality: the cost of resuscitating an incomplete, obsolete plant will almost certainly exceed the cost of building modern alternatives from scratch.
Comparisons with other industries reveal the danger of nostalgia-driven policymaking. The Kaduna and Warri refineries, like Ajaokuta, were once national trophies. Today, they are fiscal sinkholes. Billions of dollars have been spent on endless “turnaround maintenance” contracts, yet their combined output is negligible. Every new administration promises revival, and every administration fails. The logic is always the same: “we have already invested too much to stop now.” The outcome is always the same: waste without results.
Clinging to Ajaokuta risks repeating this cycle at an even larger scale. It is not enough to say that Tata Steel in Jamshedpur (1907) or South Korea’s Pohang (1970s) are still operational. The difference is that those plants were completed, commissioned, and continuously upgraded. They generated revenue to justify reinvestment. Ajaokuta has never crossed that threshold. What Nigeria possesses is not an old but working plant in need of upgrades, but an incomplete relic whose foundational technology belongs to another era.
The Opportunity Cost of Nostalgia
The debate about Ajaokuta is not merely about steel—it is about priorities. Every dollar spent reviving it is a dollar not spent on alternatives with higher returns. Economists call this opportunity cost: the value of the next best option foregone. For Nigeria, where public finances are under severe strain—over 90 percent of government revenue is consumed by debt servicing—the opportunity cost of Ajaokuta is enormous.
Reviving the plant is estimated to require between $5 and $10 billion. With that same amount, Nigeria could finance multiple modular steel plants across different regions, each tailored to local demand and powered by electric arc furnaces. This is not theoretical. Globally, steelmaking has shifted decisively toward this model. In the United States, over 70 percent of steel output now comes from mini-mills. In India, modular plants complement older integrated ones, enabling faster scaling and more efficient use of capital. These plants are quicker to build, cheaper to maintain, and adaptable to fluctuating demand.
Moreover, they align better with Nigeria’s structural realities. Power shortages, logistical bottlenecks, and fragmented demand make a single mega-complex less feasible. Smaller distributed plants are more resilient and can be integrated into local economies more effectively. By contrast, insisting on Ajaokuta locks Nigeria into a high-cost, outdated production model that will struggle to compete internationally.
The emotional attachment to Ajaokuta is understandable, especially for the people of Kogi Central who have lived in its shadow for decades. For them, the plant represents not just steel but dignity, employment, and recognition. Yet policymaking cannot be driven by emotion alone. Selling false hope is crueler than telling hard truths. To insist on Ajaokuta’s revival because of national pride is to misallocate scarce resources at the expense of projects that could actually transform lives.
Toward a Rational Steel Policy
Dangote’s bluntness may be unsettling, but it should be seen as an invitation to rethink, not as an attack on national pride. Nigeria does need steel. Industrialization without steel is like building a house without cement. But the path to achieving it lies not in reviving stranded relics, but in embracing viable, modern models.
A rational steel policy for Nigeria would rest on three pillars. First, distributed modular plants, strategically located across regions, should be prioritized. These are cheaper, faster to deploy, and aligned with global best practice. Second, public-private partnerships must replace outdated models of state ownership or crony privatization. The state’s role should be to safeguard strategic interests, set standards, and prevent monopolistic capture, while the private sector provides capital and efficiency. Third, integration into global value chains is essential. Steel must not become another protectionist fortress. Competitiveness requires openness to trade, innovation, and technology partnerships that make Nigeria a credible player.
This does not mean Ajaokuta must be erased. It can be repurposed—as a training hub for metallurgists, a logistics base, or even a museum of Nigeria’s industrial ambitions. Such uses would preserve its symbolic weight while avoiding the costly illusion that it will suddenly roar to life as the backbone of Nigeria’s economy.
The real test of political will is not whether Nigeria can keep pouring money into an incomplete dream. It is whether leaders can resist nostalgia, confront vested interests, and redirect scarce capital toward projects that deliver real returns. Industrial sovereignty is not achieved by clinging to monuments of the past but by building industries that work in the present.
Dangote’s words may sound harsh, but they force us to grapple with the question Nigeria has avoided for forty years: how do you revive what was never truly completed? The honest answer, supported by both empirical evidence and economic logic, is that you don’t. You move on, you cut your losses, and you build anew. Nations rise not on the strength of symbols but on the strength of choices. And the choice before Nigeria is clear: nostalgia or pragmatism, illusion or progress.
