Reported by: Ijeoma G | Edited by: Gabriel Osa
ABUJA, NIGERIA — The Federal Government’s proposed 2026 budget has sparked fresh controversy by allocating N6.04 billion to cover personnel costs for workers at the Ajaokuta Steel Company Limited, a major state‑owned industrial complex that has remained largely non‑operational for more than 40 years and has never produced a single sheet of steel since its inception.
Budget documents from the 2026 Appropriation Bill show that the government has set aside N6.69 billion for the Ajaokuta steel plant, with personnel expenses alone accounting for about 90.4 per cent of that total. Of the staff‑related allocation, N4.79 billion is earmarked for salaries and wages, while N1.25 billion is designated for allowances and statutory social contributions, including pension contributions, national health insurance and workers’ compensation insurance.
The predominance of recurrent spending stands in stark contrast with the minimal provisions for capital investment. Overhead costs in the 2026 budget total just N233.63 million, and capital expenditure amounts to only N410.8 million, highlighting that a tiny fraction of funding is aimed at infrastructure, rehabilitation, or efforts to revive production capacity at the moribund steel complex.
Conceived in 1979 as a flagship industrial project to anchor Nigeria’s steel production and broader manufacturing sector, Ajaokuta once stood at the center of ambitious plans to reduce import dependence and stimulate economic diversification. Despite equipment installation approaching completion by the mid‑1990s, the plant has never functioned as intended, and successive administrations have struggled to bring it into production.
The latest budgetary trend appears to continue a longstanding pattern of sustaining the facility largely as a payroll institution, rather than as an active industrial enterprise. Analysts note that while the 2026 allocation shows a marginal reduction in personnel costs compared with the N6.21 billion earmarked in the 2025 budget, workers’ salaries and related expenses remain the dominant component of the plant’s funding, even in the absence of steel output.
Critics of the budget highlight this as symptomatic of deeper challenges in Nigeria’s industrial policy and public expenditure priorities. They argue that ongoing recurrent spending without tangible production outcomes fuels perceptions of inefficiency and mismanagement, especially as the nation looks to diversify its economy and nurture productive sectors. Civil society advocates and economic commentators have repeatedly called on the government to prioritise structural reforms, strategic partnerships, or privatisation arrangements that could finally unlock Ajaokuta’s latent potential, rather than allocating large sums to wage bills for a non‑producing enterprise.
Supporters of continued funding maintain that retaining the workforce is necessary to preserve institutional capacity should plans for revival or private sector engagement materialise. Nigeria’s Ministry of Steel Development has in recent years pursued discussions with prospective investors and technical partners aimed at rehabilitating the complex, but these efforts have yet to result in meaningful production. Officials have also estimated that full revitalisation could require multi‑billion‑dollar investments to complete infrastructure and install modern steel‑making technology.
For now, the 2026 budget figures demonstrate that Ajaokuta Steel Company remains financially sustained by government appropriations, with the lion’s share directed toward personnel costs rather than productive activities or capital enhancements that would move the project closer to industrial functionality. Observers warn that without decisive action to either operationalise the plant or restructure its financing model, the cycle of recurrent expenditure on salaries may continue to drain public resources without delivering the economic benefits originally envisioned when the complex was established.
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